According to property website Rightmove, the number of landlords buying properties through limited companies has increased by 23% in the past year. This trend is driven by changes to tax rules, which have made it more expensive for individual landlords to own rental properties. The introduction of the 3% stamp duty surcharge on second homes has also made limited companies a more attractive option for some investors.
However, limited companies come with their own set of challenges. Mortgage options are limited, and interest rates are generally higher than those available to individual borrowers. This has led some experts to question whether the benefits of limited companies outweigh the costs.
The shift towards limited companies is most pronounced in England and Wales, where homeownership rates are already relatively low. In fact, a recent report by Zoopla found that the average house price in England and Wales had reached £324,000, making it even more difficult for first-time buyers to get on the property ladder.
While limited companies may offer tax advantages, they are not without their drawbacks. Landlords must also consider the administrative burden of setting up and running a limited company, as well as the potential risks associated with corporate ownership.