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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Operating a Property Management Company Effectively

Many landlords own their property portfolio personally, and operate a property management company (PMC) alongside. There are a variety of reasons why a PMC may be useful, and there are often (not always) tax advantages to be gained. However, as always, care must be taken to ensure that a PMC is operated properly, so that in the event of a HMRC 'enquiry', there are no issues that can be raised.  

What are some of the reasons a private landlord might operate a PMC?
Most portfolio landlords run their rental business as just that - a business, which requires significant time and effort to manage, has cashflow challenges, creates personal business risk, but has potentially high rewards.

The most common business structure in the UK - by a long way - is the limited company, however most mortgaged portfolio landlords did not build their portfolio in a company because of the vast difference in the availability and price of company versus personal BTL mortgages.  

However, a private landlord may legitimately wish to operate a PMC alongside their personally-owned portfolio for any number of reasons, such as:

To create a corporate, more professional 'front' to tenants and other stakeholders

To gain access to property-related services and discounts that only companies can access

To recognise that a rental business has both an investment (I) side and a management (M) side - which may be run by different people e.g. husband (I)/wife (M).

To create a separate business model (property management services) which could be sold or expanded in the future.

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