The number of BTL limited companies set up in 2023 hit a new record of 50,004, surpassing the previous record established in 2022, revealed the latest Hamptons data.
The rising number of incorporations means that at the start of 2024 there were 345,426 active limited companies designed to hold BTL property in the UK, up 11.6% from 309,643 at the beginning of 2023.
BTL companies now own a total of 615,077 properties in the UK, an 82% increase since the end of 2016 — of these, 75% have a mortgage charge against them.
While in the first half of 2023, the number of incorporations ran at around 2% below the same period in 2022, this figure rose in the second half of the year to run at 9% above 2022 levels.
Scotland recorded the largest pick-up, with an 8.4% year-on-year uplift in the number of new companies set up — an increase larger than any other region of the UK.
The only two regions to record a small fall in the number of BTL limited companies registered were the South West and North East, although in both regions the number of homes owned in a corporate structure continued to rise.
Most of the growth in BTL incorporations over the last year has come from smaller landlords — over the last 12 months, there was a 21.9% increase in the number of homes held in companies with a single property, compared to the 3.8% rise in the number held by companies owning 20+ properties.
2023 was also a record-breaking year for rental growth, with the average rent on a newly let property going up by 10.2% year-on-year in December — the strongest end-of-year growth in Hampton’s records, which began in 2014.
This increase meant that tenants who moved into new homes forked out an average of £124 per month more in rent, equating to an extra £1,488 a year.
Rental growth on newly let properties in December 2023 (Source: Hamptons)
Hamptons predicts the trend of rising rents will continue in the short to medium term, due to higher landlord costs and lack of supply.
Aneisha Beveridge, Hampton’s head of research, also predicts the number of BTL incorporations will continue running in the region of 40,000-50,000 for the foreseeable future.
“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 BTL homes suggests a long-term commitment from landlords, particularly given the upfront costs associated with incorporating,” she added.
“The growth has been driven mostly by existing landlords moving properties into a corporate structure to shelter themselves from higher interest rates.”
“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."
