Limited Company Mortgages

Yes, a limited company can purchase a buy-to-let property – the mortgage can be either full capital & repayment, or interest only. Interest only is most people’s preferred option for a limited company buy-to-let mortgage, which means you only have to pay the interest amount each month. However, just paying the interest means you are not paying back the mortgage balance at the end of the term.

Yes, however the company must be set-up as one of the following:

• Special Payment Vehicle (SPV) – a company created for a specific purpose, in this instance for the purchase and management of Buy to Let properties.
• Trading Company – typically an existing company looking to invest in a Buy to Let property to add to a current portfolio of assets.

If you’re thinking of incorporating an existing Buy-to-Let property into a new limited company, we recommend you speak to an experienced tax adviser before making any decisions.  Please contact one our Experienced Buy to Let Advisers, who could help putting you in touch with a qualified Tax Adviser.

The main reason for purchasing a property via a limited company is due to tax efficiency. As a higher-rate taxpayer renting out a property as a private individual, you pay as much as 45% tax on your rental income, and you cannot offset the mortgage costs against the rental income for tax purposes in your own name.

Please ensure you speak with an accountant who is qualified to give you tax advice, for your circumstance.

The rental market has become increasingly challenging over recent years, particularly for private landlords. Rising buy-to-let mortgage costs, dwindling tax relief and tightening regulations have left many wondering how to successfully adapt to this new environment.

Although rental demand remains high, the impact of falling house prices, higher costs and changes to Capital Gains Tax (CGT) means the only answer for some landlords is to sell up and leave the market. For others, the solution may be to set up a limited company, an option that has grown in popularity over recent years. According to estate agent Hamptons, the number of landlords operating as limited companies has doubled since 2017 – there are now 300,000 property companies in the UK, up from 89,757 in 2017. We estimate that 90%/most of all buy-to-let applications we receive are now from limited companies.

This increase, driven mainly by fiscal and regulatory pressures, also reflects the Government’s desire for the buy to let market to become professional. Managing a rental portfolio as a limited company may help some landlords to achieve this.

Yes – most lenders will require personal guarantees from all directors of the company, meaning you may still be personally liable if the company fails to meet its mortgage repayments.

If you purchase a residential dwelling, then usual stamp duty is payable in the same way as if you purchased in your own name. If the property is the first property that the Company owns, it is still usually treated as under second residential property for Stamp Duty purposes. However, if you purchase a commercial or mixed-use property then stamp duty is not payable.

Generally, yes. Limited company mortgages tend to come with slightly higher interest rates and fees than personal buy-to-let products, but the potential tax advantages can outweigh the cost difference for many investors.

Landlords using a limited company can usually claim 100% of their mortgage interest as a business expense and pay Corporation Tax on profits, which is typically lower than higher-rate Income Tax.

Yes, but this is classed as a sale, and you may be liable for Capital Gains Tax and Stamp Duty. Always seek professional tax advice before making this move.

Most lenders require a minimum deposit of 20–25%, though some may offer up to 85% LTV with specialist criteria.

Some lenders will consider first-time landlords, though your options may be more limited, and you may be required to provide a stronger financial profile or larger deposit.

Typically, you’ll need your company registration details, SIC code, director information, business bank statements, proof of income, and property details. Your advisor at Vincent Burch will guide you through the full documentation process.