Limited company landlords in the UK are continuing to pursue growth in their property portfolios, driven by expectations of higher rental yields despite rising borrowing and operational costs. Recent research highlights a strong sense of confidence among these landlords, even as they face increasing mortgage expenses, regulatory challenges, and higher running costs.

Confidence in Yield Growth Amid Rising Costs

The latest Buy-to-Let (BTL) Barometer from Kensington Mortgages reveals that 84% of residential limited company landlords anticipate an increase in rental yields over the next 12 months. This optimism is supported by 89% of landlords expressing confidence in the market outlook, with 80% expecting tenant demand to grow and 77% forecasting a rise in property prices.

However, this positive sentiment coexists with concerns about escalating costs. A significant 77% of landlords expect mortgage costs to increase, while 81% have already experienced higher running costs over the past year. These costs include repairs, insurance, utilities, and maintenance. Additionally, 79% foresee regulatory requirements becoming more complex and challenging.

Limited Company Structures and Portfolio Strategies

Allison Buckley, Chief Executive of Kensington Mortgages, commented on the findings: “Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields.” She emphasised that this confidence does not lead to complacency.

Buckley noted that many landlords are actively reviewing and diversifying their portfolios, showing increased interest in corporate lets and larger Houses in Multiple Occupation (HMOs). This strategic shift reflects a focus on securing long-term income and adapting to changing market conditions. The limited company structure remains central to this evolution, with company-held portfolios delivering marginally higher yields compared to personally owned properties.

Mortgage Costs and Market Influences

Interest rates are the primary factor influencing landlord sentiment, cited by 31% of respondents. Regulatory concerns follow at 26%, while property prices and tenant demand each influence 25% of landlords. The broader economic outlook and mortgage availability are considerations for 22%, and taxation impacts 20%.

Regarding portfolio plans, 53% of landlords intend to maintain their current holdings, while 38% plan to expand their portfolios. Only 8% are considering reducing their property numbers. Access to finance remains relatively straightforward, with 74% reporting ease in securing buy-to-let mortgages.

Portfolio Composition and Yield Differences

Incorporation continues to be the preferred ownership structure, with 53% of landlords expecting to retain their entire portfolio within a limited company. Among those operating across both personal and company structures, average gross yields stand at 5.04% for company-held properties, compared with 4.88% for personally owned homes.

Family housing remains the most common asset class, held by 40% of landlords. Larger HMOs with six or more bedrooms account for 35%, while single-tenant residential properties represent 33%. Smaller HMOs are held by 27%, holiday lets by 16%, and student accommodation by 12%.

What this means for landlords

The data suggests that limited company landlords are adapting their strategies to navigate a challenging cost environment while capitalising on strong rental demand and yield prospects. The preference for limited company ownership reflects its perceived advantages in managing tax liabilities and regulatory compliance. Diversification into corporate lets and larger HMOs indicates a proactive approach to securing stable, long-term income streams.

Landlords should remain vigilant about rising mortgage and operational costs and consider how portfolio restructuring or diversification might enhance resilience. Maintaining access to finance and understanding the evolving regulatory landscape will be crucial for sustained success in the buy-to-let sector.

Source: Based on reporting from Property118

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The Landlord Association has launched its new Training Academy for UK landlords, providing structured guidance, compliance education, and practical knowledge to support landlords at every stage. Members can now complete the programme and become TLA Certified Landlords at no additional cost as part of their membership.

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TLA update

The Landlord Association is currently onboarding new service providers into its Trusted Partner Hub, a new initiative designed to support landlords, tenants, letting agents, and property managers with vetted, high-quality services. As one of the fastest growing landlord associations in the UK, TLA offers partners direct access to an engaged and active member base at the point of need. Service providers across legal, maintenance, insurance, finance, mortgages, tenant screening, and property services can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/