Buy-to-let landlords set up a record number of companies last year as investors increasingly turned to corporate structures to soften the impact of higher taxes and rising mortgage costs.
A total of 66,587 companies were established as vehicles for letting property in 2025, up 8 per cent on the previous year, taking the total number of buy-to-let companies to 443,272, almost five times the level recorded in 2016.
Figures from Companies House show the trend continuing into 2026, with 5,922 incorporations in January alone, an 11 per cent increase compared with the same month last year. The analysis was compiled by estate agency Hamptons.
Analysts say the shift highlights how landlords have adapted to a series of tax changes introduced since 2016.
Incorporated landlords can deduct mortgage interest from rental income before calculating taxable profits, reducing their overall tax bill. Individual landlords, by contrast, lost full mortgage interest relief in 2017 and are now restricted to a basic-rate tax credit, which will rise slightly to 22 per cent from April 2027.
Rental profits held within companies are also taxed at corporation tax rates of between 19 and 25 per cent, compared with income tax rates of 40 or 45 per cent for higher earners, set to increase to 42 and 47 per cent respectively from April 2027.
Aneisha Beveridge, head of research at Hamptons, said the appeal of incorporation had intensified in recent years. “While the tougher tax treatment introduced in 2016 sparked the initial move into company structures, five years of frozen personal tax allowances combined with higher mortgage rates have fuelled the recent surge,” she said.
“As more landlords are drawn into the 40 per cent income tax bracket, paying corporation tax at 19 or 25 per cent has become increasingly attractive.”
Hamptons estimates that between 75 and 80 per cent of new buy-to-let purchases were made through companies last year. Rental firms were the second most common type of business created in 2025, behind mail-order retailers and ahead of management consultancies.
Despite the shift in structure, overall landlord activity has declined. Landlords accounted for 10.8 per cent of all property purchases last year, down from 15.8 per cent in 2015.
At the same time, rental market conditions are cooling. New let rents fell by 0.2 per cent year-on-year to an average of £1,366, marking the second consecutive monthly decline. The slowdown has been driven largely by the south of England, with new rents down 1.7 per cent in inner London, 0.9 per cent in outer London and 1.6 per cent in the southeast.
By contrast, rents rose in the northwest (3 per cent), West Midlands (2.4 per cent), northeast (1.7 per cent) and Yorkshire and the Humber (1.4 per cent). Renewal rents continued to increase nationwide, climbing by an average of 2.8 per cent.
The moderation in new rents reflects a combination of rising first-time buyer numbers and a growing cohort of young adults remaining in the parental home for longer. The forthcoming Renters’ Rights Act, due to take effect in May, will also ban bidding wars between tenants — a move expected to temper rent inflation further.
For landlords, the message is clear: while returns remain under pressure, the corporate route is increasingly seen as the most tax-efficient way to stay in the market.
