Portfolio landlords lead trend as professionalisation of BTL sector accelerates
The UK’s buy-to-let market is seeing a continued shift towards professionalisation, with a growing number of landlords structuring their property ownership through limited companies, according to new research.
The survey, commissioned by Foundation Home Loans and conducted by Pegasus Insight, found that 60% of landlords planning to purchase a property in the coming year intend to do so via a limited company. This reflects a broader trend over the past five years, during which the proportion of properties held under limited company structures has climbed from 36% to 66%.
Landlords with properties in limited companies tend to have larger portfolios, averaging 14.6 properties, compared with an average of 5.2 for those who hold their entire portfolio in their personal name.
Diversification is another key theme, with specialist investments gaining traction. One in five landlords now owns at least one house in multiple occupation (HMO), a figure that rises to 25% among portfolio landlords. Six percent of landlords reported owning a holiday let, with this figure doubling among landlords with more extensive holdings. On average, landlords with HMOs own 3.6, while those with holiday lets have 1.6 properties in that category. Among landlords with 11 or more properties, 29% include at least one HMO and 12% a holiday let.
Rental yields remain resilient despite ongoing economic pressures. The average gross yield reported was 6.3%, slightly below the 10-year high of 6.5% seen in Q3 2024. Meanwhile, 84% of landlords indicated their letting businesses remain profitable. Seventeen percent reported strong profits, and 67% noted modest gains. Among portfolio landlords with four or more mortgages, 80% continued to report positive earnings despite higher costs.
Refinancing is expected to remain a key trend throughout 2025. Thirty-eight percent of landlords with mortgages intend to remortgage or carry out a product transfer within the next 12 months. Portfolio landlords expect to refinance an average of three loans, with fixed rate products remaining the preferred option. Of those favouring fixed deals, 32% are leaning towards a two-year fix, while 35% favour a five-year term.
Foundation Home Loans said the preference for fixed products indicates continued caution around interest rate movements.
Regulatory developments also remain top of mind for landlords. The planned removal of Section 21 no-fault evictions emerged as their most pressing concern, ahead of broader changes proposed in the Renters’ Rights Bill. In addition, landlords are increasingly worried about looming energy efficiency standards. Key issues cited include the cost of meeting requirements, lack of clarity on deadlines, and the perceived imbalance between regulatory demands and support for private rental sector (PRS) supply.
“The story behind this quarter’s data is one of continuing evolution and resilience within the landlord community,” commented Grant Hendry (pictured), director of sales at Foundation Home Loans. “Incorporation is no longer a niche strategy, it’s a mainstream structural approach, especially for landlords who are expanding or refinancing.
“Specialist property investment is also a major theme, and it is interesting to see that larger portfolio landlords are targeting areas such as holiday lets, more than doubling their holdings of these properties.”
“Whether it’s holiday lets, HMOs or multi-unit blocks, landlords are clearly broadening their portfolios in ways that demands deeper product expertise and flexible criteria. This is where advisers and specialist lenders can offer tangible value.”
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