Hamptons monthly letting index for December shows that Scotland recorded the largest increase, with an 8% year-on-year uplift – due to the bigger difference in tax rates paid by individual landlords and limited companies. A record 58% of limited company buy-to-lets in the North East were held in a company that was set up outside the region, reflecting how landlords from across the UK are targeting higher yielding buy-to-lets, particularly in the north of England.
As a result, there were 345,426 active limited companies designed to hold buy-to-let property in the UK, up 11% from 309,643 at the start of last year; 68% were set up between 2017 and 2023 when tax changes came in. These companies own 615,077 properties across England & Wales, an 82% increase from the end of 2016.
Most of the growth in buy-to-let incorporations over the last year has come from smaller landlords; there was a 21% increase in the number of homes held in companies with a single property compared with a 3% rise in the number held by companies owning 20+ homes.
Aneisha Beveridge, Hamptons head of research, says for as long as landlords continue rolling off cheap fixed-term mortgages onto rates which are twice or triple what they were paying, the number of homes being put into a corporate structure will remain high.
She adds: “The number of buy-to-let incorporations each year is likely to continue running in the region of 40,000-50,000 for the foreseeable future. Longer term, the current tax regime could push half of all rental homes into a limited company, significantly reducing the existence of landlords who own buy-to-lets in their personal name.”