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One in Five Rental Properties now Owned by Company Landlord
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The proportion of rental properties owned by a company landlord reached 20% in the first quarter (Q1) of 2017 – the highest level since records began in 2010, according to research by Countrywide.
The number of homes owned by a company landlord has been steadily rising since 2013, but Q1 2017 recorded the greatest annual jump, of 4%.
One in Five Rental Properties now Owned by Company Landlord
Changes to buy-to-let tax relief, introduced earlier this month, may be behind the rise, believes Countrywide.
From 6th April 2017, the amount of tax relief that buy-to-let landlords can claim on finance costs, such as mortgage interest, is being reduced gradually to the basic rate of Income Tax.
The changes make it more tax efficient for some landlords to own their portfolios through a limited company, rather than hold as a personal asset.
Rental properties in London are most likely to be owned by a company landlord, with 27% of all homes let in the capital owned in this structure – the largest proportion in the UK.
Company landlord properties drive both the top and bottom of the rental market, with the most and least expensive homes likely to be owned by a company landlord.
Over the past year, a quarter of homes let by a company landlord cost less than £500 per month. Meanwhile, almost one in ten homes (9%) costing between £1,500 and £2,000 per month were owned by a company landlord, compared to 6% owned by individual investors.
In separate research, Countrywide found that rent prices across the UK fell in March. The cost of a new let was an average of 0.3% lower than in the same month last year, marking the second consecutive monthly drop.
The average rent in the UK is now £928 per month – £3 less than in March last year. The decline in rents was driven by London, the South West and Wales, where prices fell by 0.4%, 0.2% and 6% respectively.
The Research Director of Countrywide, Johnny Morris, comments: “The number of rented homes owned through a company is on the up. The incoming tapering of mortgage tax relief is likely driving the increase. Companies are generally taxed more favourably, particularly with recent changes by Government to tax relief. So, in many cases, landlords can make cash savings by operating through a company rather than as an individual.
“Rents fell again in March, mostly driven by falls in London. Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents. In much of the rest of the UK, rents continued to growth, although at a slower rate.”
