Pros & Cons of Managing Rental Property Portfolio with Buy-To-Let Company

Are you a UK-based landlord with a sizable rental property portfolio? Are you worried about how to manage the same effectively? Like countless other landlords, you can choose to manage your portfolio through a buy-to-let limited company.

So, you need to first set up a buy-to-let limited company by registering it with Companies House either online or with the help of an experienced accountant. Now, provide some vital details such as registered address, company name, name of the director or shareholder, and pay the registration fee. Once done, transfer the ownership of your rental properties to your buy-to-let company.

Such a move may involve various legal and potential tax implications. Also, you need to pay not only a legal fee, but also SDLT, valuation fee, and mortgage fee (If applicable). So, now that you have an idea of how to initiate the entire process, read the blog to explore the pros and cons of managing a rental property portfolio with buy-to-let company.

Pros:

Tax Efficiency

This is perhaps the most significant benefit that encourages most landlords to use a buy-to-let limited company. You will be glad to know that from now onwards, you will have to pay only the corporation tax on your profits generated from your rental income. Income tax will be no longer applicable. Also, some expenses, like mortgage interest payments are tax-deductible for limited companies. So, you will be able to reduce your overall tax liabilities.

Asset Protection

Every landlord experiences unpleasant situations, such as tenant disputes or rental property damage. Well, these are the risks generally associated with rental properties. However, managing your rental property portfolio with a buy-to-let limited company makes a demarcation line between your personal assets and rental properties. In short, you get asset protection, which implies peace of mind.

Professional Management

Are you tired of handling tenant screening or timely maintenance of your rental properties? Don’t worry! You can leave these mundane tasks to professional property managers. These managers will not only ensure legal compliance but will also streamline all operations related to your rental property management.

Meanwhile, you can also try a UK based online rental property management platform that can make the process a hassle-free affair by taking care of accounting, tenant screening, rent collection, property maintenance and communication.

Simplified Accounting

Your accounting process becomes straightforward. Now onwards, there will be a financial record for each of your rental properties to track your rental income, maintenance expenses, taxes, and much more! You will be able to save valuable time and effort that can be used to focus on expanding the existing property portfolio.

Cons

Administrative Overhead

As managing your rental property portfolio using a buy-to-let company also includes some essential administrative tasks, your overall operational cost may increase. Some of these tasks are company registration, compliance filings, and regular record-keeping, which should be best, left in the hands of professionals.

Legal and Regulatory Requirements

Paying no heed to these requirements may force you to face penalties. A limited company must strictly adhere to some legal and regulatory requirements. As it is challenging to remain updated about the evolving regulations and compliance requirements, the best course of action is to hire professionals leading to additional expense.

Potential Restructuring Costs

When you transfer your rental properties into your buy-to-let limited company, there are plenty of restructuring costs, such as valuation expenses, legal expenses, and so on. So, evaluate whether or not you are willing to bear these costs for the sake of benefits.

Think carefully about the benefits, drawbacks, and long-term financial goals to make a sound decision. Make sure that your investment strategy perfectly aligns with your long-term financial goals.