The number of companies established to hold buy-to-let portfolios is forecast to rise by 7.6% in 2026, according to research from Propoly, as landlords continue to adapt to shifting tax and regulatory pressures.

The analysis suggests that a total of 401,744 such companies were in operation in 2025, marking a 13.7% annual increase and the addition of 48,252 new entities compared with 2024.

This growth forms part of a sustained trend, with incorporations rising every year since 2015. Annual increases have reached as high as 35.9% over the past decade, reflecting a structural shift in how landlords choose to hold property assets.

Propoly forecasts that a further 30,354 companies will be created in 2026, taking the total to 432,098.

TAX AND STRUCTURAL DRIVERS

The move towards company ownership has been largely driven by tax changes introduced over the past decade, particularly the phased restriction of mortgage interest relief for landlords holding property in their personal names.

Under Section 24 of the Finance (No. 2) Act 2015, landlords can no longer fully deduct mortgage interest from rental income, instead receiving a basic rate tax credit. This has increased effective tax liabilities for higher and additional rate taxpayers.

In contrast, properties held within a limited company allow mortgage interest to be treated as a business expense, meaning it remains fully deductible. With corporation tax typically charged at 19% or 25%, compared with income tax rates of up to 45%, many landlords are finding incorporation more efficient, particularly when profits are retained within the business.

PORTFOLIO MANAGEMENT AND GROWTH

Beyond tax considerations, company structures are also seen as offering operational advantages. Incorporation can make it easier to reinvest profits, separate personal and business finances, and manage larger portfolios.

This structure can also support borrowing, with lenders often favouring more formal arrangements when assessing complex or expanding portfolios.

RISK AND LONG-TERM PLANNING

Company ownership may also offer benefits in terms of risk management and succession planning. While limited liability can provide some protection for personal assets, this is often mitigated in practice by lender requirements for personal guarantees.

However, holding assets within a company can allow for greater flexibility when transferring ownership, as shares can be passed on rather than individual properties, potentially simplifying estate planning for larger portfolios.

COSTS AND COMPLEXITY REMAIN

Despite the advantages, incorporation is not without drawbacks. Mortgage rates for company buy-to-let borrowing are often higher than those for individuals, while transferring existing properties into a company structure can trigger stamp duty and capital gains tax liabilities.

There can also be additional complexity in extracting profits, particularly where dividend taxation applies.

REGULATION ADDS MOMENTUM

Sim Sekhon, group ceo at Propoly, said: “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.

“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 and place greater obligations on landlords, from tenancy management through to compliance and dispute resolution.

“For many, this will mean tighter margins and a greater administrative burden, which is prompting a reassessment of 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.

“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.

“That said, incorporation still isn’t the right move for everyone. 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.”