UK landlords consider setting up limited companies
Increasing numbers of buy to let landlords in the UK are now considering moving their property investments into limited company vehicles.
This move is a likely response to landlords facing more property tax and experiencing cuts to mortgage tax relief.
41% of 1,400 landlords who took part in the survey indicated that they are considering moving their portfolio into a limited company following George Osborne’s decision to limit tax relief.
5% of landlords have already established limited companies, the survey by Paragon Mortgages has revealed.
14% of larger landlords with 20 or more properties are already operating as limited companies while 63% are considering it.
“Despite recent changes to legislation coming in to affect and influencing particular decisions made by landlords, tenant demands and yields remain strong. The buy to let market is healthy and the changes are unlikely to be a major disadvantage to the average landlord,” said a spokesperson for Property 118’s landlord insurance provider Discount Insurance.
“There is greater concern among larger landlords in regards to stamp duty and tax relief,” added the spokesperson.
43% of landlords have agreed that the stamp duty increase will affect their buy to let purchasing plans over the forthcoming years, whereas 63% for larger landlords with 20 or more properties.
40% of landlords reported demand to be rising in the fourth quarter of 2015 in the South West, where demand was the strongest.
However, in the North East, just 24% of landlords reported increasing demand.
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Member Since November 2013 - Comments: 1130 - Articles: 2
12:28 PM, 8th April 2016, About 10 years ago
Let’s just hope that lenders start making BTL company mortgages more available and affordable.
Member Since May 2015 - Comments: 17
10:38 AM, 23rd April 2016, About 10 years ago
Reply to the comment left by “Mandy Thomson” at “08/04/2016 – 12:28“:
Hi Mandy
The rates for BTL LTD company mortgages are becoming more cost effective and with the increased interest and demand in this area we expect that to continue in the right direction.
If you would like to discuss the best options available please do get in touch by clicking my profile.
Member Since January 2016 - Comments: 6
6:09 PM, 13th September 2016, About 10 years ago
Please can someone answer how much a limited company would have to pay in terms of stamp duty on a house BTL purchase of £125,000 or £135,000 ? Thank you
Member Since June 2013 - Comments: 381 - Articles: 61
9:20 PM, 13th September 2016, About 10 years ago
@ Jason – great article
@ Gurdeep – companies have to pay SDLT just like individuals – see the governments document (in particular section 2.20) here > https://www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties#contents
For personalised mortgage advice, contact any of our Team via my profile link above.
Member Since January 2016 - Comments: 6
9:25 PM, 13th September 2016, About 10 years ago
Hi thanks for that, so companies don’t pay 0.5% stamp duty? They have to pay the same rates as individuals then? What about the first property purchase by a limited company is there no stamp duty on that if it is less than £125,000 ? Thanks
Member Since June 2013 - Comments: 381 - Articles: 61
9:26 PM, 13th September 2016, About 10 years ago
Reply to the comment left by “Gurdeep Singh” at “13/09/2016 – 21:25“:
Gurdeep, you need to get absolute clarification directly from your / an accountant. The link I posted is the official government document following that particular budget announcement.
Member Since January 2016 - Comments: 6
9:46 PM, 13th September 2016, About 10 years ago
Reply to the comment left by “Howard Reuben” at “13/09/2016 – 21:26“:
Hi Howard, thanks I got my answers. It’s clear on my residential BTL I have to pay the higher rates, unless it’s under £40,000. Any commercials, mixed use the higher rates do not apply and if they are converted to residential later the higher rates still do not apply. Thank you for the link.
Member Since June 2013 - Comments: 381 - Articles: 61
8:17 AM, 14th September 2016, About 10 years ago
You’re very welcome.
Finance for Limited Companies is getting easier with many new lenders coming in to the market and also many existing ‘traditional’ lenders now opening their doors to Limited Company borrowers too.
Our independent mortgage advice service has access to the vast range of banks, building societies, specialist lenders, pension funds, P2P’s, bridging lenders and others all with an appetite to lend.
My Team of Advisers are here to help.