Buy-to-Let Limited Companies Outnumber Fast Food in Number of UK Business Registration: Good Omen for Property Buyers

In a dramatic change in the UK property market, buy-to-let (BTL) companies are now the most prevalent form of business to be registered in the UK, replacing traditional industries such as fast food restaurants. New statistics show that there are now more buy-to-let companies than fast food restaurants by more than four to one, giving potential investors good faith in the growth and longevity of the rental market.

According to Companies House, there are exponentially more BTL companies operating in the UK now, increasing by more than four times from 92,975 in Feb 2016 to where it stands now. Much of that growth is due to policy changes in taxation, specifically the phased phasing-out of mortgage interest tax relief on ownership by higher-rate taxpayers. And as landlords clamoured to reduce their taxes, quite a few simply chose to set up limited companies for their buy-to-let operations.

Why the Move to Buy-to-Let Limited Companies is Emerging?

The rise of buy-to-let limited companies is only part of a wider trend for investors to reorganize their portfolios for optimal tax efficiency. With the formation of limited companies, landlords can claim mortgage interest payments on rental profits before tax, which is an important advantage following changes to the tax environment. For taxpayers, increased-rate allowances can save tens of thousands of pounds.

Hamptons, a property company, expressed that without this tax shift, the bulk of the property would still be in private ownership. This transition has resulted in more and more investors looking toward property as an opportunity for the long term within the business, compared to merely doing it as an additional source of income.

The Confidence Behind the Growth

The reality that buy-to-let companies are now the biggest sector when it comes to business registrations is a testament to increasing confidence in the UK housing market. It is no flash in the pan, though, as this trend shows that property investment is still an irreversible and unshakeable source for long-term wealth creation. Investors are not just seeking to buy homes, but are also forming companies based on rental yields, further solidifying the market.

As more and more landlords take the step of setting up limited companies, so too is this a sign of a structural change in the nature of how the UK rental market operates. It is an indicator that property is no longer viewed as simply a personal asset, but as a business to be turned for profit. While partly tax-driven, this trend is also an indication of the growing appeal of the UK rental market, which still offers good yields and potential for capital appreciation.

What It Means for Investors

For property investors, this trend will therefore be good news. The news that more and more individuals are establishing buy-to-let companies is proof of the strength of the UK property market and demonstrates sustained demand for rented property. With so much investor activity, especially in limited company schemes, the UK rental market is quickly professionalising, providing increased security for those looking to enter or grow in the market.

The ongoing boom in buy-to-let ventures also serves to indicate the ongoing attractiveness of the UK housing market, most notably in major cities such as London, Manchester, and Birmingham, where there is ongoing high demand for rentals. For would-be investors, the realisation that the rental market is being spurred by such a volume of activity and investment is comforting, and the time to invest in UK property is now.

Magnate Assets

 

Magnate Assets' Perspective

It's a positive reading of the firmness and profitability of the UK property market here at Magnate Assets. When more firms become focused on investing in property and rental returns, we get a clear signal that the industry remains one of the most desirable and stable forms of investment.

This is not only an individual homeowner's market, but also a successful business market where long-term expansion and large returns are the major concern. For investors, the higher activity of buy-to-let companies means there is plenty of room to be involved in a booming sector with proven financial returns. As more and more homes are being purchased as investments, the expansion of the rental market is only going to be sustained, and it is the perfect time to consider your next property investment.

Whether you are an experienced investor or simply a novice, this movement towards buy-to-let limited companies is a harbinger of even greater things to come from UK property investment, secure returns and security on the horizon.

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