Are you thinking about switching to a company-based buy to let model? It can be a sensible move, and a professional tax advisor can help you find that out, as there may be significant cost savings.
An increasing number of landlords are switching to this way of operating so that they can increase their investment opportunities.
When researching this avenue, comparing standard buy to let and limited company buy to let figures will be one of the first ports of call. This guide will give you an understanding of how they differ.
Company-based vs individual models
First, it’s important to understand: what is the difference between a company-based model and being an individual landlord?
Essentially, a company-based buy to let model is when a landlord purchases rental properties under a company name rather than their own name. From this point, it will be recognised as a business and listed on Companies House.
On the other hand, individual landlords purchase properties under their own name. This does not have the same level of administration as a company structure does, and taxation is different.
Tax efficiencies are a primary motivator for many landlords looking to incorporate, but there are other advantages, too.
A large number of lenders offer rates that cater to limited company landlords. If you want to compare rates, check out the mortgage broker commercialtrust.co.uk – there, you can use their advanced mortgage calculator to get the latest products from a range of lenders representative of the marketplace.
That being said, here are some key buy to let figures and calculations you’ll need to get your head around.
Gross rental yield
Annual rent/Property value (or purchase price) x 100
This is the big one. Essentially, gross rental yield is the figure that tells you the property’s income potential. This is before any other kinds of costs (such as renovations) are considered.
