Landlords set record for number of new buy-to-let companies in 2021

In 2021, a record 47,400 new buy-to-let companies were set up by residential landlords across the UK, seeking to be more tax efficient by only paying tax on the profit not turnover.

The data released by Companies House reveals that this number doubled the number of buy to let companies created in 2017, when it was announced that investors with properties held in their personal names could no longer claim mortgage interest as an expense. For higher rate taxpayers it became more beneficial to transfer their buy to let properties into a company.

Since mortgage interest relief stopped, the percentage of buy to let companies set up has reached around 61 per cent, indicating that investors are continuing to regard rental property as a wise investment.

Over the last 12 months, the percentage of buy to let mortgages in the UK has risen to 29 per cent, a total of 583,000 mortgaged properties.

From 2020 to 2021 the number of newly created buy to let companies grew by 14 per cent, which was around half the amount recorded the previous year, when the pandemic struck between 2019 and 2020.

On average a BTL company has been operating for 9.2 years, although over the last five years this number has reduced as more new incorporations have been recorded.