Your Business and Industry
Record number of Limited Companies – How does your advice evolve?
The fact that 2023 saw a record number of buy-to-let companies being set up is likely to come as no surprise to intermediary firms who have had any landlord interaction over the past few years
From an advice perspective, intermediaries know how crucial it is that they don’t just assume their landlord clients are as well-versed as they could be on this a weighty decision.
Lenders vary from a product, criteria, underwriting and service standpoint. After all, adopting a one-size-fits-all approach simply doesn’t work in what remains a complex sector.
Looking back on 2023, despite fewer landlord purchases, this record number of 50,004 buy-to-let companies being incorporated – as calculated in the Hamptons Monthly Lettings Index for December – easily surpassed the previous record of 48,520 established in 2022.
The Index highlighted that buy-to-let companies now own a total of 615,077 properties in the UK, an 82% increase since the end of 2016, when a raft of tax changes and regulatory measures were first announced. The rising number of incorporations means that, at the start of 2024, there were 345,426 active limited companies designed to hold buy-to-let property in the UK, up 11.6% from 309,643 at the beginning of 2023.
Of the 615,077 limited company buy-to-let properties, 458,838 (75%) were suggested to have a mortgage charge against them. The number of outstanding limited company mortgages has risen 10% over the last 12 months, despite the total number of buy-to-let mortgages falling 3% over the same period. Meaning that limited company landlords are more likely to have a mortgage than investors who own buy-to-let property in their personal name.
It was interesting to see that most of the growth in buy-to-let incorporations over the last year come from smaller landlords. Over the last 12 months, there was said to be a 21.9% increase in the number of homes held in companies with a single property, compared to a 3.8% increase in the number held by companies owning 20+ homes.
When looking at the future of BTL, this represents a hugely encouraging trend as it paints the picture of a longer-term commitment from a landlord base which was largely expected to exit the market altogether. And is yet another healthy signpost to the resilience on show across the sector over the past 18 months, as well as its ability to create opportunities for landlords and intermediaries who remain best placed, and best advised, to maximise them.
*This was originally published on Financial Reporter
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