A record number of rented properties in the UK have been let out by companies rather than individuals in the first six months of this year, according to a new study.
There has been a four per cent surge in the number of landlords placing their properties into corporate vehicles in a bid to avoid higher taxes in the last year. This figure now stands at 18 per cent, whereas it was only 14 per cent 12 months ago.
This new trend is due to changes to the tax relief that landlords can claim on their mortgage interest costs.
Until April 2017, landlords only had to pay income tax on the profit they made on their rental properties, having first deducted their mortgage interest and other associated costs.
However, since then, the Government has been implementing a four-year tapering of this relief, which means that by 2021 landlords will have to pay tax on their total income, before claiming a basic tax reduction of 20 per cent.
Because this significantly changed the profitability of owning buy-to-let properties, thousands of landlords are switching or have already switched their property portfolio into a limited company where this tapering does not apply.
Owning property through a company allows landlords to offset interest costs against tax and pay corporation tax on their profits, which is lower.
According to the research, the highest proportion (25 per cent) of rented homes owned by companies is in Yorkshire and the Humber. This is followed by 20 per cent in the North West and 19 per cent in London.
Around 35 per cent of homes let by company landlords cost under £500 per month, compared with 19 per cent let by individuals.