Buy to let companies hit record 401,000 as rents stall

Britain’s property investment landscape has undergone a dramatic transformation with the number of limited companies established to manage buy to let homes soaring beyond 400,000.

Hamptons has analysed official figures from Companies House to reveal that, as of February, there are 401,744 active firms – making this the most popular business type registered in the UK.

BTL companies now outstrip fast food outlets and hairdressing salons by nearly fourfold.

This seismic shift goes back to February 2016, when the government began phasing out full mortgage interest tax relief for higher-rate taxpayers.

Since then, BTL company numbers have rocketed by 332%, leaping from 92,975 to its current peak.

Limited company is the structure of choice

Aneisha Beveridge, the head of research at Hamptons, said: “The limited company is now the structure of choice for the next generation of investors.

“Current tax rules mean that most, although not all, new investors find themselves better off in a company structure than owning an investment property in their own name.

“This means the number of limited companies is likely to continue its upward trajectory for the foreseeable future.”

She added: “But 2024 may prove to be a high watermark for the number of new companies set up to hold buy to let property.

“Higher stamp duty rates will be a big barrier for investors looking to move an existing rental home from a personal name into a company structure.”

Landlord tax-efficient structures

Hamptons says the surge in BTL company numbers peaked in 2024, with a record-breaking 61,517 new incorporations — a 23% jump from the previous high set in 2023.

London, where slim profit margins amplify the need for tax-efficient structures, hosts 30% of these ventures.

Across England and Wales, around 680,000 rental properties now sit within a corporate framework, with annual increases ranging between 70,000 and 100,000.

Landlords transferring to companies

However, this growth doesn’t solely reflect fresh acquisitions with many landlords are transferring existing holdings from personal ownership to limited companies to lighten their tax load.

In 2024, 30-40% of properties shifted into this structure were managed by firms formed within the prior year, while the rest joined established portfolios, 90% of which already owned at least one rental home.

Looking ahead, Hamptons says that 70-75% of new buy to let acquisitions are expected to funnel into limited companies, a trend bolstered by tax advantages.

Though it adds that with rental growth lagging behind inflation and policy shifts looming, the pace of this corporate takeover may soon slow down.

Rent rises have slowed

Despite this corporate boom, rent rises have slowed dramatically with annual rents to February rising by 1%.

That’s the smallest increase since September 2020, Hamptons says.

However, London bucks the trend entirely, with rents on fresh lets dropping 2.8%, and inner London seeing a steeper 5.1% decline, pulling prices back to May 2023 levels.

This dip has cut inner London’s average new tenancy cost to £2,647 per month, undercutting renewal rates by 3.5%.

Ms Beveridge explains: “Tenants moving into a new home have seen rental growth grind to a halt, with prices rising at the slowest rate since September 2020.

“Londoners, in particular, have seen rents go backwards, with inner London rents now falling at about half the pace they did during the pandemic.”

She adds: “This means some tenants who moved relatively recently may be able to find themselves a better deal by moving again.”

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