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Limited Company Buy to Let Mortgage
Matt Coulson explains how a Buy to Let mortgage through a limited company works.
Do you have any facts and figures to set the scene on this topic?
I was intrigued by this information from Hamptons, who state that over 50% of new Buy to Let mortgages in 2024 were taken out in a limited company structure. That’s amazing.
This was historically quite a niche area of the mortgage market, so now having more than half of new Buy to Let mortgages in limited companies is a real sign of the times.
The next bit of data I uncovered was that even though average interest rates are around 0.3% higher for a limited company Buy to Let mortgage, the tax savings outweighed that difference in rate.
So people are now more likely to take a Buy to Let mortgage on a limited company basis.
This is really all down to changes in how landlords can offset mortgage interest against rental income. Various governments have made changes in that area which has driven this.
My final bit of data is that landlords with four or more properties are now 70% more likely to use a limited company to buy their next property. That came from Paragon, a major Buy to Let lender. With four or more properties, you will potentially be regarded as a professional landlord – and that means you’re much more likely to buy in a limited company.
Just some interesting context there, for the questions coming up.
Can I get a Buy to Let mortgage via a limited company? Is it difficult to do this?
Yes, and they are clearly now more widely available, as that data has shown. It’s a more popular choice – but that doesn’t necessarily mean it’s the right answer for you as the listener. Your own personal tax situation plays a really big part and you should always get tax advice.
Where we’re seeing bigger demand is from higher rate taxpayers, portfolio landlords and long-term property investors. These are the types of people requesting limited company Buy to Let mortgages from us.
It’s usually driven by conversations with accountants or tax advisors, and quite regularly we’ll be involved in those conversations too. This type of mortgage is pretty straightforward to obtain nowadays.
How do limited company Buy to Let mortgages work? What are the eligibility criteria?
Typically the start point is to set up a Special Purpose Vehicle (SPV), which is again something your accountant would help you with. What you’re doing is creating a legal entity that is limited in its nature and has property letting as its main function.
This is important because lenders will ask for a SIC code and it’s important that this is correct. It shows the lender that the limited company exists for the purposes of letting out property.
The mortgage is then issued to the SPV, and that company holds the mortgage and owns the property. Importantly, you often need to give a personal guarantee as the director and shareholder of that company. The lender is not allowing you to wash your hands of the situation. By giving a personal guarantee on that mortgage, you’re effectively agreeing to continue to pay it.
Lenders then look at the rental income, the type of property, you as a director – and your creditworthiness. Do you as an individual have any adverse credit? Do you as an individual have any income to fall back on if it was to fail for any reason?
Setting up a limited company doesn’t necessarily remove you as an individual from the underwriting process, but overall it means that the property is owned by the SPV.
How much deposit do I need for a Buy to Let through a limited company?
Typically 25% is the minimum. But the more you can provide, the better the deal is likely to be. We tend to see landlords with a 25%, 30%, 35% deposit, which are almost always enough for a lender.
If you increase your deposit level, you might bring more lenders into the equation. Lenders that are particularly security conscious might offer you a deal if you have a 40% deposit, but not if you have 30%.
Largely, you’ll get a better rate with a bigger deposit, and you may also open up more lenders and products.
The type of tenant you’re looking for will also dictate the deposit level required. For example, if you are purchasing a House of Multiple Occupation (HMO), that might typically need a slightly bigger deposit. That’s a property let out to multiple individuals, typically students or young professionals, all of whom have a separate agreement with you as the landlord.
That’s different from an Assured Shorthold Tenancy (AST) with a family, for example. So for a more complex type of tenant, you might also need a slightly bigger deposit.
Is it worth setting up a limited company for Buy to Let?
Talking to a tax advisor is always the start point here. It really depends on your situation.
With a limited company structure, mortgage interest is more tax deductible than as an individual. That’s really the main reason that people look at this as a solution and why they are migrating into this space.
Again, get tax advice around that. At the time of recording in August 2025, corporation tax is also potentially lower than personal tax rates. The company might therefore pay less tax on the income it generates.
It also becomes potentially easier to pass properties to your children via shareholders. Talk to an inheritance tax specialist about this, but that’s another reason people cite to us.
It separates out personal and business liability, as well. People like to have clean lines between their own home and their Buy to Let properties owned via a company.
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What are the disadvantages of setting up a limited company for Buy to Let?
As I mentioned previously, mortgage rates are on average 0.3% higher than on personal Buy to Let mortgages. You typically have extra accountancy and administration costs, too. There are fees for filing accounts and financial/tax advice. You also have less choice of lenders, although that is improving as demand increases.
Do limited companies pay stamp duty on Buy to Let? What other costs are involved here?
It’s important to understand that there’s a difference between somebody who advises on mortgages and somebody who advises on tax – but I can set out some key information. Again, I encourage you to check this out with a tax specialist.
Limited companies do pay stamp duty, and there’s the potential for an additional surcharge, even on that first purchase. Saving on stamp duty is not a reason to go down this route.
Other costs might include annual accountancy fees – filing accounts costs money. If you have a mortgage advisor acting for you, they may also charge you.
You’ve got additional legal fees, in terms of setting up a company and the structures around that. There are also potential capital gains tax liabilities if you transfer an existing property into a company. That’s not a simple exercise – so get advice on that and all the other potential costs to consider.
What are the benefits and drawbacks of owning property through a Buy to Let limited company?
I’m going to give you three of each. As always, I’m going to caveat this by saying that you need to get accountancy advice and tax advice.
The first benefit is full interest relief on your mortgage payments. That’s a real plus and the main reason people look at it. There can also be better potential long-term tax efficiency. It depends on your scenario, but that can be a real positive.
It is definitely a more scalable structure. If you buy multiple properties, add them to a portfolio and build this as an income stream, you can perhaps hand the company down to children. It is more scalable and flexible than owning things in your personal name.
Now, let’s look at three drawbacks. The higher rates mean you are going to be paying a little bit more on your mortgage rate. There are also those personal guarantees – you’re not completely removing yourself from the equation as an individual.
There is also added complexity. I’ve talked a lot about accountants and solicitors here and that’s less relevant if you’re buying a Buy to Let in your personal name. You can’t really take your eye off the ball with this. You need to understand your obligations to HMRC and legal duties as a company.
How do I get a Buy to Let mortgage through my limited company? What’s the process?
Number one, set up your SPV and open a bank account. That company needs a bank account attached to it to make your mortgage payment.
Next, talk to your mortgage broker and they will find you a suitable lender. Have that conversation as early as possible. Disclose everything to them and provide as much documentation as you possibly can.
Number three, submit your Agreement in Principle (AIP) and then your full application. With an AIP you can start making offers on properties and once they are accepted, you move into the full application.
Finally, appoint a solicitor with limited company Buy to Let experience. That’s something we’ve not touched on an awful lot in this particular episode, but it’s really important. They need to understand how these things work – and not all solicitors are specialists in this area.
How does remortgaging a Buy to Let property work through a limited company?
It’s very similar to the purchase. Some lenders will restrict their product set for existing company borrowers, but broadly that process of document and information provision is the same.
Switching between lenders is common practice to avoid Standard Variable Rates and potentially worse deals. Lenders tend to offer less competitive products to an existing borrower than to a new borrower, which I find strange.
Lots of people therefore choose to switch lenders when their fixed rate or their tracker rate is ending. Just bear in mind that, in addition to all of the usual documentation, you’ll also need to demonstrate how the company has been performing through company bank statements.
You’ll also probably need company accounts or tax returns at that stage. Unlike when you first buy the property, the company has now existed for a period of time and any new lender might want evidence of how it’s conducted itself.
Has your personal information also changed? Are you still employed, if you were originally? There could be a couple of extra bits, but broadly the process itself is very similar to when you bought the property.
What else do we need to know about getting a limited company Buy to Let mortgage?
We’ve covered most of it, but in summary, engaging with a broker at the very outset of this idea is really important. Talk to an advisor who’s comfortable with this idea of buying via an SPV, and is willing to have a conversation with you, potentially with your tax advisor present.
Then, you can have a joined up conversation. You’ll start that journey with the company set up correctly and in the right structure from the outset. You can avoid mistakes around personal guarantees, SIC codes and the legal structure.
Your broker can then find you appropriate deals. Within this relationship, the broker acts as a concierge. We coordinate that whole journey in conjunction with your legal and tax advisors – and we hold your hand through that process.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
For specialist tax advice, please refer to an accountant or tax specialist.