Why 75% of New Buy-to-Let Purchases Are Now Through Limited Companies

Something fundamental has changed in the way UK landlords hold property. What was once a structural choice reserved for larger portfolio investors has become the default approach for the majority of new buy-to-let buyers. Industry estimates now suggest that upwards of 75% of new buy-to-let purchases are being completed through limited companies — a figure that would have seemed extraordinary just a decade ago and that carries significant implications for every active investor in the private rented sector.

The Numbers Behind the Shift

The scale of this transition is striking. In 2025, 66,587 new buy-to-let limited companies were established in the UK — an 8% increase on the previous year and a 363% rise over the past decade. There are now more than 443,272 active buy-to-let companies operating across the country, and that number continues to grow. In the first half of 2025 alone, 33,598 new limited companies were incorporated by landlords, with 50% of new shareholders being Millennials born between 1981 and 1996.

Research by Paragon Bank, which surveyed 500 landlords, found that 63% intend to purchase all future buy-to-let properties through a limited company structure. Among landlords aged 25 to 34, that figure rises to 100%. Even in the 35 to 44 age group, 82% plan to use corporate ownership going forward. The shift is generational, structural, and shows no sign of reversing.

What Is Driving Incorporation

The single biggest catalyst remains Section 24 of the Finance Act 2015, which phased out mortgage interest tax relief for individual landlords and replaced it with a basic rate tax credit worth just 20%. For higher-rate and additional-rate taxpayers — those paying 40% or 45% income tax — this change fundamentally altered the economics of personal property ownership. A limited company, by contrast, can deduct 100% of mortgage interest as a legitimate business expense before calculating corporation tax, which stands at 19% on profits below £50,000 and 25% above £250,000.

The tax differential is set to widen further. From April 2027, personal name landlords will face an entirely separate property income tax schedule: a basic rate of 22%, a higher rate of 42%, and an additional rate of 47%. These rates will apply specifically to property rental income, taxed more heavily than employment earnings. Limited company landlords will not be subject to this surcharge — they remain within the existing corporation tax framework. For any landlord weighing up their structure ahead of that deadline, the arithmetic is increasingly difficult to ignore.

A further incentive emerged from the Autumn Budget. Rachel Reeves announced a 2% increase in income tax rates on property and dividend income from April 2026. Crucially, this surcharge does not apply to limited company landlords, who pay corporation tax rather than income tax on rental profits. This is one more advantage that the corporate structure offers over personal name ownership in the current tax environment.

What This Means for Investors Considering Incorporation

The tax case for limited companies is compelling, but incorporation is not a frictionless decision. Transferring an existing personally-held portfolio into a limited company will typically trigger both Capital Gains Tax and Stamp Duty Land Tax on the transfer value, which can produce a significant upfront cost that offsets years of future tax savings. Every incorporation decision needs to be stress-tested against a landlord's specific portfolio size, mortgage position, and time horizon before any restructuring takes place.

One important regulatory change arriving in April 2026 is also relevant. Incorporation Relief under Section 162 of the Taxation of Chargeable Gains Act 1992 — which previously allowed qualifying landlords to roll over capital gains on a transfer into a limited company — will no longer apply automatically. The practical impact of this change will depend on the individual's circumstances, but it underscores the importance of acting with professional advice rather than assuming existing tax reliefs will remain available.

For investors who are buying new properties rather than transferring existing ones, the calculus is simpler. A clean acquisition through a limited company avoids the transfer costs entirely and puts future income into the most tax-efficient structure from day one. This is why the proportion of new purchases going through companies has risen so sharply — it is the path of least resistance for investors who are starting or expanding their portfolios in the current environment.

Looking Ahead: The Market is Reshaping Itself

The sustained growth in limited company buy-to-let is not simply a tax optimisation trend — it represents a professionalisation of the private rented sector. As individual accidental landlords exit the market, they are being replaced by structured investors who approach property as a business and choose their legal entity accordingly. Making Tax Digital, which from April 2026 requires landlords with gross income above £50,000 to report quarterly to HMRC, will push that professionalisation further still.

For investors at Quiddity Group, the message is clear. If you are acquiring property in 2026, the default starting point should be a careful evaluation of limited company ownership — not an afterthought. The direction of tax policy, the structure of new market entrants, and the compounding advantage of the corporate wrapper over a multi-decade hold period all point in the same direction. The majority of sophisticated investors have already made their choice. The question is whether you have made yours.