Landlords professionalise with increasing use of limited companies

The UK’s private rented sector is undergoing a major transformation with landlords increasingly adopting professional strategies and using limited companies, researchers say.

According to Foundation Home Loans, there has been a big rise in limited company ownership, diversification into specialist properties and robust profitability despite regulatory challenges.

Its Q1 2025 Landlord Trends study reveals that 60% of landlords planning to purchase property in the next year intend to use a limited company structure.

Over the past five years, the share of properties held in limited company ownership has nearly doubled, rising from 36% in Q1 2020 to 66% in Q1 2025.

Landlords using limited companies also manage larger portfolios, averaging 14.6 properties compared to 5.2 for those holding assets personally.

Going limited isn’t niche

FHL’s director of sales, Grant Hendry, said: “Incorporation is no longer a niche strategy, it’s a mainstream structural approach, especially for landlords who are expanding or refinancing.

“The fact 60% of those planning to buy this year intend to do so through a limited company reflects how embedded this behaviour has become.”

He added: “Specialist property investment is also a major theme, and it is interesting to see that larger portfolio landlords are targeting areas such as holiday lets, more than doubling their holdings of these properties.

“Whether it’s holiday lets, HMOs or multi-unit blocks, landlords are clearly broadening their portfolios in ways that demands deeper product expertise and flexible criteria.”

HMO and holiday let ownership

Diversification is another key trend, the report reveals, with one in five landlords now owning a House in Multiple Occupation (HMO), and one in four among portfolio landlords.

Additionally, 6% of landlords own holiday lets, a figure that doubles among those with larger holdings.

On average, landlords own 3.6 HMOs and 1.6 holiday lets, with larger investors particularly active in these markets.

Despite rising costs and regulatory shifts, the sector remains financially resilient, FHL says.

The average rental yield stands at 6.3%, close to a decade-high, and 84% of landlords report profits, with 17% achieving significant gains.

Even among portfolio landlords with multiple mortgages, 80% remain profitable.

Landlords planning to remortgage

Also, remortgage activity is set to thrive in 2025, with 38% of landlords with buy to let loans planning to refinance or switch products.

Portfolio landlords anticipate refinancing three mortgages on average, with 75% preferring fixed-rate deals, split between two-year (32%) and five-year (35%) terms.

The lender says this reflects a cautious approach amid interest rate uncertainty.

Regulatory changes, particularly the potential abolition of Section 21 and stricter Energy Performance Certification (EPC) standards, are causing concern.

Landlords are worried about compliance costs, unclear timelines and insufficient support for the rental market’s supply side.

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