Tax changes from the government aimed at deterring buy-to-let investors are instead pushing more people into owning their flats through limited companies.
According to research from Countrywide, 20% of flats are owned and let through a company, a 6% rise on last year.
Johnny Morris, research director at Countrywide, said: “The measures from government to try to discourage investment into the rental market, with the perception that if fewer investors buy rented homes it would be better for first-time buyers, isn’t necessarily persuading a huge swathe of investors, it’s more changing behaviour.”
Changes to tax relief on buy-to-let mortgage interest payments were announced in the spring Budget of 2015 and came into effect from 6 April 2017. Under the changes, the amount of tax relief landlords are able to claim has been reduced to the basic tax rate of 20%.
Landlords with a highly mortgaged property portfolio are most affected by these changes, while companies are generally taxed more favourably.
Pricing of units seemed to have little effect on the numbers of company landlords, though the geographic concentration was mainly in London and the South East.
The rental market, meanwhile, continued to record falls in rent, driven by the London markets.
Morris said: “Rents fell again in March, mostly driven by falls in London. Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents. In much of the rest of the UK rents continued to grow, although at a slower rate.”
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