Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.
Buy-to-let company formations may have peaked after tax-driven boom
New research from Hamptons suggests the rapid growth in buy-to-let company formations may have peaked, with incorporations falling as fewer existing landlords transfer properties into limited company structures. Even so, around eight times as many buy-to-let companies are being set up today than a decade ago.
Incorporations on the decline
Analysis by the Connells Group brand found that 41,483 buy-to-let companies were set up in the first eight months of 2026, an 8% decline from the 44,802 established over the same period in 2025. August saw a particularly sharp contraction, with incorporations falling 22% year-on-year from 5,363 to 4,198. That drop pushed buy-to-let companies down to the fifth most common business type set up during the month, from second place in 2025. New mail order and online sales companies took the top spot with nearly twice as many registrations.
If the current trajectory continues for the remainder of 2026, it will mark the first full-year decline in new buy-to-let company formations since 2008.
However, the total number of companies continues to rise. By the end of August 2026, 469,165 buy-to-let businesses were operating across Britain, up from 443,272 at the end of 2025, with new incorporations outstripping closures.
Tax pressures behind the trend
Hamptons said tax changes have driven growth in company formations, particularly because companies can still fully expense mortgage interest. In 2025, approximately 81,800 properties were placed into buy-to-let limited companies across England and Wales, either through purchase or transfer. Around 43,400 of these, or 53%, were personal-to-company transfers by existing owners rather than new purchases.
But the analysis indicates the market has now passed the peak of existing portfolio transfers. Hamptons warns that most landlords who benefit from incorporating have already made the transition, while lower-rate taxpayers and those planning short-to-medium-term exits often find upfront transfer costs unviable, as both Stamp Duty and capital gains tax are often due. Average Stamp Duty bills on these transactions are approximately £28,000, based on an average price of £380,000, generating around £1.2 billion annually for the Treasury. That figure could dip if incorporations slow.
Rental growth continues to accelerate
The research also shows annual rental growth for tenants moving into a new property accelerated in August for the tenth consecutive month. Rents across Britain rose 2.4% over the past 12 months to £1,419 a month, the fastest growth since November 2024, led by regions outside London. Growth was highest in the South West at 5.4%, followed by the South East at 3.75%. August also marked the first time the cost of renting a new home in the North of England passed £1,000 a month, rising 2.8% from £986 to £1,014. Meanwhile, the average rent paid by all tenants rose 2.0% to £1,260 a month, £159 less than what a tenant moving home pays.
Aneisha Beveridge, Head of Research at Hamptons, said a large part of the incorporation boom was driven by the one-off structural shift of existing landlords transferring properties into limited companies in response to tax changes, and that the market is now reaching the tail end of that trend.
Source: The Negotiator