Key Highlights

The UK’s buy-to-let market is experiencing a significant shift, with a record number of landlords opting to establish limited companies to manage their property portfolios. In 2024 alone, data from Hamptons suggests that new limited company setups for buy-to-let portfolios are on track to surpass the 2023 total of 47,400. This trend represents a nearly 300% increase compared to 2016, when just 12,400 limited companies were created, underscoring the impact of regulatory changes and tax reform on property investment strategies​.

Several factors are driving landlords to choose incorporation over personal ownership. One primary motivation is the change in mortgage interest relief regulations. Since 2020, individual landlords have been restricted to a basic rate relief of 20% on mortgage interest, diminishing the once-substantial tax benefits for higher-rate taxpayers. Limited companies, however, can still deduct full mortgage interest as a business expense, giving incorporated landlords a stronger financial footing.

Another advantage is the lower corporation tax rate, currently set at 25% for companies, which is typically more favourable than the higher personal income tax rates many landlords face. This difference allows landlords to retain more rental income within the company, which can then be reinvested into expanding their portfolios. According to Hamptons, approximately 50% of all buy-to-let mortgages are now issued to limited companies, illustrating the growing preference for corporate ownership in property investment​.

Long-Term Benefits of Limited Company Ownership

Beyond immediate tax benefits, limited companies offer structural advantages for landlords with long-term ambitions. By accumulating rental income and profits within the company, landlords can reinvest without incurring personal tax liabilities, making it easier to grow their portfolios. Additionally, for those with family inheritance plans, a limited company structure facilitates smoother asset transfers, often with reduced tax implications.

Creating a corporate portfolio does involve initial setup costs and ongoing administrative responsibilities, including compliance with corporate law. Dividend tax on company withdrawals can also impact returns, so it’s advisable for landlords to seek guidance from tax advisors or property experts to fully assess their options.

The Growing Appeal of Corporate Ownership in Buy-to-Let

The recent surge in landlords setting up limited companies reflects a big change in the property investment landscape, particularly as property prices continue to rise and rental yields remain robust. As of 2024, the UK has more than 300,000 limited companies set up solely for property investment, a number expected to grow given the market’s favourable conditions for investors. Many view corporate structures as a buffer against the impact of future tax changes, making limited companies an appealing route for those looking to build resilient portfolios.

About Us 

North Property Group is a premium property investment agency and lettings agency focusing on premium UK real estate. We are a team of experts dedicated to finding you the best opportunities and guiding you through the investment lifecycle. We have in-depth knowledge of the property market and policy changes within the industry, so we can help guide and advise as the UK government unveils its new budget.

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