Thousands of buy to let landlords have set up property companies to sidestep the mortgage interest tax relief measures starting in April, according to commentators.
But is this fake news?
The starting point is talking to Companies House, the agency responsible for managing incorporations in the UK.
Asked how many buy to let landlords were setting up companies to hold property, the response was Companies House does not keep this statistic.
Next stop was the Office of National Statistics, the government agency tasked with providing independent data for official and business use.
The same question was asked – could the ONS confirm speculation that more landlords were setting up property companies now than a year ago?
Again, the answer was no comment because the statistic is not monitored.
A different tack was to look at business sectors by SIC code, the classification system favoured by Companies House and the ONS to group similar businesses for statistical purposes.
The problem with SIC codes is the codes do not differentiate between letting agents and landlord property businesses – and Companies House cannot search data by SIC code.
Although the ONS can search by SIC code, business data includes incorporated and non-incorporated businesses, so sheds no light on property companies.
These inquiries tell us that no one can say with certainty whether buy to let landlords are rushing to set up companies to try and avoid mortgage interest relief.
Commentators use phrases like ‘inquiries from landlords about incorporation are up 66%’. That’s a useless statistic if the base comparison figure is not included.
After all, two thirds of three is 66% and only two extra inquiries, while two thirds of 100 inquiries is clearly more significant.
Other surveys say ‘10% more landlords are considering incorporating’, another meaningless statistic if considering is not clearly defined.
The lesson? Do not make important decisions swayed by conjecture or poor data masquerading as facts.
