Private landlords continued to exit the sector throughout 2025, with record Capital Gains Tax receipts and a surge in limited company formations as the UK’s rental market.
HMRC data shows CGT receipts for the 12 months to January 2026 reached £20.6 billion, up 44 percent from £14.3 billion the previous year. January 2026 alone saw £16.985 billion collected – a 69 percent increase on the same month in 2025. While CGT covers all asset classes, property sales by landlords are believed to be a significant contributor.
At the same time, landlords still in the market are shifting to corporate structures. A record 66,587 new buy-to-let companies were formed in 2025, according to the Hamptons Lettings Index, taking the total number of active buy-to-let companies to 443,272 – nearly five times the 91,278 recorded in 2016.
Ten years of tax pressure
The shift began with the introduction of Section 24 mortgage interest relief restrictions in 2016, which prevented higher-rate taxpayers from deducting mortgage costs from rental income. Since then, a series of tax changes have made personal ownership less attractive:
- 2016: Section 24 phased in, restricting mortgage interest relief
- 2017: 3 percent stamp duty surcharge on additional properties
- 2021-2024: CGT annual exemption cut from £12,300 to £3,000
- 2024: CGT rates on residential property raised to 18/24 percent
The English Private Landlord Survey 2024 found the private rented sector now houses 4.7 million households – 19 percent of all households in England. But the composition of landlords is changing. Data from Hamptons shows 75-80 percent of new buy-to-let purchases are now made through limited companies, compared with a minority a decade ago.
The mathematics of exit
For landlords considering their options, the maths favours either selling or incorporating. A higher-rate taxpayer with a £200,000 mortgage on a rental property now receives only basic-rate relief on interest costs under Section 24, potentially adding thousands to their annual tax bill compared with a company structure where mortgage interest remains fully deductible.
Jason Hollands, managing director at Evelyn Partners, said the January 2026 CGT figures likely reflect “a summer of ’24 firesale” as landlords disposed of assets ahead of the October Budget. “Many investors expected CGT rates to rise more than they did, with some Labour MPs having argued for equalisation with income tax rates,” he said.
Aneisha Beveridge, head of research at Hamptons, noted that frozen personal allowances have compounded the pressure. “Five years of frozen personal allowances, combined with the impact of higher mortgage rates, which company landlords can fully offset against their tax bill, have fuelled the more recent surge,” she said.
What the data shows
| Metric | 2016 | 2025 | Change |
|---|---|---|---|
| Active BTL companies | 91,278 | 443,272 | +386% |
| New BTL companies formed | ~13,000 | 66,587 | +412% |
| CGT annual exemption | £11,100 | £3,000 | -73% |
| CGT rate (higher rate) | 28% | 24% | -4pp |
| PRS households (England) | 4.5m | 4.7m | +4% |
Outlook for 2026
With the Renters Rights Act taking effect in May 2026, abolishing Section 21 evictions and introducing new compliance requirements, industry bodies expect the pace of exits to continue.
The National Residential Landlords Association has warned that excessive regulation risks reducing rental supply at a time when demand remains strong. Average rents reached £1,366 per month in January 2026, with tenants facing competition of 17 applicants per property in some areas.
For landlords weighing their options, the choice comes down to three paths: sell and pay CGT, incorporate and continue, or hold personally and accept the tax disadvantage. The record company formation figures suggest most are choosing door two – but the CGT receipts show plenty are choosing door one.
Editor’s view
The private rented sector is not shrinking – PRS household numbers continue to grow. What is changing is who owns the properties and how. The age of the amateur landlord with a property or two in their own name is ending. What replaces it is a more professionalised, corporatised sector. Whether that is better for tenants remains to be seen.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 23 February 2026
Sources: HMRC, Hamptons Lettings Index, Companies House, English Private Landlord Survey 2024, Evelyn Partners, ONS
Related reading: Landlords form record 66,587 companies as tax drives incorporation surge
