A shift in investment strategies has seen a huge increase in landlords opening a limited company for their rental properties, with two North West cities leading the way.
A decade ago, running your buy-to-let through a limited company wasn’t common, with the cost of doing so sometimes seen as prohibitive compared to the benefits for many landlords; particularly those with fewer than five properties.
However, in recent years many buy-to-let landlords have become more strategic about how they operate, particularly in light of tax changes that were rolled in from 2016 that meant individuals could no longer claim mortgage interest tax relief on their rental incomes.
For a growing number, weighing up the pros and cons of a limited company has led to many biting the bullet and ‘professionalising’ their business – setting up a limited company, employing the relevant accountants, and running their business in quite a different way to before, even when only owning one or two investment properties.
According to recent figures from Hamptons, the number of limited companies for buy-to-lets has hit a record high, after a surge of around 332% over the past nine years takes the total of limited company landlords to 401,744.
The most popular property investment hotspots, due to having higher proportions of rental homes, have seen the greatest level of professionalisation, and new research by Arbuthnot Latham looks more closely at where the trend is having the biggest impact and why.
Top locations for limited company landlords
While London has long since been the go-to property investment hotspot, driven largely by wealthy overseas investors, a shifting property market has placed the focus elsewhere in recent years. The more affordable yet equally dynamic property markets in the North of England have gained a lot of traction, with huge investment and regeneration efforts meaning they can compete with the capital city.
Arbuthnot Latham’s research revealed that this trend continued when it came to limited company landlords. While London saw a 30% increase in limited company property businesses launched in 2024 compared with 2023, Manchester and Liverpool were close behind, with each registering a rise of 26% year-on-year.
Birmingham also saw a significant increase in limited company set-ups of 24%, marking out a third city where investors are serious about their long-term property investment strategies.
Justin Snoxell, director of real estate finance at Arbuthnot Latham, said: “Manchester continues to be a prime destination for owner-occupiers and investors looking for strong yields and long-term growth potential. Many landlords are setting up limited companies to target these regional hubs, where property values are more accessible and rental demand remains high.”
He added: “It’s not just about acquiring property; investors are increasingly structuring their holdings through corporate entities to optimise management, more efficient wealth planning, and long-term succession planning,” with investors increasingly adapting to evolving market conditions by taking a more nationwide view of opportunities.
New investment strategies
According to the study, there are a number of reasons that are leading to this exponential growth in limited companies for buy-to-lets, many of which are linked to investors adopting new strategies to keep up with the changing market.
Alongside previously mentioned tax changes, regulatory adjustments play a role, including recent ones linked to non-dom rules for overseas investors.
Justin Snoxell notes: “In the past, many overseas investors held UK property through offshore entities, meaning these holdings weren’t recorded on UK company registries. With government reforms requiring these companies to register in the UK, we’re seeing a notable increase in new property-related business registrations.”
There is also a growing focus on wealth preservation in the current economic climate, making structuring assets even more crucial for investors and affecting property investment decisions.
Limited company landlords may have more options available to them in terms of long-term planning, notes Gary Jasper, senior wealth planner: “Gifting shares in a property company over time, establishing trusts, and implementing strategic wealth management, for example, can help safeguard a property legacy.”
By setting up a company structure at the outset in order to invest in property, many investors are able to start their planning earlier, as well as avail of the certain tax benefits that can come with operating as a limited company as opposed to an individual.
Gary Jasper adds: “As awareness of wealth protection strategies grows, more landlords may be setting up property businesses sooner rather than later to maximise the benefits. This shift in mindset may be a key factor behind the recent rise in property business registrations.”
