Buy-to-Let Firms Become UK’s Largest Business Type

Buy-to-let firms are now the biggest single type of business in the UK. Research from the estate agent Hamptons reveals more companies holding buy-to-let properties are registered at Companies House than any other type of business. This shows a big change, with more landlords setting up limited companies to cut down on their tax bills.

Fourfold Growth in Buy-to-Let Firms

The number of buy-to-let companies has exploded over the past decade. Over 400,000 firms were registered in February 2025, a dramatic rise from just under 93,000 in 2016. This surge is attributed to changes in tax regulations, which have pushed landlords to switch from personal ownership to limited companies.

Under the old system, landlords filing returns as individuals could claim full mortgage interest tax relief. However, the government began phasing out this tax break in 2016, prompting many landlords—especially higher-rate taxpayers—to reassess their portfolios and adopt more tax-efficient methods.

Numbers Speak Volumes

Total companies in February 2025 holding buy-to-let properties: 401,744
Companies registered in February 2016 holding buy-to-let properties: 92,975
Annual registrations in 2024 alone reached 61,517, a 23% increase on the previous year.

Hamptons attributes much of this growth to landlords transferring properties from personal ownership into limited companies. Despite this trend, higher mortgage rates have led some smaller landlords to sell their properties, resulting in the first contraction in the sector for nearly three decades.

Why Are Landlords Moving to Limited Companies?

For landlords, using a limited company structure presents several tax advantages:

Reduced Tax Burden: Limited companies are taxed on profits at the corporate tax rate, which can often be lower than personal income tax rates for higher earners.
Full Mortgage Relief: Unlike private landlords, limited companies can still claim mortgage interest as a tax-deductible business expense.
Easier Portfolio Growth: By operating as a business, landlords find it easier to expand their property portfolios and secure loans.

These benefits have made limited companies increasingly attractive, with up to three-quarters of new buy-to-let purchases now being registered under company structures.

Rent Growth Slows, Offering Relief for Tenants

While landlords are adjusting to tax and mortgage pressures, there’s a glimmer of good news for tenants. Rent increases have significantly slowed, offering some respite to renters who’ve faced steep price hikes in recent years.

Hamptons reported that the average monthly rent on new leases in February rose by just 1%, bringing the national average to £1,355. This marks the slowest annual rent increase since September 2020.

Falling Rents in London

Tenants in London saw the most significant relief:

Newly agreed rents in London decreased by 2.8%, returning to May 2023 levels.
Inner London recorded a larger drop of 5.1%, with rents now 9.4% below their peak.

Aneisha Beveridge, Head of Research at Hamptons, highlighted a unique opportunity for tenants in inner London. She noted, “Londoners, in particular, have seen rents go backwards, with inner London rents now falling at about half the pace they did during the pandemic. This means some tenants who moved relatively recently may be able to find themselves a better deal by moving again.”

Challenges Ahead for Buy-to-Let Firms

Buy-to-let companies are set to face new challenges as the government raises the stamp duty surcharge on second homes from 3% to 5%, a move likely to slow the creation of new firms. Falling mortgage rates may also lead some landlords to keep properties under personal ownership.

Hamptons predicts landlords will continue to favour the limited company structure, with companies expected to register around 75% of future buy-to-let purchases.