Research by Hamptons shows that during 2020 there were a record number of new limited companies set up, known as incorporations, to hold buy-to-let properties.
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.
In 2016, a 3% investor stamp duty surcharge came into force and the proportion of mortgage interest deductible from tax on buy-to-lets held in personal names began to be phased out. As a result, investors have changed the way in which they purchase properties, with increasing numbers shifting towards limited companies to reap further tax benefits.
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. This means that at the end of 2020 there were a total of 228,743 buy-to-let companies up and running, an all-time record.