Landlords Corner – The Changing Landscape of Buy-to-Let: Strategies for Forward-Thinking Landlords
We know landlords need to think about the day-to-day nature of the market, but it is also vital to look ahead. The Buy-To-Let (BTL) market is evolving in the UK, as the entire country battles with new and extreme challenges.
At Trading Places, we not only take care of the day-to-day parts of your business, we make sure you are fully informed.
How many landlords these days are incorporating as limited companies
One of the most significant trends in the buy-to-let sector is the record number of landlords setting up limited companies for their property portfolios.
Between January and September of this year, we have already seen 46,000 companies set up, with still a quarter of the years’ figures to come in. Compared to the January to September signups of 2023, this year sees a rise of 23%. Also, at just-three quarters of this year, the number of sign-ups is greater than the total for 2021.
What are the benefits of operating through a limited company?
By operating through a limited company, landlords can potentially benefit from:
· Lower tax rates on rental income
· Greater flexibility in profit reinvestment
· Enhanced mortgage interest deductibility
However, transferring existing properties into a company structure requires careful consideration of potential stamp duty and capital gains tax implications.
Tailored tax and property guidance is essential for landlords
We are more than happy to talk you through all the property implications, and what it means for your business. However, it is also vital you speak with a tax professional to ensure you have all the information you need.
We can help you find reputable tax advisors in the local area, and we firmly believe speaking with professionals in the local area, with knowledge of the local business sector, makes a massive difference. This is true for landlords when looking for a letting agent, and it’s true when it comes to tax and business advice.
You need to work with someone who knows your circumstances, and who knows what your aims and expectations are. There is no shortage of information available online, but this is always from a general viewpoint. Your business and property portfolio aren’t generic, it is unique to you, and it’s impacted by the local factors that are relevant here, but not in place anywhere else.
The London property and rental market is unique in the UK, and it should be viewed separately from the rest of the nation. The demand for rental property in London, and right here in Leytonstone, is such that landlords can have a degree of confidence about what comes next. However, by working with specialists, you’ll increase your chances of success.
There are many landlords strengthening their portfolio in 2024
Despite challenges in the market, many landlords are actively strengthening their portfolios. In January 2024, 14% of homes bought by investors were purchased by landlords expanding their portfolios, up from 12% in January 2023.
Throughout the year, this outlook has continued, helped by a fall in monthly mortgage repayments. The most recent figures are for August 2024, and these show the average rate of a BTL mortgage has dropped to 4.33%. This has led to the average full monthly repayment dropping by 12% to £1,212 a month, while the average monthly cost of an interest only payment has dropped to 25%, standing at £801.
Moving forward with confidence
As we move forward, landlords can take advantage of high demand for rental property, lower monthly rental mortgage payments, and opportunities to manage their properties better. For all the doom and gloom, we believe landlords can be positive, but only if you are proactive and take advantage of the opportunities on offer.
If you are looking for guidance on the Leytonstone rental market, or you just want a helping hand in complying with rental market regulations, we are always here to assist you.
Click here for an online Valuation (a starting point)
Click here for a Desktop Valuation (a more detailed option)
Click here to book a Home Visit Valuation (the full works)