x
By using this website, you agree to our use of cookies to enhance your experience.
Graham Awards

TODAY'S OTHER NEWS

Tax threat to buy to let forces investors to set up companies

A third of landlords who own rental property in their personal name are planning to incorporate their portfolio into a limited company structure, Paragon Bank says.

Paragon’s new report, The rise of the limited company landlord, found that 33 per cent of those with rental property in their personal name intend to incorporate within the next three years, although 37 per cent said it was unlikely that they would transfer their properties into a limited company structure.

Tax was the main barrier to incorporation, cited by 56 per cent of those with property in personal name, followed by a lack of information on how to incorporate (36 per cent) and fewer mortgage options available (26 per cent).

Advertisement

Paragon’s report, based on a survey of over 1,000 landlords, found that nearly a quarter of landlords (23 per cent) own all of their rental properties within a limited company structure, 31 per cent hold a mix of personal name and limited company properties and 34 per cent hold all properties in personal name.

There has been a clear shift in the structure of property ownership from when landlords acquired their first rental property, with 71% of landlords initially holding property in their personal names.

This suggests those landlords have pivoted towards the limited company option as they have built their portfolios, either through incorporation or acquiring new property in a limited company structure.

Paragon Bank Managing Director of Mortgages Richard Rowntree says: There has been a significant increase in the number of landlords who hold property in a limited company structure over the past six years as the Government started to phase out Mortgage Interest Relief from 2017.

“Many landlords who own property exclusively within a limited company structure have done so from the off and that is reflected in the demographic of this group, which is typically younger than those with personal name or mixed portfolios.”

He adds: “There is a clear desire for a large proportion of landlords with property in personal names to incorporate, but barriers persist, such as having to pay Stamp Duty and Capital Gains Tax. We would advise landlords in this position to speak to a tax specialist who can offer guidance on the most suitable route available.”

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.

  • icon

    Nope, not me…. I am selling 🎉🎉💵💵

    icon

    Ditto Simon

     
  • Chris Haley

    I’d have thought that recent ‘revelations’, Spotlight 63 and the imminent Autumn Statement would make most landlords pause and take qualified advice

    icon

    Yes- Sell up!

     
  • icon

    If I am going to take the capital gains tax hit that would be needed to transfer to a limited company I am keeping the money and enjoying my retirement!

    icon

    Stamp duty too.

     
    icon

    I thought you could roll into a Ltd Co without incurring it though?

     
  • icon

    We are selling those with mortgages. We've had to move three sets of Tenants out which has been awful for one couple because they've had below market rent for 12 years. That's £20k in their pocket instead of ours. Now they can't afford the local rent. But worse than that they can't get onto any letting agents books. Nobody will take them they are retired on benefits. It will go through the courts and they will end up in temporary accommodation. A hotel room probably. All because of government meddling.

    Richard LeFrak

    These are the real people who are suffering Martin, I have the same with a pensioner who has lived in a building of mine for over 30 years. I bought the building which is converted into 4 flats and Jim was already there. He has a two bedroom flat and pays 350per month and I have never put it up. I don't intend to either, a little erratic and eccentric but as good as gold.

    If this is what the government want to do to landlords by forcing them out then people like Jim will be become a burden on the state.

    Ben Beadle should be pushing this sort of narrative that some PRS landlords are doing the governments job for them, should we apply for carers allowance....???

     
    icon

    These are the real victims 😢

     
    icon

    Martin and Peter should both write to their MP and Michael Gove to let them see the lunacy of the proposed legislation.

     
    icon

    Martin - How do you know they CAN'T afford the local rent and it isn't simply the case they don't want to pay market rent? Have they enquired about benefit top ups, Discretionary Housing Payments or the possibility of retirement Social Housing?
    Would you continue to let to them if they were paying a more realistic rent?

     
    icon

    @ Robert Brown - there are none so blind as those who will not see.

     
  • icon

    I'm worried sick this will be the last straw for my landlord. I've been in my property for 11 years and he's only increased the rents twice in that time. If he decides to sell there isn't a single property in my area I can afford to rent. I wish the Gov would leave good landlords alone. We all know there are rogue Landlords and Rogue Tenants but the Renter's Reform Bill is NOT the answer. There must be other worried Tenants like me. I just hope the Gov will see sense and realise the ultimate losers will be the Tenants this Bill is supposed to help - as it will only make things worse for Tenants

    icon

    Peter, unforunately the government is listening to Shelter, Generation Rent etc and this proposed legislation is persuading good landlords to leave. You may be fortunate and your landlord may be one of those staying. I have sold half my properties, just two left. One of those will go in 2025 or before if the tenant leaves. It doesn't help that Labour say they will be harder on landlords. I wish you good luck in your search.

     
    icon

    It's nice to see a tenant finally seeing things as most landlords do. Thanks Peter.

     
  • icon

    The gov like annoyed states is just listening to them. They r tunnelled vision. They must be getting a bck hander. It’s a case if flog flog and flog us PLL’s.

  • icon

    Emily. It might be the case that you do have to pay capital gains depending on your situation if it’s your own business, run, maintained and managed by you without an Agent it is likely c/gains won’t apply, check out the criteria.

    icon

    Thank you Michael. Worth a look I suppose but there are bigger reasons than the tax for me to feel the need to get out of the business. Just having a bad year one way and another and seeing the issues hurtling towards us as landlords I want to jump out of the way.

     
  • icon

    Paragon are a little in realising that the landlords are incorporating to invest in property, as they have just woken up in lending. Also incorporation is not as attractive as it appears. To get cash out of company after selling attracts additional taxes. So have to plan carefully.

icon

Please login to comment

MovePal MovePal MovePal
sign up