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A look in to limited company growth in the 2024 BTL market
In recent years, tax and regulatory changes in the UK have significantly impacted the buy-to-let market, favouring professional landlords with extensive portfolios and long-term investment strategies.
Professional landlords often have the financial resilience and strategic foresight to navigate these changes, leveraging economies of scale and diversified portfolios to maintain profitability. In contrast, accidental landlords, who may rely on rental income as a supplementary source, find it more challenging to absorb increased costs and tax liabilities, leading some to exit the market.
Recent analysis of Companies House data from Hamptons shows that in September 2024 alone, 5,312 new limited companies were set up across Great Britain to hold buy-to-let properties. The data indicates that this figure is 28% higher than in September 2023 and represents the third-highest monthly figure on record, trailing only April 2024, with 5,854 new companies, and February 2024, with 5,442.
This shift is also evident in the latest Pegasus Insight Landlord Trends research report for Q3 2024 which outlines that the share of rental properties held within company structures has jumped from 36% in Q1 2020 to 76% in Q3 2024.
Incorporation offers key benefits for landlords aiming to expand and manage larger portfolios. Currently, a significant proportion of newly purchased rental properties by limited company landlords are placed directly into business structures. This shift highlights a growing preference for the flexibility and tax efficiency of limited companies, particularly appealing to landlords with substantial portfolios. The Landlord Trends research also shows that while most landlords (79%) still hold all their properties individually, 21% now hold at least one property within a limited company structure, with 9% managing their entire portfolio this way. These landlords, who typically own an average of 13.1 properties, tend to be more leveraged and investment oriented.
The significant rise in limited company formations highlights the resilience emerging across the buy-to-let sector. As the market increasingly shifts toward corporate structures, intermediaries remain best positioned to guide individual landlord clients through the advantages and considerations of this approach.
By connecting clients with specialist lenders and offering in-depth advice on limited company funding, intermediaries can enhance client relationships, tap into a growing market segment, and adapt to the evolving demands of the buy-to-let industry. This approach not only supports landlords in futureproofing their investments but also helps them capitalise on opportunities within the increasingly complex but opportunity-laden UK housing market.
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