The number of new buy-to-let company formations in Britain declined by 8% in the first eight months of 2026 compared to the same period in 2025, according to research by Hamptons, a Connells Group brand.
The analysis shows that 41,483 buy-to-let companies were established between January and August 2026, down from 44,802 during the equivalent period in 2025. If the trend continues, 2026 will mark the first full-year decline in new buy-to-let company formations since 2008.
August 2026 recorded a particularly sharp contraction, with incorporation numbers falling 22% year-on-year from 5,363 to 4,198. This drop pushed buy-to-let companies to the fifth most common business type registered during the month, down from second place in 2025. New mail order and online sales companies took the top spot, recording nearly twice as many new registrations.
Despite the slowdown in formation rates, the total number of operating buy-to-let 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 changes driving structural shift
The surge in buy-to-let company formations over recent years has been driven by tax changes, particularly the ability for companies to fully expense mortgage interest, which individual landlords can no longer do. However, the research suggests the market has passed the peak of existing portfolio transfers.
In 2025, approximately 81,800 properties were placed into buy-to-let limited companies across England and Wales, either through purchase or transfer. Of these, around 43,400 properties, or 53%, were personal-to-company transfers by existing owners rather than new purchases.
The analysis indicates that most landlords who benefit from incorporating have already made the transition. Lower-rate taxpayers or those planning short-to-medium-term exits often find the upfront transfer costs unviable, as both Stamp Duty and capital gains tax are typically due on such transactions.
Hamptons calculates that the average Stamp Duty bill on these transactions is approximately £28,000, based on an average property price of £380,000. This has generated around £1.2 billion annually for the Treasury, a figure that could decline if incorporations slow down. The trend reflects broader shifts in the lettings market as landlords adapt to regulatory and fiscal pressures.
Rental growth accelerates
Separate data from Hamptons shows that annual rental growth for tenants moving into new properties continued to accelerate in August 2026 for the tenth consecutive month. Across Britain, rents increased by 2.4% in the past 12 months to reach £1,419 per month, the fastest growth rate since November 2024.
Rental growth has been strongest in regions outside London, with the South West recording the highest annual increase at 5.4%, followed by the South East at 3.7%. August 2026 marked the first time that the cost of renting a new home in the North of England exceeded £1,000 per month, rising by 2.8% from £986 to £1,014.
The average rent paid by all tenants, including those not moving home, rose by 2.0% to £1,260 per month, which is £159 less than what tenants moving home are paying. These rental pressures come amid rising mortgage costs that continue to impact landlord investment decisions.
Aneisha Beveridge, Head of Research at Hamptons, said: “A large part of the buy-to-let incorporation boom was driven by the one-off structural shift whereby existing landlords transferred properties they already owned into limited company structures in response to tax changes. But we’re now reaching the tail end of that trend.”
She added: “While limited companies remain the preferred structure for most new investors entering the market, it’s likely that new company formations peaked in 2025. Moving forward, growth is likely to increasingly depend more on landlords making new purchases than restructuring portfolios.”
Beveridge also noted that the arrival of the Renters’ Rights Act appears to be adding further pressure on rental prices. “Higher compliance costs and extra administration have left prospective tenants facing increased prices to secure new tenancies, even while existing renters are seeing more modest increases,” she said.
Market outlook
The decline in buy-to-let company formations represents a significant shift in the private rental sector, which has seen incorporation numbers increase eightfold over the past decade. The slowdown suggests that the tax-driven restructuring phase is nearing completion, with future growth dependent on new property acquisitions rather than portfolio transfers.
The Treasury’s Stamp Duty revenue from these transfers is also expected to decline as the rate of incorporations slows. This development occurs against a backdrop of broader market uncertainty affecting property investment decisions across the UK housing sector.
