The buy-to-let sector in the UK is witnessing unprecedented growth, with new buy-to-let companies being established at a record pace. In 2024 alone, 61,517 new limited companies have been set up, marking a significant 23% increase from the previous year. This surge in buy-to-let firms has positioned them as the largest single type of business in the country. Currently, there are 401,744 companies registered to hold buy-to-let properties across the UK.
Most of these new buy-to-let purchases are expected to be channeled through limited companies. This trend is supported by data indicating that there are now 680,000 buy-to-let properties held in a limited company structure throughout England and Wales. This figure has risen annually by between 70,000 and 100,000 properties. Since February 2016, when full mortgage interest tax relief began to be withdrawn from homes owned by higher-rate taxpayers, the number of such properties has increased more than fourfold from the initial count of 92,975.
Despite the growth in the number of buy-to-let companies, the rental market is experiencing a slowdown in rent increases. The average monthly rent on new lets across Britain rose by just 1% to £1,355 in the year leading up to February. This is the slowest rate of increase since September 2020 when rents began to recover after a decline at the onset of the COVID-19 pandemic. In contrast, rents for renewals have seen a significant rise of 5.6%, reaching an average of £1,262 per month.
Inner London has not been immune to these changes. Over the past 12 months, rents in inner London have fallen by 5.1%, and they are now 9.4% below their peak last year. This decline suggests a potential opportunity for tenants seeking better rental deals.
“Tenants moving into a new home have seen rental growth grind to a halt, with prices rising at the slowest rate since September 2020,” said Aneisha Beveridge, head of research at Hamptons. “Londoners, in particular, have seen rents go backwards, with inner London rents now falling at about half the pace they did during the pandemic. This means some tenants who moved relatively recently may be able to find themselves a better deal by moving again.”