Brokers say investors are scrutinising deals more carefully and limited company structures are now the default route for portfolio building
The UK buy-to-let sector is undergoing a significant structural shift, with experienced landlords adopting an increasingly commercial approach to property investment as taxation, regulation, and borrowing costs continue to reshape the market.
This comes as Paragon Banking Group reported a 4.7% decline in new buy-to-let mortgage lending to £774 million in the first half of its financial year, which the FTSE 250-listed lender attributed to a "smaller opening pipeline" of business following the delayed November 2025 Labour budget. Paragon's data also showed 43% of all mortgaged buy-to-let purchases completed in Britain during 2025 were made through limited companies, up from 35% in 2024 and a sub-8% share in 2018.
Sebastian Murphy, group director at JLM Mortgages, said the drop in lending volumes reflects a market that has been squeezed by policy rather than one lacking in underlying demand.
"Professional landlords are still buying because at this moment in time there's a bit of uncertainty in the market – they're able to pick up some houses which they can see there's value in," he said. "But the issue is nobody's really buying family homes or converting houses into HMOs because of the rental yield. Landlords who were buying and helping the private rental sector have slowed up buying because they're being taxed to death."
Murphy argued the consequences extend beyond the investment market. "You're creating a high tax environment which always throughout history creates a low growth environment – it just goes hand in hand. Landlords can't keep being taxed to death, and that's a problem because we have less of a private rental sector and that increases rents."
A market that has become more selective
Louis Mason (pictured top), director at Oportfolio Mortgages in London, said borrower confidence should not be confused with weakness – rather, the nature of demand has changed fundamentally.
"The days of investors buying almost any property, putting some money into it, and expecting strong capital growth and rental returns are gone," he said. "Higher mortgage rates, increased taxation and tighter regulation mean landlords are absolutely scrutinising deals much more carefully."
Mason said experienced investors remain active but are concentrating their attention on assets that genuinely stack up from a yield and cash flow perspective. "The buy-to-let market hasn't disappeared, it's simply become much more professional.”
That professionalisation is visible in the rapid growth of limited company structures. Mason said the primary driver remains tax efficiency, particularly since the phased removal of mortgage interest tax relief for individual landlords, which concluded in the 2020–21 tax year and significantly increased the tax burden on higher-rate taxpayers holding property in their personal names.
"Limited companies are increasingly viewed as the default route for building a portfolio rather than an alternative option," he said. "I expect that trend to continue, especially if tax policy remains unchanged and landlords continue to want long-term profitability."
Brokers redefining their role
The structural complexity now embedded in buy-to-let advice has placed new demands on mortgage brokers. Mason said the scope of expertise required has expanded considerably over the past decade.
"Buy-to-let advice is far more complex than it was five or 10 years ago. Brokers now need a much deeper understanding of limited company lending, portfolio landlord rules, stress testing, EPC requirements and the wider tax considerations affecting investors. Increasingly, our role is less about simply finding a mortgage and more about helping clients understand how finance actively fits into their investment strategy."
Murphy echoed the concern that policy direction continues to work against the conditions needed for a healthy private rented sector. He pointed to stamp duty as a particular sticking point – not only for buy-to-let investors, but for the broader housing market – arguing that the current fiscal environment discourages the very activity that supports housing supply and tenant choice.
For brokers, the message is consistent, that landlord clients who are succeeding today are those approaching property with long-term, business-minded discipline – and the advisers best placed to serve them are those who have evolved their knowledge to match.
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