The proportion of landlords intending to take out commercial loans to fund their property purchases has doubled over the last 18 months as they look for ways to avoid the impact of forthcoming changes to landlord taxation.

The research from the National Landlords Association (NLA) shows that the proportion of landlords who said they planned to use commercial loans has risen from 10% in July 2015 – when the changes to taxation were first announced – to 19% at the end of last year.

The changes to taxation will take place from April this year and, once fully phased in by 2021, will prevent landlords with buy-to-let mortgages from deducting their interest payments or any other finance-related costs from their turnover before declaring their taxable income. 

The rise in the proportion of landlords looking to take out commercial loans coincides with a 500% increase in the proportion of landlords who have formed a limited company over the last year. This has risen from just 1% in January 2016 – approximately 20,000 landlords – to 6% by the end of 2016 – approximately 120,000 landlords.

Landlords who own their properties as a limited company will avoid the changes to taxation and instead pay Corporation Tax – currently 20% – on their profits alone.