BTL incorporations see sharp drop for first time since 2008 as rental supply contracts

The BTL incorporation ‘boom’ is showing signs of ending after 18 years, with Hamptons forecasting a drop in new companies being formed for the first time since 2008.

In the first eight months of 2026, 41,483 BTL companies were formed; this is 8% lower than the 44,802 set up during the same period in 2025.

The drop was particularly noticeable in August, which saw a 22% year-on-year decline in new incorporations.

According to Hamptons lead analyst David Fell, this slowdown comes from a “fundamental change” in landlord behaviour.

This, he explained, comes from already established landlords transferring homes into a limited company structure to mitigate taxes.

While there are still roughly eight times as many BTL companies established today than there were a decade ago, for the first time more than half (51%) of properties entering limited company structures are new property purchases.

“That restructuring phase is now approaching the beginning of the end,” David added.

“The vast majority of landlords who stood to benefit financially from incorporating their existing holdings have already done so.

“For those who haven't, high upfront transfer costs — namely stamp duty land tax and capital gains tax — mean shifting properties into a company structure is unlikely to be viable.”

At the same time, data shows that rental supply is contracting in the UK.

The latest Zoopla Rental Market Report shows the number of homes available to rent is 3% lower than a year ago, after three years of supply improvements

The flow of new homes coming onto the rental market is 6% lower than a year ago, with an average 5.3 enquiries per rental home marking the highest level for almost two years.

In turn, this has impacted rents. The average UK rent has increased by 2.6% in the last year to £1,343 and Zoopla expects this to grow by 4–5% by the end of 2026.