Buy-to-let company formations may have peaked since tax changes

The rapid growth in new buy-to-let company formations may have peaked, research suggests.

Analysis by Connells Group brand Hamptons found that the number of new buy-to-let company incorporations is falling as fewer existing landlords transfer properties they already own into limited company structures.

However, despite the slowdown, around eight times as many buy-to-let companies are being set up today than a decade ago,

The analysis shows that 41,483 buy-to-let companies were set up in the first eight months of 2026, marking an 8% decline from the 44,802 established over the same period in 2025.

August saw a particularly sharp contraction, with incorporation numbers falling 22% year-on-year, from 5,363 to 4,198.  This drop pushed buy-to-let companies down to the fifth most common business type set up during the month, down from second place in 2025.

New mail order and online sales companies took the top spot, and saw nearly twice as many new registrations.

If the current trajectory continues for the remainder of 2026, it will mark the first full-year decline in new buy-to-let company formations since 2008.

Despite the slowdown in creation rates, the total number of companies continues to rise. By the end of August 2026, 469,165 buy-to-let businesses were operating across Britain, up from 443,272 at the end of 2025, with new incorporations outstripping closures across those eight months.

Growing tax pressures

Tax changes have driven growth in the formation of buy-to-let companies, Hamptons said, particularly as companies can still fully expense mortgage interest.

In 2025, approximately 81,800 properties were placed into buy-to-let limited companies across England and Wales, either through purchase or transfer.  The majority of these – around 43,400 properties, or 53% – were personal-to-company transfers by existing owners, rather than new buy-to-let purchases.

But the analysis indicates that the market has now passed the peak of existing portfolio transfers.

Most landlords who benefit from incorporating have already made the transition, whereas lower-rate taxpayers or those planning short-to-medium-term exits often find the upfront transfer costs into a limited company unviable, Hamptons warns, as often both Stamp Duty and capital gains tax are due.

Hamptons highlights that average Stamp Duty bills on these transactions is approximately £28,000, based on an average price of £380,000, generating around £1.2billion annually for the Treasury, which could start to dip if incorporations slow down.

Rental growth

The research also shows that the pace of annual rental growth for tenants moving into a new property continued to accelerate in August for the tenth straight month.  Across Britain, rents are up 2.4% in the past 12 months to reach £1,419 a month, the fastest level of growth since November 2024.

Rental growth has been led by regions outside of London, with growth highest in the South Wet were it was up 5.4% annually, followed by 3.75% growth in the South East.

August also marked the first time that the cost of renting a new home in the North of England passed the £1,000 a month mark. Rents rose by 2.8% in the past 12 months, from £986 to £1,014 a month.

Meanwhile, the average rent paid by all tenants, not just those moving home, rose by 2.0% to £1,260 a month. This is £159 a month less than what a tenant moving home pays.

While limited companies remain the preferred structure for most new investors entering the market, it’s likely that new company formations peaked in 2025.”

Aneisha Beveridge (pictured), Head of Research at Hamptons, says: “A large part of the buy-to-let incorporation boom was driven by the one-off structural shift whereby existing landlords transferred properties they already owned into limited company structures in response to tax changes.

“But we’re now reaching the tail end of that trend. Increasingly, the landlords who stand to benefit financially from incorporating existing properties have already done so.

“While limited companies remain the preferred structure for most new investors entering the market, it’s likely that new company formations peaked in 2025. Moving forward, growth is likely to increasingly depend more on landlords making new purchases than restructuring portfolios.

“That also means the Treasury’s Stamp Duty windfall from these transfers is likely to start falling.

“Rental growth for new lets has been steadily gathering pace for nearly a year now, with much of that increase being driven by markets outside London. The arrival of the Renters’ Rights Act seems to be adding further pressure.  Higher compliance costs and extra administration have left prospective tenants facing increased prices to secure new tenancies, even while existing renters are seeing more modest increases.”