Share of properties held in limited companies doubles in five years

The proportion of rental properties owned within limited companies has more than doubled over the past five years, with nearly all new purchases by landlords now structured in this way, according to Foundation Home Loans’ latest Landlord Trends report.

In Q1 2020, 36% of rental properties were held within a limited company. By Q4 2024, this had risen to 74%, reflecting a significant shift in how landlords structure their property holdings.

Over the same period, the average number of properties held in a limited company has grown from 6.3 to 10.6.

GROWING TREND TOWARDS INCORPORATION

The report, based on 789 interviews conducted by Pegasus Insight, highlights a growing trend towards professionalisation in the buy-to-let sector.

Landlords with at least some properties in a limited company typically have larger portfolios, averaging 14.4 properties, compared to an average of 5.2 properties for those who hold all their properties in their personal name.

Overall, 22% of landlords now own at least one property within a limited company, while 9% hold their entire portfolio in this way.

SHIFTING INVESTMENT PATTERNS

Foundation Home Loans said the increasing move towards limited company structures is also influencing the types of properties being purchased and let.

One in five landlords now has at least one HMO (House in Multiple Occupation) in their portfolio, with the average number held at 3.1.
Among larger landlords – those with 11 or more properties – 29% own at least one HMO.
6% of landlords now own at least one holiday let, with the average portfolio containing 1.6 holiday lets. Among larger landlords, this figure rises to 12%.

While terraced houses (62%) and individual flats (52%) remain the most common types of buy-to-let properties, 10% of landlords now own an entire block of flats, reflecting a shift towards higher-yield investments.

CHANGING LANDSCAPE FOR LANDLORDS

Grant Hendry, director of sales at Foundation Home Loans, said the findings highlight how landlords have adapted to tax and regulatory changes in recent years.

“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. Almost all new purchases by landlords are now within a limited company, which tells you everything about the impact of the cut to mortgage interest tax relief on individuals and the need for landlords to incorporate to manage tax efficiency.”

He also pointed to an increasing preference for higher-yield property types.

“Landlords of all sizes are recognising the need for diversification, particularly across property type, which can often deliver a more sizeable rental yield than traditional properties.

“Hence why we now have one in five landlords owning a HMO, rising to 29% for larger landlords. Meanwhile, more landlords are turning to holiday lets, holding 1.6 on average.

“One of the ongoing trends we have seen is landlords seeking out these property types — HMO and multi-unit freehold blocks in particular—because there is strong tenant demand and the potential for higher yields.”