More companies are registered to hold buy-to-let property than for any other type of business as investors seek to reduce their tax burden, new data reveals.

Hamptons reports that in the nine years since full mortgage interest tax relief began to be withdrawn in February 2016, the number of companies holding buy-to-let property has jumped by 332% to 401,744.

The increase was driven by a record 61,517 new limited companies being set up in 2024, a 23% increase on the previous year’s total.

Limited company structure        

There are now 680,000 properties held in a limited company structure across England and Wales, with the number rising by an average of 70,000-100,000 every year.

However, these are not all new rental properties. Some are being moved from personal names into a limited company owned by the same landlord.

Hamptons predicts that the pace may slow as the impact of raising the stamp duty surcharge to 5% bites and falling mortgage rates mean more investors keep homes in their own names.

However, it estimates that 70-75% of new buy-to-let purchases now go into a company structure.

Aneisha Beveridge, of Hamptons, (pictured), said current tax rules mean that most, although not all, new investors find themselves better off in a company structure, although 2024 might prove to be a high watermark for the number of new companies set up to hold buy-to-let property.

“Higher stamp duty rates will be a big barrier for investors looking to move an existing rental home from a personal name into a company structure,” she added.

“It will also weigh down on the number of new buy-to-let purchases overall, likely suppressing the number of companies being set up.”

Hamptons also reports that the average rent on a new let rose by just 1% across Britain during the last year, the slowest rate since September 2020.