Landlords also now face a 3 percentage point stamp duty surcharge on purchases and have been stripped of other tax breaks which had allowed them to claim allowances for wear and tear in their properties.
Company structures allow landlords to pay corporation tax, rather than income tax, which is levied at a rate of 19pc, compared with 20pc, 40pc or 45pc. Businesses can also deduct mortgage interest from their profits as a legitimate cost. Landlords can also pay themselves a mix of salary and dividends. Dividends are taxed at 7.5pc, 32.5pc and 38.1pc depending on your income tax band, although they are increasing by 1.25 percentage points from April.
The downside of company structures is that landlords must pay stamp duty and capital gains tax on existing properties they transfer in, as this move is classed as a sale for tax purposes. Corporate mortgages are also typically more expensive than those for individuals.
“Most of these new companies are likely to be set up by landlords buying new property during the stamp duty holiday last year, which triggered a mini housing boom,” Mr Shah said.
Half of buy-to-let mortgages issued last year were taken out by companies, as opposed to individuals, and companies now hold close to a third of Britain’s buy-to-lets, Hamptons said. Most new companies were set up in London, followed by the South East and the West Midlands.
The estate agency chain said rents were growing at an annual rate of 7.2pc in December – twice the rate recorded the same time the year before, as tenant incomes have recovered from the worst of the crisis and landlords have raised prices.