A record number of companies were set up last year to hold buy to let property.
In total there were 47,400 new BTL companies incorporated in 2021 across the UK according to Companies House data, analysed by the Hamptons lettings agency.
This is nearly twice the number that were set up in 2017 when it was announced that investors with properties in their personal names would no longer be able to claim mortgage interest as an expense.
While individual landlords are effectively taxed on turnover, company landlords are taxed on profit. This has meant that for some landlords – particularly those who are higher rate taxpayers – it has become more profitable to move their buy to lets into a company.
However, the rate of growth in new incorporations fell compared to previous years, with a 14 per cent increase recorded between 2020 and 2021, down from a 30 per cent increase recorded between 2019 and 2020.
While the number of BTL companies up and running in the UK passed through the 200,000 mark as the country emerged from the first lockdown, by 2021 this figure rose to a new total of 269,300.
Some 61 per cent of these have been set up since the withdrawal of mortgage interest relief which began in April 2017.
The average BTL company has been operating for 9.2 years, a figure which has fallen amid the rising number of new incorporations over the last five years.
At the other end of the scale, 7,900 or three per cent of companies have been running for more than 50 years, while 440 have been going for more than a century.
Buy to let companies currently hold a total of 583,000 mortgaged properties, accounting for around 29 per cent of all existing BTL mortgages nationally. This figure has increased from 26 per cent over the last 12 months.
The bulk of new BTL companies set up in 2021 were in London and the South East, with the two regions together accounting for 45 per cent of all new incorporations.
While the number of buy to let incorporations has continued to grow, around 25,100 have closed their doors since the onset of the pandemic.
Some 15,200 companies closed in 2021 which equates to around six per cent of all buy to let companies up and running today.
The average company closed down after 5.8 years, a figure which has fallen steadily in recent years as the number of incorporations has increased.
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