- Now more companies set up to hold buy-to-lets than any other type of business
The number of companies holding buy-to-let property in the UK has passed 400,000, according to analysis of Companies House data by Hamptons.
It comes after a record breaking 61,517 new buy-to-let limited companies were set up in 2024, a 23 per cent increase on what had previously been a record set in 2023.
Holding property in a limited company, also known as ‘incorporating’, is an alternative to holding property in one’s personal name, and the tax structure is different.
Hamptons found that since February 2016, the number of buy-to-let companies has risen by 332 per cent, going from 92,975 to 401,744.
It means that Companies House now has more companies registered to hold buy-to-let property than for any other type of business.
Hamptons also revealed there are now 680,000 buy-to-let properties held in a limited company structure across England and Wales, with the number rising by 70,000-100,000 annually.
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 number of companies holding buy-to-let property in the UK rose from 92,975 to 401,744 between February 2016 and February 2025
The rise of limited company buy-to-let has been driven by the different ways buy-to-lets in companies and buy-to-lets in personal names are taxed.
Owning within a limited company comes with various tax advantages, including the fact that corporation tax – payable in a company structure – is lower than income tax, which is payable for landlords who own properties in their own name.
This allows landlords to build up profit within the company, which they can use it to re-invest towards another property sooner than they might otherwise have done if owning in their own name.
Owning in a limited company also allows property investors to fully offset all of their mortgage interest against their rental income, before paying tax.
This differs from landlords who own property in their own name. They only receive tax relief based on 20 per cent of their mortgage interest payments.
This is less generous for higher rate taxpayers, who previously received a 40 per cent tax relief on mortgage costs before a 2016 rule change.
A higher-rate taxpayer landlord with mortgage interest payments of £500 a month on a property rented out for £1,000 a month now pays tax on the full £1,000, with a 20 per cent rate on the £500 that is being used towards the mortgage.
A landlord who owns in a limited company with mortgage interest payments of £500 a month on a property rented out for £1,000 a month would only pay tax on £500 of that income.
Put simply, it means that whilst individual landlords are effectively taxed on turnover, company landlords are taxed purely on profit.
As a result of these tax benefits, Hamptons estimates that 70-75 per cent of new buy-to-let purchases now go into a company structure, a figure which has steadily grown.
Had the mortgage interest relief tax changes not come into effect in 2016 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.
It says that without the tax tinkering, most buy-to-let properties would have remained in personal ownership, where investors declare taxes in their annual self-assessment.
Aneisha Beveridge, 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.
Aneisha Beveridge, head of research at the estate agent Hamptons
Will the limited company buy-to-let market continue to grow?
The pace of increase may slow as the impact of raising the stamp duty surcharge from 3 per cent to 5 per cent bites.
Falling mortgage rates may also mean more investors keep homes in their own names.
Aneisha Beveridge adds: ‘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.
‘It will also weigh down on the number of new buy-to-let purchases overall, likely suppressing the number of companies being set up.’
Drawbacks of limited companies for landlords
Ultimately, whether there is an advantage to be had or not depends on the landlord’s individual circumstances.
For example, lower-rate taxpayers, particularly if they don’t have a big mortgage on their buy-to-let, may be better off holding their buy-to-let in their personal name.
Finally there is an added layer of bureaucracy that comes with a company structure. Company accounts must be formally prepared and filed, records maintained, and directors appointed.
This creates more work for landlords choosing the limited company route, and an added cost if they use an accountant.
There is also likely to be added cost for those buying with a mortgage. This is because company mortgages tend to come with higher rates and fees on average.