What's driving the shift?
The proportion of rental properties owned by landlords through limited companies has more than doubled over the past five years, with nearly all new purchases now made within such structures, according to new research.
The Q4 2024 Landlord Trends report, conducted by Pegasus Insight for specialist buy-to-let lender Foundation Home Loans, found that 74% of properties were held within a limited company by the end of 2024, up from 36% in early 2020. Over the same period, the average number of properties owned within a limited company rose from 6.3 to 10.6.
Landlords with at least some properties in a limited company tend to manage larger portfolios, averaging 14.4 properties, compared to 5.2 for those holding all properties in their individual name. The report also revealed that 22% of landlords now own at least one property through a limited company, while 9% hold their entire portfolio this way.
The research, based on 789 online interviews, highlights a trend towards professionalisation in the sector, Foundation Home Loans said. The lender noted that landlords are increasingly incorporating their portfolios and investing in specialised property types, such as houses in multiple occupation (HMOs) and holiday lets.
One in five landlords now owns at least one HMO, with an average of 3.1 properties, while 29% of larger landlords — those with 11 or more properties — hold at least one HMO. Meanwhile, 6% of landlords have invested in holiday lets, with an average ownership of 1.6 properties. Among larger landlords, the share rises to 12%.
Foundation Home Loans also reported that landlords are becoming more open to purchasing specialist property types, including multi-unit blocks and mixed-use properties. While terraced houses (62%) and individual flats (52%) remain the most common property types, 10% of landlords now own a block of flats.
“The shift towards landlords holding their properties within a limited company structure is clear to see from the latest results of our Landlord Trends report,” said Grant Hendry (pictured), director of sales at Foundation Home Loans. “Indeed, almost all new purchases by landlords are within a limited company, which perhaps tells you all you need to know about the impact of the cut to mortgage interest tax relief on individuals and the need for landlords to incorporate in order not to be hit by this.
“At the same time, landlords of all sizes are recognising the ongoing need for diversification, particularly across property type, which can often deliver a more sizeable rental yield than ‘traditional’ properties.
“One of the ongoing trends we have seen for some time is that of landlords seeking out these different property types, often housing multiple tenants in either HMO or multi-unit freehold block structures, because there is strong tenant demand and due to the allure of higher yields.”
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