Landlords are turning their property portfolios into companies

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We recently wrote a blog about the rising number of landlords turning to lettings agents to help them manage their buy-to-let investments. This news was fascinating as it countered predicted trends, with many market analysts believing landlords would turn away from lettings agents following financial changes and the restriction against lettings agents charging tenants agency fees in England and Scotland.

While it’s true that an increased number of landlords are turning to lettings agencies, it is also true that more landlords are turning their property portfolio into businesses. However, we will have to wait awhile to see whether both, either, or neither of these trends continue going forward.

Number of career landlords on the rise

In the first quarter of 2017, the proportion of British homes owned by company landlords reached 20%, potentially to offset buy-to-let tax changes. It was estimated that landlords would set the properties as a company in order to run their rental properties more efficiently, especially ahead of the tax relief changes that were enforced from April.

In London, more than a quarter of rental properties are owned by company landlords; 27% of all London rental properties are managed by career landlords. The statistics from Q1 2017 represent the highest proportion of company landlord-owned properties since records began in 2010. While it’s true that numbers have been slowly increasing since 2013, between the beginning and end of Q1 2017, the number of company-owned rental properties increased by 4%.

Most market analysts and experts believe that this change is in part due to the tax changes announced in the 2015 Spring Budget.

While becoming a company landlord can be more tax efficient, that’s not always the case, and a variety of factors can boost or impede the efficiency. These factors can include, but aren’t restricted to, personal circumstances, income, and the number of properties in a portfolio.

Company landlords own high-end and budget rental properties

Interestingly, properties owned by company landlords account for the most and least expensive properties on the rental market. A quarter of company landlord properties cost less than £500pcm, while 9% of these properties cost between £1,500-£2,000, this is comparable to just 6% of non-company landlords who charge that amount for their properties.

The above shouldn’t be too much of surprise when taken in tandem with the fact that a large number of these properties are located in London, a city infamous for its eye-wateringly high rent rates. The low spectrum could suggest that landlords are underestimating the value of their property, and are therefore under-charging tenants. At CPS Homes, we are dedicated to renting property at a rental price point that is fair to tenants without short-changing landlords. 

If you’re looking for a bespoke property management service, look no further than Cardiff’s largest lettings and estate agent, CPS Homes. We have the know-how and experience to make your property investment thrive. For more information, email us on enquiries@cpshomes.co.uk, or pop into one of our branches in Cathays and Roath.

30 June 2017

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