Company or Personal Ownership? How Prime Central London Landlords Are Rethinking the Question

Should a rental property be held personally, or through a limited company? Thousands of owners have answered that question by incorporating, and the result has been one of the more striking shifts in how British rental property is owned. Now, for the first time in many years, the pace of that change appears to be easing.

Between January and August 2026, Companies House recorded 41,483 new buy-to-let company incorporations, a drop of around 8% on the same months of 2025. August alone saw a fall of more than a fifth. If the trend continues to the end of the year, 2026 will be the first year since 2008 in which fewer new buy-to-let companies are formed than the year before.

How the incorporation boom began

The rush towards company ownership has its roots in a series of tax changes from 2016 onwards. The most significant was the gradual restriction of mortgage interest relief for individual landlords, which meant that higher-rate taxpayers could no longer deduct their full finance costs from rental income. For many, owning through a company, which can still treat interest as a business expense and pays corporation tax rather than income tax, became the more attractive option.

Since then, the pressure on personally held property has increased further. Frozen personal allowances and tax thresholds have pulled more landlords into higher tax bands, and personal tax rates on property income are rising by two percentage points. For investors who are able to leave profits within a company rather than drawing them as income, the arithmetic has continued to favour incorporation.

Why the pace is now slowing

The slowdown does not mean companies have fallen out of favour. New buy-to-let companies are still appearing at roughly eight times the rate of ten years ago, and the total number continues to climb, reaching more than 469,000 by the end of August. What has changed is the source of that growth.

In recent years, a large share of new companies were created by existing landlords moving properties they already owned out of their personal names. That process is expensive. A transfer into a company is usually treated as a sale, so stamp duty and capital gains tax can both fall due, and the property may need to be refinanced on commercial terms. Most of the landlords for whom that trade-off made sense appear to have already made the move. Those who remain are often basic-rate taxpayers, owners close to retirement or investors planning to sell within a few years, for whom the upfront costs are hard to justify.

As a result, new company formations are increasingly tied to fresh purchases rather than transfers, and are likely to follow wider confidence in the rental market rather than tax planning alone.

The Prime Central London perspective

In Prime Central London, the question of structure has always been more nuanced than in the wider market, largely because of property values. Companies buying residential property worth more than £500,000 can face a higher flat rate of stamp duty and an annual charge under the Annual Tax on Enveloped Dwellings, unless they qualify for the reliefs available to genuine letting businesses. Those reliefs are widely used, but they need to be claimed correctly and every year, and the consequences of getting it wrong can be costly.

The transfer costs for an existing owner are also proportionately larger in central London. Moving a £2 million flat in Kensington into a company can trigger a stamp duty bill many times higher than the national average, alongside capital gains tax on any increase in value since purchase. For many long-standing owners, that alone makes a transfer difficult to justify, however favourable the ongoing tax treatment might be.

Ownership is also bound up with wider considerations that matter a great deal to central London landlords: inheritance planning, family succession, the residence status of the owner and how the property is financed. For some, particularly those building a portfolio for the long term, a company remains the right vehicle. For others, holding a single prime property personally continues to make more sense.

Structure is only part of the picture

The slowing pace of incorporation is a reminder that tax structure, while important, is not what ultimately determines whether a rental investment succeeds. Rents in many parts of the country are rising again, and demand for well-located homes in central London remains firm. The landlords achieving the best results are, for the most part, those who own the right property, maintain it well and let it at a sensible rent, whatever name appears on the title deeds.

For anyone considering a purchase, or reviewing how an existing property is held, the right answer depends heavily on individual circumstances. Taking specialist tax and legal advice before making changes is essential, as is understanding how any decision might affect financing, management and an eventual sale.

A market settling into a new normal

The surge in buy-to-let companies reflected a period when landlords were adjusting to a very different tax landscape. That adjustment now appears largely complete. What follows is likely to be a steadier pattern, with company ownership the natural choice for many new investors, and personal ownership remaining entirely sensible for others. For Prime Central London landlords, the priority remains the same as ever: a well-chosen property, carefully managed, that continues to appeal to tenants for years to come.

This article provides general information and is not tax advice. Landlords should take advice from a qualified tax adviser on their own circumstances.