The property market saw a decline in the number of homes purchased by landlords in 2023, but this did not stop the growth of buy to let companies with a record 50,004 new limited companies being formed, research reveals.
According to Hamptons, the number of firms being formed to hold buy to let properties in the UK last year saw a 3% increase from the previous record of 48,540 in 2022.
The trend was driven by tax changes that made it more attractive for landlords to incorporate their properties, as well as higher mortgage rates that affected individual investors.
The number of BTL companies rose by 9% in the second half of 2023, compared to the same period in 2022, after a slight dip in the first half following the mini-Budget.
‘No let-up in landlords rushing to incorporate’
Hampton’s head of research, Aneisha Beveridge, said: “Despite last year’s slowing sales market, there was no let-up in landlords rushing to incorporate.
“Rather, the record number of companies set up to hold buy to let homes suggests a long-term commitment from landlords – particularly given the upfront costs associated with incorporating.
“The growth has been driven mostly by existing landlords moving properties into a corporate structure to shelter themselves from higher interest rates.”
She added: “Meanwhile the number of new landlords setting up shop has remained relatively muted.
“For as long as landlords continue rolling off cheap fixed-term mortgages onto rates which are twice or triple what they were paying, the number of homes being put into a corporate structure will remain high.
“The number of buy to let incorporations each year is likely to continue running in the region of 40,000-50,000 for the foreseeable future.
“Longer term, the current tax regime could push half of all rental homes into a limited