"As the sector becomes more regulated, many landlords are recognising the need to operate in a more formal, business-like way, and a limited company structure naturally supports that shift"
- Sim Sekhon - Propoly
The number of companies set up to hold buy-to-let property in the UK is forecast to grow by 7.6% in 2026, according to new research from property technology firm Propoly, as landlords seek tax advantages, liability protection, and better portfolio management ahead of the Renters' Rights Act.
Propoly analysed incorporation data and estimated that 401,744 buy-to-let companies were operational in 2025, representing a 13.7% annual increase and the addition of 48,252 new companies compared to 2024.
The firm forecasts a further 30,354 incorporations in 2026, pushing the total to 432,098.
A decade of unbroken growth
The trend is not new. Buy-to-let company formations have risen every year since 2015, with annual growth rates reaching as high as 35.9%. The acceleration began in 2016, when the phasing out of full mortgage interest relief for higher-rate taxpayers who hold property in their personal names prompted a significant structural shift across the sector.
Since then, limited company ownership has become an increasingly default route for landlords building or expanding portfolios.
Tax efficiency driving incorporation
The primary driver remains tax. Section 24 of the Finance (No. 2) Act 2015 restricted individual landlords from fully deducting mortgage interest against rental income, replacing it with a basic rate tax credit.
For higher and additional rate taxpayers, this means paying tax on turnover rather than profit, a position that has made personal ownership significantly less efficient.
By contrast, properties held within a limited company allow mortgage interest to be treated as a standard business expense and fully deducted. Limited companies also pay corporation tax on profits at rates of 19% or 25%, compared with income tax rates of up to 40% or 45% for individuals. For landlords retaining profits within the company rather than drawing them out immediately, the difference can be substantial.
Beyond tax, company structures offer other practical advantages:
- Profits can be reinvested into further acquisitions more efficiently
- Business and personal finances are more clearly separated
- Lenders often prefer the structure when assessing larger portfolios
- Shares in the company can be transferred as part of estate planning, rather than individual properties, simplifying succession
Renters' Rights Act adding fresh impetus
"While tax efficiency has been a major driver behind the rise in incorporation, the upcoming Renters' Rights Act is now playing an increasingly important role in how landlords are choosing to structure and manage their portfolios," said Sim Sekhon, group chief executive at Propoly. "As the sector becomes more regulated, many landlords are recognising the need to operate in a more formal, business-like way, and a limited company structure naturally supports that shift."
The Renters' Rights Act is expected to introduce stronger tenant protections alongside greater obligations covering tenancy management, compliance, and dispute resolution. Sekhon says the resulting pressure on margins is prompting many to reassess how their portfolios are run.
"Operating through a company can provide a clearer framework for managing these responsibilities, while also allowing landlords to take a longer-term, more strategic view of their investments," he added. "It enables better organisation of finances, easier reinvestment, and a structure that is more aligned with running a professional rental business rather than holding property as a sideline."
Downsides still require careful consideration
Incorporation is not straightforward for everyone. Buy-to-let mortgages held in a company name typically carry higher interest rates than personal loans. Transferring existing properties into a company also triggers stamp duty and capital gains tax liabilities. Once inside the structure, taking profits out as dividends introduces further tax complexity.
"Incorporation still isn't the right move for everyone," Sekhon noted. "There are additional costs, tax considerations, and lending challenges that need to be carefully evaluated. But as legislative change continues to reshape the private rental sector, we expect more landlords to consider whether a company structure offers the resilience and flexibility they need to adapt."
