Telephone iconCall UsTelephone icon0333 0146 683
Our opening hours
Chevron left icon
Knowledge centre

Over a third of landlords plan to form property companies after recent buy-to-let tax changes

2-minute read

Anna Delves

8 May 2017

Facebook iconTwitter iconLinkedIn icon

Buy-to-let tax changes have hit landlords hard over the past few years, from the three per cent stamp duty surcharge for investment properties, to the phasing out of mortgage interest tax relief.

Different property gurus have recommended different strategies for coping with all these changes, but one piece of advice we’ve been hearing a lot lately is that landlords should consider setting up a property company - and it seems people have listened.

36 per cent of landlords plan to set up property companies

A recent Simply Business poll has found that over a third of landlords plan to set up a property company in order to try to alleviate the financial burden these tax changes will cause.

Of the 151 landlords polled, 23 per cent said they intended to form a limited company to manage their buy-to-let properties, while a further 14 per cent were interested in setting up a beneficial interest company trust.

One of the suggested advantages of creating a beneficial interest company trust is that landlords wouldn’t need to remortgage properties, as is almost always required when setting up a traditional limited company.

However, accountants have warned landlords to be careful when it comes to setting up companies as HMRC could well crack down on those it sees as trying to dodge taxes. So if you’re planning to set up a property company, make sure you take expert advice before you make the move.

Landlords to raise rents and convert mortgages

For those not planning to set up a limited company, raising rents and converting mortgages appears to be an attractive option.

Nearly a quarter of landlords plan to raise rents to combat tax changes, while 11 per cent are considering converting their interest-only mortgages into repayment plans.

However, a fifth of landlords appear to be unfazed by the slew of tax changes, with 20 per cent of respondents saying they didn’t plan to do anything to mitigate the changes coming in. Of course, for landlords who don’t plan to expand their portfolios and who have mortgage-free properties, the tax changes are going to make little impact at the moment, though it’s worth keeping in mind that the ban on letting agent fees could well act as a further tax on landlords.

Get set with tailored landlord cover

Over 200,000 UK landlord policies, a 9/10 customer rating and claims handled by an award-winning team. Looking to switch or start a new policy? Run a quick landlord insurance quote today.

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.

Facebook icon
Share
Twitter icon
Tweet
LinkedIn icon
Post

People also liked

12 March 20202-minute read

What the UK Budget 2020 means for landlords

Chancellor Rishi Sunak announced the first UK Budget since October 2018 amid continuing political and economic uncertainty. Here’s the key…

Read more

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter

Categories

Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19

Address

6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2020 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.