Why More Landlords Are Moving to Limited Companies for Buy-to-Let Investments

The Rise of Limited Company Buy-to-Let Ownership

Over the past five years, the number of buy-to-let properties held within limited companies has more than doubled. According to data from Foundation Home Loans, 74% of all newly acquired rental properties are now held in a limited company structure, up from just 36% in 2020.

This shift reflects a growing preference among landlords for incorporation, as they seek more tax-efficient ways to manage their portfolios. On average, landlords using a limited company structure hold 10.6 properties, compared to 6.3 properties just five years ago.

Why Are Landlords Incorporating Their Portfolios?

Landlords operating with limited companies tend to have significantly larger portfolios, with an average of 14.4 properties, compared to just 5.2 properties for those who own them personally. The key reasons driving this change include:

• Tax Efficiency – Limited companies can deduct mortgage interest as an expense, unlike private landlords.
• Better Financial Planning – Retaining rental profits within a company structure allows for controlled reinvestment.
• Easier Portfolio Expansion – Many lenders offer better mortgage terms to corporate landlords.
• Asset Protection – A limited company structure can provide liability protection and estate planning benefits.

What Types of Properties Are Investors Buying?

The growing professionalisation of the sector is also reflected in the types of properties being acquired:

• HMO (Houses in Multiple Occupation) – One in five landlords now owns an HMO, with larger landlords (11+ properties) making up 29% of this segment.
• Holiday Let Properties – Currently, 6% of landlords own at least one holiday let, with an average of 1.6 per investor.
• Multi-Unit Blocks – 10% of landlords now hold a block of flats, highlighting diversification strategies.

Is Incorporation the Right Move for You?

With nearly all new buy-to-let purchases now being made within limited companies, it’s clear that landlords are adjusting their strategies in response to tax changes and market conditions. If you’re considering property investment, exploring the benefits of structuring your portfolio within a limited company could be a smart move.

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