The number of companies set up to hold buy-to-let property across the UK passed the 400,000 mark in February 2025 for the first time, according to the latest - February 2025 - Hamptons Monthly Lettings Index.
By the end of February, a total of 401,744 companies were up and running as investors continued to move their portfolios from their personal names in a bid to reduce their tax burden. This means that Companies House now has more companies registered to hold buy-to-let property than for any other type of business. There are nearly four times as many buy-to-let companies operating than either fast food takeaways (3.7x) or hairdressers (3.8x).
The pace of growth of buy-to-let incorporations has remained high since 2016, when full mortgage interest tax relief began to be withdrawn from homes owned by higher-rate taxpayers. In the nine years between February 2016 and February 2025, the number of companies holding buy-to-let property rose by 332%, from 92,975 to 401,744.
Had the tax changes not come into effect and the growth in limited company numbers remained on its pre-2016 trajectory, around 223,000 fewer companies would likely have been incorporated over the last nine years, according to Hamptons, which added that most buy-to-let properties would have remained in personal ownership, where investors declare taxes in their annual self-assessment.
The rise in the total number of buy-to-let companies operating has been driven by a record 61,517 new limited companies being set up in 2024, a 23% increase on what had previously been a record in 2023 (50,004). The number of new incorporations has risen each year for the last decade. London, where lower yields mean the ability to offset mortgage interest is particularly important, is home to 30% of all buy-to-let companies.
In total, there are now around 680,000 properties held in a limited company structure across England & Wales, with the number rising by an average of 70,000-100,000 per year. However, these are not all new rental properties; rather, some are being moved from personal names into a limited company owned by the same landlord.
The pace of increase may slow as the impact of raising the stamp duty surcharge from 3% to 5% bites and falling mortgage rates mean more investors keep homes in their own names. However, most new buy-to-let purchases will still go into a limited company, according to Hamptons. The firm says: ‘We estimate that 70-75% of new buy-to-let purchases now go into a company structure, a figure which has steadily grown. Between 30-40% of buy-to-let homes placed into a limited company during 2024 were held by companies set up within the last 12 months. Meanwhile, the remainder went into older companies, with around 90% of these already holding at least one rental property. This suggests that most purchases are being made by more established limited company landlords and/or investors are moving homes from personal to company names.’
Rental growth
The pace of rental growth has fallen back to just a third of the wider inflation rate. Over the 12 months to February 2025, the average cost of a newly agreed let in Great Britain rose by just 1.0%, the slowest rate since September 2020 when rents started returning to growth after falling at the start of the pandemic.
The pace of rental growth nationally has been dragged down by London, where newly agreed rents were down 2.8% on the same time last year. These falls put the cost of moving into a new rental property in the capital back to May 2023 levels. Newly agreed Inner London rents fell by 5.1% over the last 12 months, meaning they stand 9.4% below their peak last year.
The falling cost of rents on new lets across Inner London means that increasingly, tenants can find themselves better off moving home than renewing a contract for their existing home. Here, the average monthly cost of moving into a new home stood at £2,647pm, 3.5% less than the cost faced by tenants renewing a contract with an existing landlord.
Nationally, while the cost of renewing a contract continued to rise faster than the cost of moving into a new property, tenants staying put still paid less. The average rent on contract renewal rose 5.6% over the last 12 months, meaning the average renewal rent is £93pm below the cost of moving into a new property.
Aneisha Beveridge, head of research at Hamptons, says: “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.”
