Among the moves being considered by landlords to avoid upcoming tax changes is an increasing attraction to commercial buy to let, say researchers.
The National Landlords’ Association (NLA) says that the changes to the reduction in mortgage tax relief for landlords will not affect them if they take out commercial loans.
They will also be unaffected if they run their buy to let through a limited company.
Now, the organisation says that the proportion of landlords who are planning to take out a commercial loan has risen to 19% from the 10% recorded in July 2015.
Indeed, over the past 12 months, they say that the number of landlords who have formed a limited company to run their portfolio has rocketed by 500% to 20,000.
‘More than 100,000 landlords have formed limited companies’
The NLA's chief executive, Richard Lambert, said over the last 12 months, more than 100,000 landlords have formed limited companies to beat the tax changes.
“This overlaps with the increasing intention of looking to commercial loans to help fund their future purchases.”
The findings are underlined by another study from specialist bridging finance lender Roma Finance which says that growing numbers of buy to let landlords are looking to diversify their portfolio with semi-commercial property.
They say landlords looking to protect their property investments from the increasing high rates of tax by increasingly opting for shops with a flat above it.
Roma says mixed property is exempt currently from tax increases that are coming into force from April and landlords are looking to offset stamp duty tax rises through portfolio diversification.
Roma's managing director, Scott Marshall, said: “We are seeing landlords diversifying their portfolio and some are investing in semi-commercial units and are keen to take advantage of tax efficient property types.”
Rent accounts for half of tenants’ pay
Meanwhile, research has revealed that tenants in the UK are spending around half of their take-home pay on their rent.
The findings from campaign group Generation Rent also revealed that tenants tend to take fewer holidays than home owners and are less able to save money.
Their findings reveal that 31% of tenants have less the £100 saved, compared with 15% of homeowners, while 16% of tenants say their income is insufficient, compared with 37% of mortgage borrowers.
A spokesman for financial services firm Momentum, which helped with the survey, said: “At the start of every month, the average private tenant loses about half of their pay cheque and for people living in London, this can be higher.
“This means they may have to cut back on expenses such as socialising and holidays and it limits their ability to save."
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