The number of new buy-to-let companies set up by landlords is on course to fall for the first time since 2008, as a tax-driven boom in incorporations starts to fade.

There were 41,483 buy-to-let companies formed in the first eight months of the year, down from 44,802 in the same period a year earlier, according to analysis of corporate filings by the estate agency Hamptons.

The gap between the two periods amounts to 3,319 fewer companies, a fall of 7.4 per cent, and an average of about 5,200 formations a month so far this year. The comparison covers the same eight months, January to August, in each year.

It means that, barring a recovery in the coming months, incorporations of such companies are heading for their first annual decline since the depths of the property crash between 2008 and 2009 during the financial crisis.

Aneisha Beveridge, head of research at Hamptons, said that company formations by landlords may have peaked last year.

“A large part of the buy-to-let incorporation boom was driven by the one-off structural shift whereby existing landlords transferred properties they already owned into limited company structures in response to tax changes,” she said.

“But we’re now reaching the tail end of that trend. Increasingly, the landlords who stand to benefit financially from incorporating existing properties have already done so.”

Formations were fuelled by tax changes that started in 2016 and which have made it more efficient for buy-to-let investors to own properties through a limited company, rather than personally.

This prompted landlords to transfer properties they owned into companies, with the majority of homes placed in these structures in recent years being existing assets, rather than new purchases.

However, Hamptons research on the sector estimates that new purchases entering these structures will overtake transfers this year.

Stamp duty on landlord transfers

A slowdown in transfers has implications for the government, as stamp duty land tax is levied on these transactions and has been bringing in about £1.2bn a year to the Treasury, the estate agency said.

Beveridge said that growth of company formations in future “is likely to increasingly depend more on landlords making new purchases than restructuring portfolios. That also means the Treasury’s stamp duty windfall from these transfers is likely to start falling.”

Rents rise as supply tightens

Renters face rising rates after the market was hit by a fall in supply, figures from Zoopla, the property website, show. UK rents were up 2.6 per cent in the year to July, an increase from 1.6 per cent growth in February and taking the average monthly rent to £1,340, Zoopla said.

It blamed the rent rise on a tightening market, which started in May and has led to there being a 3 per cent decline in properties available for rent compared with a year earlier.

Zoopla said this had ended “a three-year recovery in rental supply which helped reduce the level of rent rises over the last two years”. It now expects rents could increase by between 4 per cent and 5 per cent by the end of the year.

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