The landlords leaving aren't wrong about property. They're using the wrong structure.
What Has Happened?
Research from Pepper Money, published in April 2026, put a figure on something the mortgage market has been watching build for two years: 220,000 privately rented households are expected to leave the sector by the end of this year. That's about 5% of England's entire private rented stock. Bloomberg ran the story this week under the headline "Britain's Buy-to-Let Landlords Are Abandoning the Market." The exits are real. What gets less attention is what's happening on the buying side.
UK Finance data shows that roughly 80% of new buy-to-let mortgage completions now involve limited company applications. Companies House has over 325,000 buy-to-let SPVs on its register. More than 170,000 of those were set up in the last five years. The amateur individual landlord is leaving. The corporate one is arriving.
The shift has a single dominant cause: Section 24. Since April 2020, individual landlords have been unable to deduct mortgage interest as a business expense before calculating rental profit. They receive a basic-rate 20% tax credit on that interest instead. For a higher-rate taxpayer with meaningful leverage, that change made portfolios that worked perfectly well in 2015 look marginal by 2022. A limited company was never subject to Section 24. It deducts mortgage interest in full. The maths looked different, so investors restructured.
The Renters' Rights Act coming into force on 1 May 2026 accelerated the decision for many smaller landlords already on the fence. The removal of Section 21, the Ground 1A 12-month relet restriction, the Information Sheet compliance obligation: none of it is unmanageable at scale. At one property, the compliance overhead feels disproportionate.
Why This Matters to UK Property Investors
The Pepper Money data profiles who's leaving. Smaller landlords with a single property are twice as likely to exit as those with two or more. The South East accounts for the largest share: over 46,000 projected exits, roughly a fifth of the national total. But Birmingham, Bradford, and most of the North West are seeing the same pattern at lower price points.
For an investor buying in a limited company, that supply matters. These aren't distressed sellers in the dramatic sense. They're landlords who want a clean exit, often without an auction or a chain, and who are pricing for speed. That combination, motivated seller plus clean structure on the buy side, is where value surfaces.
The tax comparison is worth laying out plainly. An individual higher-rate taxpayer with a £150,000 interest-only BTL mortgage at 5.2% pays £7,800 a year in interest. Under Section 24, they can't deduct that from their rental income. They receive a 20% credit on the interest: £1,560 back. Their rental income is taxed at 40% first, then the credit is applied. On £12,000 gross rent, the actual tax bill before the credit is £4,800, leaving them paying £3,240 net tax on income the mortgage consumes most of. A limited company earning the same £12,000 deducts the £7,800 interest first, leaving £4,200 profit taxed at 19-25%. The company pays £798 to £1,050 in corporation tax. The same property, the same mortgage, almost three times the tax efficiency in the right structure.
The lender market caught up with the demand. Paragon, Aldermore, Precise, Foundation and Fleet all have active company BTL products. The range has expanded significantly since 2022, and rates have compressed as competition in the sector grew.
The Risks Investors Need to Understand
Running a limited company has ongoing costs. Annual accounts, a confirmation statement to Companies House, and a corporation tax return typically cost £600 to £1,200 a year in accountancy fees when handled properly. On a single property generating £9,000 net rent, that overhead changes the maths. On a portfolio of five or six properties, it largely disappears into the numbers.
The mortgage rate premium is real. Limited company BTL products tend to run 0.2 to 0.5% above equivalent personal BTL rates. With two-year fixed personal BTL rates currently around 5.18%, you're looking at roughly 5.4 to 5.7% for a comparable company product depending on LTV and lender. That narrows the tax advantage for smaller portfolios. A higher-rate taxpayer with a £180,000 mortgage generally crosses into positive territory on the limited company at rates up to 5.8%. A basic-rate taxpayer often doesn't, because Section 24 bites less hard at 20%. Model your specific numbers before deciding.
Getting money out of the company adds a layer of planning. Profit in the company pays corporation tax at 19-25%. Drawing it as salary means income tax and National Insurance. Dividends above the £500 annual allowance are taxed at 33.75% for higher-rate taxpayers from April 2024. If the plan is to live on the rental income now, the wrapper needs structuring advice. If the plan is to reinvest and grow, the company makes sense on most scenarios.
Transferring existing personal-name properties into a company later triggers SDLT on market value (including the 3% surcharge) and CGT on any gain above base cost. For most investors who bought before 2019, both charges are material. Setting up the company structure before the first purchase avoids both. Retrofitting it after five properties is an expensive lesson.
Where the Opportunity Could Be
The North East is where the numbers work hardest right now. Two-bed terraces in Middlesbrough at £90,000 to £110,000 generating £650 to £750 a month gross put you above 7.5% yield, sometimes approaching 8.5%. Licensing pressure is lighter than in Greater Manchester or London. Supply of stock from older landlords retiring out of portfolios held since the 1990s is steady. In a limited company at 75% LTV, rates below 5.7%, you're looking at positive monthly cash flow before voids and maintenance. Sunderland and Hartlepool have similar profiles.
Birmingham is worth watching in the B21 to B23 corridor and across B12. Section 24 has already pushed a cohort of small-portfolio landlords toward the exit in those wards over the past 18 months. Properties at £110,000 to £145,000 with gross yields above 7%, from landlords who've decided the administration is no longer worth their time, are appearing. Some are listed on the open market. More are moving off-market through sourcers who know the local landlord base.
The student HMO sector has its own version of this. Operators who can't simultaneously manage the EPC C upgrade programme, Ground 4A administration, and mandatory HMO licensing are selling. A licensed four-bed in Birmingham B29 or Leeds LS6 at a discount because the outgoing owner is overwhelmed is worth a serious look. The compliance headache belongs to the seller, not you, when you buy with the licence already in place.
One thing to note on the South East exits: 46,000 projected disposals sound large, but they're concentrated in higher-price stock with thinner yields. A £280,000 flat in Reading at 4.5% gross is a different deal from a £105,000 terrace in Sunderland at 7.8%. Know which version of the opportunity you're buying before you go to offer.
Arsh's Investor View
I moved my purchases into a limited company structure in 2019. At the time, with two properties, the annual accountancy overhead felt disproportionate. By the fourth acquisition it was clearly the right call.
What compounds is not obvious until year three or four. Profits inside a company pay 19-25% tax. In personal ownership, a higher-rate taxpayer pays 40-45% on the same profit. Reinvest the difference into a deposit on the next property and the gap widens faster than most people model when they're still debating whether to set up the company at all.
I'd push back slightly on the idea that Section 24 alone explains the exodus. It cracked the model for leveraged personal ownership, yes. But it's the combination that breaks people: Section 24 ate margin, the Renters' Rights Act added compliance overhead, and then EPC C arrived with a capital expenditure number they hadn't budgeted. Three pressures at once is what tips a casual landlord over the edge. Remove any one of them and plenty of those 220,000 exits probably don't happen.
The 80% company figure isn't a trend to watch. It already happened. The serious investor population made this structural shift over 2021 to 2025. If you're still buying in your personal name as a higher-rate taxpayer, you're not behind a trend. You're behind a completed shift. Set the company up before the next offer goes in.
How Property Investor App Can Help
Property Investor App aggregates live BTL, HMO, BRRR and regeneration deals across the UK. If you're looking for discounted stock from landlord exits in the North East, Birmingham or the North West, filtering by region and yield gives you a working shortlist without running separate searches across Rightmove, Zoopla and OnTheMarket. Sourcers and sellers list direct, which means you often see pricing before it's been tidied up for the open market. For a company buyer targeting the £90,000 to £150,000 range at above 7% yield, that sourcing edge matters.
Key Takeaways
- Pepper Money estimates 220,000 rental homes will leave England's PRS in 2026, roughly 5% of total stock. Single-property landlords are twice as likely to exit as those with two or more.
- Around 80% of new buy-to-let mortgage completions now involve limited company applications. Over 325,000 BTL SPVs are registered at Companies House, with more than 170,000 set up in the last five years.
- The core tax advantage is Section 24. Limited companies deduct 100% of mortgage interest before calculating profit. Individual landlords receive only a 20% basic-rate tax credit on that interest.
- Corporation tax inside a limited company runs at 19-25%. For a higher-rate taxpayer on a £150,000 mortgage, the net tax bill on rental profit can be almost three times higher in personal ownership than in a company.
- Limited company BTL mortgages typically run 0.2 to 0.5% above personal BTL products. Basic-rate taxpayers should model both structures carefully. The break-even calculation shifts at lower income levels.
- Transferring personal-name properties into a company later triggers SDLT and CGT on market value. Set up the company before the first purchase if you plan to build a portfolio.
Frequently Asked Questions
Should I use a limited company for my first buy-to-let?
Depends on your marginal tax rate. If you pay income tax at 20% and have no other income pushing you into the 40% band, personal ownership may be simpler and cheaper overall. The company structure pays off most clearly for higher-rate and additional-rate taxpayers where Section 24 bites hardest. The break-even shifts with mortgage size, rate, and rental income level. Get an accountant to model both scenarios on your specific numbers before deciding, including the annual company administration cost of around £600 to £1,200 a year.
Can I move my personally-held properties into a limited company?
You can, but it costs. Transferring a property from personal name to a company is treated as a sale for both SDLT and CGT purposes. SDLT applies on market value including the 3% additional dwelling surcharge. CGT is triggered on any gain above your original purchase price. For properties bought before 2019, both charges tend to be substantial. A narrow set of reliefs exists around partnership incorporation, but they require specific prior structuring that most individual landlords don't have in place. Talk to a property tax specialist before attempting any transfer.
What is a BTL SPV and why do most investors use one?
SPV stands for Special Purpose Vehicle: a limited company set up purely to hold property, with no other trading activity inside it. Most BTL SPVs use SIC code 68209 (letting and operating own or leased real estate). Mortgage lenders prefer individual properties held in separate SPVs rather than multiple properties pooled in one company, because it simplifies their security position. With over 325,000 BTL SPVs now registered at Companies House, the structure is well understood by lenders, solicitors and accountants. It also keeps each asset's liabilities separate from the others.
What mortgage rates can I expect for a limited company BTL in 2026?
Expect to pay roughly 0.2 to 0.5% above equivalent personal BTL rates. With two-year fixed personal BTL products currently around 5.18%, a limited company equivalent typically sits at 5.4 to 5.7% depending on LTV, loan size and lender. Active lenders in the company BTL space include Paragon, Aldermore, Precise Mortgages, Foundation Home Loans and Fleet. Rates compress at lower LTVs, so a 65% LTV application prices better than a 75% one. A specialist BTL broker who works regularly with company structures is worth using, as product availability changes quickly.
Does the Renters' Rights Act apply differently to company landlords?
No. All Renters' Rights Act obligations apply equally to company and individual landlords. Section 21 is abolished for both. Section 8 and Ground 1A work in the same way. The Information Sheet obligation, EPC requirements and the Decent Homes Standard all run with the tenancy, not the ownership structure. The limited company is a tax and ownership wrapper. It changes nothing about what you owe tenants, what notices you need to serve, or how possession proceedings work.
