According to a research by Hamptons, the number of landlords incorporating their buy-to-let businesses into limited companies (as opposed to personal ownership) is rising.
In September 2024 alone, 5,312 new companies were formed to hold buy-to-let properties, marking a 28% increase from the same period in 2023.
By the end of 2024, between 60,000 and 62,000 new companies are expected to have been established, a notable rise from the 50,004 formed in 2023. This increase brings the total number of buy-to-let companies to a record 350,980, the highest ever.
Hamptons’ findings show that more than half of buy-to-let purchases in 2024 have been made through limited companies, compared to just 20% a decade ago. This trend reflects landlords’ growing preference for company structures in response to changes brought by Section 24 of the Finance Act 2015, which restricts individual landlords from fully deducting mortgage interest from their rental income. Limited companies, however, still benefit from full mortgage interest relief, making incorporation a commercially sound choice.
Research shows that buy-to-let incorporations are particularly common in southern England, where higher interest rates and a greater number of higher-rate taxpayers make incorporation more attractive. In 2024, 59% of all new buy-to-let companies were formed in the South, with the remaining 41% in the North and Midlands.
This regional pattern highlights how landlords, especially those facing greater tax burdens, are increasingly opting to structure their businesses through limited companies to operate more efficiently.
Region | Percentage of Buy-to-Let Companies |
South of England | 59% |
North and Midlands | 41% |
Since 2017, changes to tax laws have limited landlords’ ability to fully deduct mortgage interest from rental income, replacing it with a 20% tax credit by 2020. This has encouraged many landlords, especially higher-rate taxpayers, to form property companies to benefit from the lower corporation tax rate. Consequently, 68% of current buy-to-let companies were established between 2017 and 2023.
Year | New Buy-to-Let Companies Formed | Percentage Increase |
2021 | 45,000 | N/A |
2022 | 50,004 | 11.1% |
2023 | 46,449 (Jan-Sep) | 23% |
2024 (projected) | 60,000–62,000 | 28% |
Initially, Labour had said they would “crack down” on non-doms – the term used to describe a UK resident whose permanent home (or domicile) for tax purposes is outside the UK. In its manifesto, the party had vowed to tighten the rules on where tax is paid, in order to bring in more money for the Treasury.
While this is still largely subject to change for the Budget, Labour is now said to be reconsidering these changes due to the fact that it could in fact bring in less revenue than expected. There is also the concern that wealthy non-doms could leave the UK, removing the benefits they bring to the economy.
Commenting on this, a Treasury spokesperson said: “These reports are speculation, not government policy. The independent Office for Budget Responsibility (OBR) will certify the costings of all measures announced at the Budget in the usual way.”
Further to this, a government official told the Financial Times: “We are looking at the details of our proposals. We will be pragmatic, not ideological. We won’t press on regardless, but we are not going to abandon this completely.”
The UK property market continues to be a destination of opportunity for overseas investors, due to the country’s strong economy, and resilient housing market.
The growing trend of landlords incorporating buy-to-let businesses, as seen in Hamptons’ data, is driven by changes in tax law and a desire for more efficient property management. This trend does not constitute tax avoidance but represents a legal and commercially sound response to evolving legislation.
Incorporation remains a legitimate business strategy, fully compliant with UK tax law, and distinct from tax avoidance schemes. By structuring their portfolios through limited companies, landlords are navigating tax complexities effectively and within the bounds of the law.
Investing in the UK property market requires thorough research to make sure you’re investing in the right areas, trust in the developers, and patience until completion. With the help of our expert team in Value Invest, we can guide your way to wealth accumulation.
Make sure to tune in to our next UK Property Market webinar to learn more about how the market will perform Autumn 2024.
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