Company landlords now own 1 in 5 rental properties

The latest report from Countrywide has revealed that the number of homes let by a company landlord saw the largest annual jump during Q1 2017 - reaching a 20% proportion of the market, the highest proportion since records began in 2010.

Related topics:  Landlords
Warren Lewis
17th April 2017
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"The number of rented homes owned through a company is on the up. The incoming tapering of mortgage tax relief is likely driving the increase"

According to Countywide, changes to tax relief on rental properties, announced in the 2015 Spring Budget may be behind the rise.  

The changes to income tax relief on mortgage interest payments are being phased in over a four year period (until 2020) and took effect from this month. They make it more tax efficient in some cases for landlords to own their buy to let portfolios through a company rather than hold as a personal asset.

Landlords letting homes in London are most likely to own their property using a company name. 27% of properties let in London are owned by a company, a larger proportion than anywhere else. Company landlord lets drive the top and bottom of the rental market with the most and least expensive homes likely to be owned by a company landlord. Over the last year, a quarter of homes let by a company landlord cost less than £500 per calendar month.

Nearly one in ten homes let for between £1500 and £2000 pcm were owned by a company landlord, compared to 6% owned by non-company landlords.

Rents fell in March 2017, the cost of a new let was 0.3% lower than in the same month last year, the second consecutive monthly fall.  The average rent of a new let in Great Britain fell to £928, £3 less than the same period last year.  The fall in rental growth was driven by London, the South West and Wales where rents fell by 0.4%, 0.2% and 6% respectively.

Johnny Morris, Research Director at Countrywide, said: “The number of rented homes owned through a company is on the up. The incoming tapering of mortgage tax relief is likely driving the increase. Companies are generally taxed more favourably, particularly with recent changes by government to tax relief, so in many cases landlords can make cash savings by operating through a company rather than as an individual.

Rents fell again in March, mostly driven by falls in London.  Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents.  In much of the rest of the UK rents continued to grow, although at a slower rate.”

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