The number of companies set up to hold buy-to-let property in the UK has passed 400,000.

Published — Mar 2025

Buy-to-let landlords are increasingly shifting to limited company structures to hold their property portfolios. According to data from Companies House, the number of companies set up to hold buy-to-let property in the UK has surged by 332% over the past nine years, reaching a milestone of 401,744 in February 2025.

Companies House now has more registered buy-to-let companies than any other type of business. There are nearly four times as many buy-to-let companies operating than either fast food takeaways or hairdressers.

This shift can be largely attributed to changes in tax legislation introduced in 2016, which began phasing out full mortgage interest tax relief for higher-rate taxpayers. These changes have reshaped how landlords approach their investments and manage their tax liabilities, with investors increasingly shifting their portfolios into a limited company structure.

The limited company is now the structure of choice for the next generation of investors too. We estimate that 70-75% of new buy-to-let purchases now go into a company structure, a figure that has been steadily growing.

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. Under the current system, companies can still deduct mortgage interest as a business expense before calculating their tax liability. This contrasts sharply with the situation for individual landlords, who since 2020 have been restricted to a 20% tax credit on mortgage interest payments.

For example, a higher-rate taxpaying landlord receiving £1,000 per month in rent while paying £500 per month in mortgage interest would have paid £2,400 in tax on their £6,000 profit back in 2015. By 2020, under the new rules, the same landlord would pay £3,600 in tax - a 50% increase.

For Full Article visit: https://www.hamptons.co.uk/articles/february-2025-lettings-index#/