The Hamptons Lettings Index found this was also the third-highest monthly figure on record, following the 5,854 limited companies set up in April this year and the 5,442 in February.
Between January and September, 46,449 limited companies were established, a 23% rise on the same period last year, which was a record at the time. Hamptons said this meant more companies have been created so far this year than the whole of 2021.
It also said by the end of October, it was likely that more companies would have been set up to hold buy-to-let property than in the whole of 2023.
If limited companies continue to be created at the current rate, the firm said there could be between 60,000 and 62,000 new limited companies this year which would be higher than 2023’s total of 50,004.
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More limited companies in high cost areas
Hamptons’ data showed that 59% of the new limited companies had been created in the South of England, where higher interest rates had a bigger impact on affordability and a larger share of households are higher-rate taxpayers. The firm said these landlords would benefit most from incorporating.
However, with just 42% of properties bought by limited companies being located in the South of England, Hamptons suggested landlords were investing in higher yield areas such as the Midlands and North of England.
In total, there are 382,007 companies in Great Britain set up to hold rental property.
Some 74% have been incorporated since the start of 2016, when tax changes were introduced to stop higher-rate taxpayers from fully offsetting mortgage interest from their tax bill.
The majority of new landlord purchases are being done through limited companies too, as Hamptons found this made up 70% of new buy-to-let purchases in England and Wales while the remainder were obtained in personal names.
However, although most new purchases are being made through limited companies, just 15% of all rental homes owned by private landlords are held in this way.
Overall, 666,831 properties are held in limited companies across England and Wales. This is 175% higher than 10 years ago.
Hamptons said the benefits of owning rental properties in limited company structures meant they were previously a trend for larger landlords, but this was now starting to appeal to newer investors. It found that 54% of new purchases this year had been made by companies making their first, second or third purchase.
Aneisha Beveridge, head of research at Hamptons, said: “While landlord purchase numbers are well down on pre-pandemic levels, there’s been no sign of a slowdown in the number of companies being set up to put them in.
“Most new purchases are now made in a company structure. However, there’s also been a significant rise in the number of landlords moving homes they own in their personal name into a company to shelter from an increasingly aggressive tax environment.”
She added: “While the benefit of being able to offset mortgage payments before being taxed has been the primary driver for new incorporations over the last few years, more recently rumours of potential increases to capital gains tax or inheritance tax are further fuelling the rise.
“An increase in personal tax rates will only widen the gap between the tax paid by landlords who own homes in their own name or a company name further.”
Rental growth slows but still hits new high
The pace of rental growth slowed to 4.5% year-on-year in September, compared to 5% in August and 11.7% last year.
However, the average rent for a newly let property reached a high of £1,384 a month.
This September was also the first month since March 2021 where no region recorded a double-digit growth for rental increases. By comparison, the same month last year saw six of the 11 recorded regions report annual rental growth of more than 10%, but by August this year, the North East was the only region with double-digit growth of 12.1%.
This slowed to 8.1% in September.
The lowest annual growth was recorded in outer London at 1% to an average of £2,264 a month.
