The number of UK and international landlords choosing to register as a limited company to manage their portfolios is on the rise.

A spike in international investors enquiring about forming a limited company, up 62% year-on-year.

 Last year, there were a total of 41,700 buy-to-let incorporations, an increase of 23% on 2019. The numbers have more than doubled since 2016, rising 128%, when tax changes for landlords were introduced.

Between the beginning of 2016 and the end of 2020 more companies were set up to hold buy-to-let properties than in the preceding 50 years combined. Companies set up to hold buy-to-let properties were the second most common company founded during 2020, with companies selling goods online or by mail order in first place.

More than a third (34%) of all companies set up to hold buy-to-let properties in 2020 were in London. Together, London and the South East accounted for almost half (47%) of all incorporations.

Advantages

If landlords hold property in a limited company, they have the ability to offset 100% of mortgage interest against profits, while those holding a property in their own name can offset just 20%. Investing in property through a company provides landlords with higher levels of tax relief and personal tax savings. Landlords can grow their BTL portfolio more quickly, as there is no income tax on the retained profit, thus allowing more cash to re-invest.

Although corporation tax is payable on trading profits, this is lower than the higher income tax rate. However, running a portfolio through a limited company is not right for everyone.

One of the main benefits of remaining a private landlord is that any post-tax profits can go straight into their pocket. Profits can be used then for anything they choose – all paid for by the tenants.

There was a surge in re-mortgage activity in February and March of this year, as expat borrowers look to lock into cheap deals ahead of an expected interest rate rise.

Since the financial crisis in 2008 mortgage rates have steadily fallen.

However, with the Bank of England hinting that it could raise interest rates in the near future and economists are predicting a hike could come as soon as July/August of this year.

Record low mortgage rates continue to sustain market activity, many of the Bank of England’s Monetary Policy Committee are now adding to the calls for an interest rate rise, this picture could very quickly change.

A “wait and see” approach is best avoided for existing expat UK homeowners considering re-mortgaging.

The number of expat mortgages approved also went up this year, suggesting the market is picking up steam now the Brexit outcome has been resolved.

Expats who avoid reviewing their current mortgage deal could well pay for this error in the long term as interest rates look to be going upwards. Not everybody will benefit from changing their mortgage, but it certainly makes sense to check how your existing deal stands up to the future.

Contact us.

If you would like to review your current mortgage please make contact and one of our independent advisers will be happy to help.

Since the end of last year, the expat mortgage market has seen much more activity in both new and re-mortgage applications.

The UK property market continues on an upward spiral albeit slower than years gone by and still offers potential longer-term growth and security. Expats are always keen to secure property in the UK and this year is no exception as applications for new mortgages are at an all-time high.

Most experts believe these high activity levels will remain for the foreseeable future, with all the uncertainty expats want a UK foothold.

Confidence in the UK market has grown again since the turn of the year due to interest rates still being held after the threat of increases.

What does the future hold in store for expats?

This is a difficult market to predict in the long term, but if the past is anything to go by then UK property will hold its own and increase in value. Whatever happens with the pandemic property values are more than likely to remain strong. Several factors control prices, the main ones are listed below:

• Supply and demand currently supply only meets 47% of the demand.
• Mortgage interest rates are low and affordable.
• UK economic growth is currently strong, and the outlook is stable.

So looking at the key factors the housing market looks in good shape for the future. Of course, situations can change very quickly, not to mention Covid-19, but on the whole, the UK property market looks to be in a very healthy state especially if the supply does not increase.

Mortgage help?

Should you require any assistance with your new or re-mortgage please call one of our fully qualified independent consultants and we will be happy to assist.