Almost all UK landlords who invest through limited companies believe their incorporated status mitigates the risks of inflation, according to new research from GetGround.
In a study of landlords operating throughout the UK, GetGround found that 79% of those who invest partially or entirely through limited companies believe that doing so helps them better mitigate the impact of rising inflation than if they were to invest in property in their personal names. 76% of those surveyed say that limited companies have allowed them to adjust more easily to rising inflation. A similar proportion (73%) reveal that limited company investing makes them feel more protected against inflation.
These findings come as property investment through limited companies continues to grow. 81% of UK landlords surveyed by GetGround hold at least a quarter of their property portfolio in limited companies. This data correlates with recent industry evidence that showed that around half of UK investment property purchases in 2021 were completed through limited companies - the highest annual total on record*.
Moubin Faizullah Khan, CEO of GetGround, comments: “Whether it’s because of its financial, administrative or time-saving benefits, it’s unsurprising that a limited company structure is recognised as a useful defence mechanism against the impact of inflation. And, in this unprecedentedly high inflation environment, limited companies prompt greater responsible investment too. By moving to a limited company structure, landlords reduce the costs of running their property investments, making them better placed to keep rents at an affordable ‒ while still profitable ‒ level for their tenants.”
The new GetGround research also suggests that landlords with single investment properties or smaller portfolios are less likely to choose limited company structures than counterparts with larger portfolios. Of the landlords questioned in GetGround’s survey, 60% do not hold any property investments in limited companies.
Failzullah Khan continues: “Our small scale landlords are the lifeblood of a healthy PRS and are vital to making sure tenants are secure in their homes while we all endure this cost of living crisis. At a time when some smaller landlords might question the long-term viability of property investing, the industry can and must do more to dispel myths and misunderstandings that surround limited company investing.
He concludes: "Gaining a better perspective on the investment structure could be the deciding factor for many of these people when they consider whether or not being a landlord continues to be the right thing for them.”