Landlords in UK set to become corporate funds rather than individuals (Updated)

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This is according to Sky. Article here.

What does this mean for renters? One thing is that you are about to lose your power in negotiations. A private landlord with only one property really needs the monthly rent. They can’t afford to have the flat vacant for a month, let alone two or three months. That gives you some power as a tenant (particularly if you are trouble free and pay on time). Corporations are different, they could not care less. In fact, when corporates own real estate they often leave them vacant, sometimes for years.

Corporate landlords are looking for a certain percentage increase each year and if they don’t get it, they can afford to leave it vacant until they do. The reasoning is that it is better to have it vacant than let out at a low rent which they are then stuck with. When a corporate owns 10,000 flats, they don’t care if a few are vacant, it is not going to move the needle. For you, it is a matter of being booted out which is deadly serious so when they say jump, you say ‘how high?’

When it comes to negotiating, you don’t want to be negotiating with an intern running a spreadsheet who in any event, won’t be there 6 months. Which is a bit of a coincidence because if you don’t play your cards right, neither will you.

UPDATE:

It seems private landlords are a bit more savy than the government planned for. The changes that the government put through which penalised private landlords can simply be circumvented if the private landlord operates through a limited company. As a company, you should still be able to deduct interest payments from your taxable income (the ability to do this is much reduced for the private landlord) and you can deduct wear and tear.

Therefore, if you are a private landlord and don’t like the current tax set up, have a chat with your solicitor and accountant and consider setting up a limited company.

See an FT article on this here

 

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