The landscape of property investment is ever-evolving, and for many landlords, the question of whether to incorporate their buy-to-let portfolio into a company structure is increasingly relevant. This article aims to explore the advantages and disadvantages of a limited company buy-to-let, providing landlords with a comprehensive overview. 
 

The Pros of a Buy-to-Let Company Structure

One of the most compelling arguments for transferring a property portfolio into a limited company lies in the potential tax efficiencies. The ability to offset mortgage interest against profits, which is no longer permissible for individual landlords due to recent tax changes, remains available to corporate entities. This can lead to significant savings, particularly for higher-rate taxpayers.

Additionally, when operating within a company structure, landlords may benefit from lower corporation tax rates compared to income tax rates on personal income. As per the data from GetGround, the trend towards incorporation is clear, with a steady influx of buy-to-let incorporations each year, likely to persist in the range of 40,000-50,000.

Another advantage is the potential for succession planning. A limited company can provide a more straightforward process for passing on assets to heirs, which can be particularly beneficial for landlords considering their long-term legacy.

The Cons of a Buy-to-Let Company Structure

However, the decision to incorporate is not without its drawbacks. The initial process of transferring properties into a company can incur costs such as capital gains tax and stamp duty land tax, which can be substantial depending on the portfolio's size and value.

Furthermore, running a limited company entails ongoing administrative responsibilities, including the filing of annual accounts and corporate tax returns, which can be both time-consuming and require additional expertise.

Landlords should also be aware that mortgage rates for limited companies can be higher than for individual borrowers, potentially impacting profitability.
 

For landlords considering the transition to a limited company structure, Hamptons has partnered with GetGround to streamline the process. GetGround specialises in the creation of buy-to-let companies and offers a tailored service to ensure that the incorporation aligns with the landlord's investment strategy.

With GetGround's assistance, landlords can navigate the complexities of setting up a limited company, ensuring compliance with legal requirements and optimising the structure for tax efficiency. In 2023, 53% of new shareholders in buy-to-let companies facilitated by GetGround were based overseas, highlighting the global reach and expertise of the company.

While the incorporation of a buy-to-let portfolio into a limited company can offer tax efficiencies and structured succession planning, it is essential to weigh these benefits against the potential costs and administrative burdens. Landlords should seek professional advice tailored to their specific circumstances and consider the support offered by GetGround through our partnership, to make an informed decision about the structure that best suits their investment goals.

As the property investment environment continues to evolve, it is crucial for landlords to stay informed and adapt their strategies accordingly. By carefully considering the pros and cons of a buy-to-let company structure, landlords can position themselves to make the most of their property investments in the years to come.