A record 400,000 companies have been set up to hold landlord properties in the UK, while the average cost of a new rental rose by 1%, the slowest rate in more than four years.
This data comes from Hamptons’ latest monthly lettings index, which found that 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.
The pace of growth of buy-to-let (BTL) incorporations has remained high since 2016, when full mortgage interest tax relief began to be withdrawn from homes owned by higher-rate taxpayers.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 BTL property rose by 332%, from 92,975 to 401,744.
The rise in the total number of BTL 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).
In total, there are now around 680,000 properties held in a limited company structure across England and Wales, with the number rising by an average of 70,000 to 100,000 per year.
However, these are not all new rental properties, some are being moved from personal names into a limited company owned by the same landlord.
Meanwhile, 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 Covid 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 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.
The average monthly cost of moving into a new home stood at £2,647pcm, 3.5% less than the cost faced by tenants renewing a contract with an existing landlord.
Hamptons head of research Aneisha Beveridge 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.”
“But 2024 may prove to be a high watermark for the number of new companies set up to hold BTL 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 BTL purchases overall, likely suppressing the number of companies being set up.”
“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. This means some tenants who moved relatively recently may be able to find themselves a better deal by moving again.”
