Research carried out by Hamptons found that during 2020 there was a 23% increase in the number of BTL companies being formed compared to 2019 and in total, last year saw 41,700 new BTL companies.
Hampton suggests that the increase in new BTL companies could be due to landlords looking to benefit from the tax incentive of being a limited company, especially as 2016 saw the proportion of mortgage interest deductible from tax on BTLs held in personal names starting to be phased out.
Commenting on the research, Aneisha Beveridge, head of research at Hamptons, said: “Despite growth in the private rented sector slowing in recent years, an increasing proportion of BTL purchases are now being held in limited companies. We estimate that around half of all rental properties bought today are being put into a company, up from close to one in five during 2016. While most of this growth has been driven by larger landlords, smaller landlords, particularly those who are higher rate taxpayers, have also reaped the tax-saving benefits from incorporating.
“As the company BTL market has matured, more mortgage lenders have entered the space. Back in 2016 there were just a handful of lenders who offered company BTL mortgages, often at a greater premium than today. But with more high street names entering the limited company space in recent years, competition has driven down interest rates to within a percentage point of similar products designed for landlords purchasing in their own name.”
For more information about setting up a limited company, read our guide on how to set up a BTL limited company.
