Corporate Lets Mortgage
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Corporate Lets Mortgage
What’s the market like for corporate lets?
According to Rightmove in 2024, it’s a growing niche. Demand increased 23% year on year in London alone for corporate lets – so this is of growing interest.
Around 12% of UK landlords now rent to companies or relocating professionals, with the average rent often 10% to 20% higher than a standard Assured Shorthold Tenancy (AST). People are gaining interest in this area because, in theory, it could be a lot more profitable.
Lenders offering corporate let mortgages are limited and more than 40% of UK Buy to Let mortgage products exclude corporate lets – so getting advice is absolutely key in this area.
What is a corporate let mortgage?
Effectively, it’s a specialist type of Buy to Let mortgage, which explicitly allows the landlord to rent a property to a company. It’s usually for employee accommodation, as opposed to an individual tenant on a standard tenancy.
It’s all about the tenant that will be living in that property once it’s bought with a Buy to Let mortgage. In this case, that’s a company. The property is usually held on behalf of employees who then make use of that accommodation.
How does a corporate let mortgage differ from a standard Buy to Let mortgage?
The big difference is that the ‘tenant’ is a business. The tenant in a corporate let is not an individual, although an individual is going to be living there. That’s a tricky thing to get your head around.
The rental agreement is with a business. It’s a company let agreement, not a standard AST. Another key difference to flag is that lenders view this as higher risk and there are some differences in regulatory protection.
There are also potentially greater void periods and there’s obviously a dependency on the business stability of your tenant.
Who is eligible to apply for a corporate let mortgage?
Of course, every individual circumstance needs to be considered on its own merits – and that’s where advice comes in.
As a broad overview, however, lenders tend to be looking for an experienced landlord. They tend to want you to have experience in letting properties out, whether that be to individuals or corporates.
Your credit score plays a big part in this process, and they often look for somebody who is structuring their property ownership via a limited company. That’s not exclusive. They will consider an individual with a personal Buy to Let, but there’s a sway towards limited company ownership.
What types of properties qualify for a corporate let mortgage? Are corporate let mortgages available for both residential and commercial properties?
I’ll stick with residential because that’s the scope of the advice we provide. Of course, there are commercial specialists available and we can make recommendations and referrals in that area.
Lenders do tend to prefer the residential market because it’s more reliable. They would therefore expect it to be a residential property, where a business enters into an agreement for its staff to use that accommodation.
A company might be headquartered in a city, with a division elsewhere that staff travel to for occasional meetings or training. It makes sense for that company to have a residential property nearby for staff use. They stay in that property rather than a hotel.
Most lenders don’t want corporate let mortgages on commercial buildings because those would be shops or offices. This is for a property somebody is going to live in temporarily whilst working.
The property itself has got to be in good condition, which goes without saying – but the lender would assess that when underwriting the mortgage. They will send a valuer to check the condition. Some lenders may even go a step further and look at the area itself, and whether it’s typically popular with professionals, people relocating or working locally.
How do lenders assess affordability for a corporate let mortgage?
The rental income is key, as always with any Buy to Let. If you have listened to other episodes we’ve recorded on Buy to Let, you’ll be familiar now with this idea of stress testing the rental income.
Effectively, the lender is looking at the rent you expect to achieve. They’ll then apply a ‘stress test’ to that, which is not necessarily based on the interest you’re going to pay on the mortgage. They’ll build in a bit of a buffer there, assuming a higher mortgage interest rate to allow for a potential future scenario where rates might increase, for example.
They then look for a further buffer on top of that. So the lender might look at the loan amount you’re looking to take out assuming a 5.5% or 6% interest rate, even if the actual rate you pay is significantly lower than that. They’d expect the rent to be 145% of that payment – but I would recommend you seek some personalised guidance so you understand the complexity that goes into this.
They are generally more conservative on this type of lending than on a standard Buy to Let. They often ask for evidence of that signed company lease agreement – or at least the intention for a company to take a tenancy with you on completion. They want to check the viability of that company covering the rent.
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Can a limited company apply for a corporate let mortgage?
Yes, and I’d suggest some lenders actually prefer this. They certainly expect it, because this is quite a niche area of the market. Lenders assume a certain level of landlord experience and for you to be well-briefed on limited company ownership of property and the tax advice that goes with that.
I would encourage anybody on this particular journey to find themselves a really good tax advisor or property accountant, in conjunction with mortgage advice. Most lenders would expect you to set up a Special Purpose Vehicle (SPV) and for the accountant to set out the correct SIC code.
Essentially, the company needs to be structured correctly to own and let property for a corporate tenant.
Lenders might also ask for personal guarantees from the directors. Even though this mortgage is being issued to a company, its directors are expected to personally guarantee the mortgage in the event that the company can’t pay.
So you definitely need the right tax advisor and a good solicitor on board who understands all those different complexities.
What is the typical Loan to Value (LTV) ratio for corporate let mortgages?
We are recording this in August 2025 and as a start point, most lenders would cap the LTV at 75%. That means you’ll be expected to put in a deposit of around 25%.
For less experienced landlords or particularly complex arrangements, they may reduce that LTV further – to 65% or 70% perhaps. It could be more than you would ordinarily expect, but that reflects the niche elements and the increased risk on the lender’s side. That’s really general, so do get in touch with us for further questions around that.
How does potential rental income impact the mortgage application process?
The lender is looking to assess whether the rent covers the mortgage with significant headroom on top. Sometimes we’re approached by less experienced landlords who make a crude calculation around the rent that’s achievable and the associated mortgage payment.
They assume that if the rent covers the mortgage, we can go ahead. But the reality is that the lender needs a significant amount of headroom – that stress test.
Corporate rent does tend to be higher, but you still need to make sure that the rent you’re expecting will satisfy that stress test.
Are there specific industries or businesses that lenders prefer as corporate tenants?
There are some classic corporate tenants where lenders are less likely to have in-depth questions. These include big blue chip companies, listed businesses, national companies and household names. Government bodies are similar – civil servants, local authorities, etc. are commonplace.
There are also professional services firms like the big four accountancy practices that send their teams out all over the country to work with clients in different cities. Those are typical tenants.
Can I switch from a standard Buy to Let mortgage to a corporate let mortgage?
First and foremost, check with your current lender. That’s something we could help you with. If you have a Buy to Let mortgage already on the property, you need to understand the terms and conditions.
Does your current lender allow corporate lets within the realms of your current agreement? If not, you’ll either need to seek consent from them in the first instance, or potentially remortgage to a new product where that’s allowed.
That’s where the advice comes in. We would look at the details, and if corporate lets are allowed, fine. No further questions are usually required, providing your solicitor is happy and you’ve got the right tax advice.
If it isn’t allowed, we would look at a new lender for a remortgage so you’re not breaching the terms and conditions of your mortgage – which you absolutely don’t want to do.
What fees are typically involved in setting up a corporate let mortgage?
They are similar to any mortgage, really. There’s normally a product fee and because of the niche elements with the underwriting here, typically those fees are on the higher side – at least £1,000. This may differ from lender to lender, and products change all the time.
You’ll also have a valuation fee for the lender to send out a surveyor to assess the property. There will be legal fees too, and it’s really important to have a solicitor who’s comfortable with this kind of arrangement. They typically charge a bit more because of things like those director personal guarantees.
There might be an early repayment charge if you switch away from a current Buy to Let product. So there’s quite a bit to consider.
As we speak in August 2025, we find that the interest rates are a bit higher on this than standard Buy to Let. You can expect to pay more with this type of product.
What else do we need to know about a corporate let mortgage?
This can be a really high yield strategy. I’m not a tax advisor or a legal advisor, but we’ve observed clients taking this path and getting good yields.
To give a few pointers before embarking on this, the first is to make sure you understand all the lease structures. I’ve mentioned different vehicles and you’ve really got to get your head around that. Don’t go into this unless you’re certain you understand the process and structures.
Your lender selection is next, and that’s where the advice comes in. You need an advisor who’s confident and experienced in this field.
Then, of course, there’s the tenant themselves and the due diligence. You’re going to be looking for reputable blue chip or government organisations. Don’t make assumptions. When you’re approached by a potential corporate tenant, you need to do your research and ask lots of questions. You’ll be putting a lot of expectations on them to pay that rent.
It can be a really high yield strategy, but please go into it with your eyes open and make sure that you’ve got all the facts at hand before you get that ball rolling.
YOUR HOME 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.