Professionalising BTL: New data reveals rise in number of limited company landlords
Posted on Thursday, October 1, 2020
Fewer than 10% of landlords are choosing to invest as an individual, providing the strongest evidence yet that the government's plan to professionalise the UK buy-to-let sector appears to be working.
According to new research from UK property developer, SevenCapital, 9.7% of UK private landlords now actively choose to invest in property as an individual. with 42% now investing through a limited company, and 48% either planning to (30%) or are interested but don’t know how (18.3%).
The poll also found that more than half (53%) believe that the UK property market will be stronger in 18 months’ time, and four in five (80%) believe the market will be stronger in five years’ time. Of these, more than a quarter (26%) agree that UK house prices will achieve more than 15% growth over the next five years, proving the continued confidence and resilience within the sector.
This comes after numerous changes to the tax relief system imposed on buy to let landlords over recent years, which has seen an exodus of so-called accidental landlords who are no longer able to make the figures add up to a perceived profitable investment.
Andy Foote, director at SevenCapital, commented: “These figures really highlight just how much has changed in terms of how property investors choose to buy and operate in the UK property market these days.
“Of course, investing as an individual will remain the right path to go down for some people, as investing is very circumstantial – whatever type of investment you choose. However more and more we’re seeing investors choosing to buy through a limited company or expressing an interest in how to go about it, which is certainly the case now at SevenCapital.
“Depending on your objectives and your personal situation, buying through a limited company offers many benefits, including making your investment more tax efficient, as well as shielding you from some personal liability which can help to protect your other assets.
“What we as a sector need to do now is make sure that the new buy to let rules and ways to invest are fully understood by everyone within the sector, enabling investors to make informed and correct decisions for their circumstances. I think we have a duty to educate on all areas, including the pros and cons of investing through a limited company and the process for setting one up.”
He added: “It’s encouraging to see that positivity remains within the market over the long-term – another sign perhaps of the increasing maturity of the sector, with long-term views and a sound understanding of the workings and cyclical patterns of the UK’s property market.”