45% of BTL Is Now Company-Owned: Why Your Ltd Structure Is Built for Serviced Accommodation, Not ASTs

The Numbers Are In, and They Tell a Fascinating Story

New figures published this August reveal that 45.1% of all UK buy-to-let properties are now held within limited companies. Just a few years ago, incorporated ownership was the minority. Today, it's rapidly becoming the norm, and in London the trend is even more pronounced.

The catalyst is well understood. Since the phased withdrawal of mortgage interest relief for individual landlords (Section 24), buying through a company structure has become the default tax planning strategy for serious property investors. Corporation tax rates, the ability to offset full mortgage interest, and flexible profit extraction make the Ltd route highly attractive.

But here's the thing most landlords haven't realised yet: the corporate structure they've built is perfectly optimised for serviced accommodation, not traditional assured shorthold tenancies. And under the incoming Renters' Rights Act, which further caps what AST landlords can charge and how flexibly they can operate, the gap between what a Ltd company could earn and what it actually earns is widening fast.

Let's unpack why.

Why Landlords Incorporated in the First Place

The rush to incorporate was driven almost entirely by tax. Individual landlords lost the ability to deduct mortgage interest from rental income, replaced by a basic rate tax credit that squeezed higher and additional rate taxpayers hard. Inside a limited company, full mortgage interest remains a deductible expense against profits.

Combine that with the current 25% corporation tax rate (still lower than the 40% or 45% marginal income tax rates many London landlords face personally), and the maths becomes compelling. Profits retained in the company compound more efficiently. Dividends can be drawn strategically. Multiple shareholders, often spouses or family members, can split income.

All of this is solid planning. The problem isn't the structure. It's what most landlords are doing inside it.

The AST Ceiling: Good Structure, Wrong Strategy

The vast majority of incorporated landlords are still running traditional long-term lets. A single AST tenant, monthly rent, and the same operational model they used before incorporating. The Ltd company helps with tax, but the revenue side remains fundamentally capped.

In London, long-term rental yields typically sit between 3% and 5% gross. After mortgage payments, management fees, maintenance, void periods, and insurance, net returns can be thin. The Renters' Rights Act adds further friction: abolishing Section 21, restricting rent increases, and extending tenant protections in ways that reduce a landlord's operational flexibility.

None of this is necessarily bad for tenants. But for a landlord who went to the trouble of setting up a limited company specifically to maximise returns, running a capped AST strategy inside it is like buying a sports car and never leaving second gear.

Why the Ltd Structure Is Actually Built for Serviced Accommodation

Serviced accommodation, also known as short-term lets or corporate rentals, is where the Ltd company structure truly shines. Here's why.

Full Expense Deductibility

Inside a company, all legitimate business expenses reduce your taxable profits. With serviced accommodation, the list of deductible costs is significantly longer than with a standard AST. Furniture, linen, cleaning, consumables, welcome packs, professional photography, listing platform fees, and ongoing management costs all reduce your corporation tax bill. The more operationally intensive the model, the more value the corporate wrapper delivers.

Capital Allowances

Furnished holiday lets and serviced accommodation within a trading company can qualify for capital allowances on fixtures, fittings, and equipment. This is a meaningful advantage over ASTs, where capital allowance claims are far more limited.

Higher Revenue Potential

London serviced accommodation properties routinely generate 30% to 80% more gross revenue than equivalent long-term lets, particularly in high-demand areas like Canary Wharf, Kensington, Shoreditch, and Marylebone. Nightly and weekly rates, dynamic pricing, and corporate bookings create multiple revenue streams from a single property.

VAT Threshold Planning

Operating through a company gives you cleaner control over VAT registration timing and planning, which matters once your serviced accommodation portfolio grows beyond the registration threshold.

Retained Profits and Reinvestment

Higher revenues taxed at corporation tax rates, with profits retained and reinvested inside the company, accelerate portfolio growth far faster than the AST model allows.

What London Landlords Need to Watch For

Pivoting to serviced accommodation isn't without its considerations, and being honest about the challenges is important.

Planning permissions and the 90-day rule. In London, properties cannot be let on a short-term basis for more than 90 nights per calendar year without planning permission for a change of use. This is a hard limit, and working with a professional management company that understands the regulatory landscape is essential. Some boroughs enforce this more strictly than others, and there are legitimate pathways for properties that can demonstrate planning consent or exemptions.

Operational complexity. Serviced accommodation requires guest communications, cleaning turnovers, linen management, pricing optimisation, maintenance response, and multi-platform listing management. For a landlord used to collecting a monthly standing order from a long-term tenant, this can feel overwhelming.

Seasonality and occupancy. London benefits from year-round demand driven by tourism, business travel, relocations, and events. But occupancy rates still fluctuate, and pricing strategy matters enormously. Getting this wrong can mean a serviced accommodation property underperforms even a basic AST.

Insurance and compliance. Short-term let insurance differs from standard landlord policies. You also need to consider fire safety, gas certificates, and guest check-in procedures that meet local authority requirements.

This is precisely where professional management changes the equation entirely.

The Case for Professional Management Over DIY

The landlords who thrive in serviced accommodation are rarely the ones doing everything themselves. The operational demands are real, and the difference between a well-managed and a poorly managed listing can be thousands of pounds per month in lost revenue.

At Airhosts, we manage the entire serviced accommodation operation for London landlords, from professional listing creation and dynamic pricing to guest management, cleaning, maintenance coordination, and regulatory compliance. Our landlords keep the tax advantages of their Ltd company structure while we handle everything that makes serviced accommodation operationally demanding.

The result is genuinely hands-off, high-yield income. Our managed properties in London consistently outperform AST returns, and our landlords spend less time on day-to-day management than they did with traditional tenants.

Comparing the Two Paths

Consider a one-bedroom flat in Zone 2 London. On a long-term AST, you might achieve £1,800 to £2,200 per month. Predictable, yes. But after mortgage payments, management fees, and void periods between tenancies, the net return inside your Ltd company is modest.

The same property, professionally managed as serviced accommodation by Airhosts, can generate £2,800 to £3,500 per month in gross revenue, with higher deductible expenses reducing your corporation tax liability further. The net improvement to your bottom line is substantial, and the corporate structure you already own is the perfect vehicle to capture it.

Your Ltd Company Deserves a Strategy That Matches It

You made the smart move by incorporating. You built a structure designed for tax efficiency, flexible profit extraction, and long-term wealth building. Now it's time to put the right strategy inside it.

Serviced accommodation in London, professionally managed and fully compliant, is the highest and best use of a property investment Ltd company. It's what the structure was actually designed for, even if most landlords haven't made the connection yet.

Airhosts makes the transition simple. We handle every aspect of short-term let management so you can focus on growing your portfolio, not managing guest check-ins at midnight. If you're a London landlord with a Ltd company and you're still running ASTs, let's talk. Your company is ready for more, and so are your returns. Get in touch with our team today and find out exactly what your property could earn.