Landlords showing Limited interest

Section 24 has really shaken up the landlord sector.

One positive has come out of the changes though. Prior to the changes, many landlords may have found themselves operating as sole traders simply as it seemed the ‘least hassle’. However, the Section 24 changes have shone a light on the various options for business structures, forcing us out of the dark and stumbling into the dazzling world of LLPs, limited companies, and various more complex structures in a bid to tackle the tax troubles.

New research from Precise Mortgages has revealed that 38% of BTL landlords plan to use a limited company structure to acquire properties over the next twelve months, compared to just 28% as individuals. Those choosing to form a limited company to expand their portfolio are reported to be doing so in order to mitigate a potential tax bill. Landlords in London are the most likely to be making the move towards limited, owning perhaps to the larger mortgage requirements in the capital.

The report continued to say how 42% if portfolio landlords (who already own four or more properties) intend to purchase new property via a limited company, owning predominantly to the fact that they must meet the new, more stringent, mortgage requirements.

Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords. Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue.

Alan Cleary, managing director of Precise Mortgages

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