Since the government removed mortgage interest relief for individual landlords, the question of whether to hold buy-to-let property in a limited company has become one of the most common and most important conversations in the property investment space.
For many landlords, the limited company route makes sound financial sense. For others, the higher mortgage rates and additional complexity make it less advantageous than it initially appears. Getting this decision right before you buy is significantly less expensive than trying to correct it afterwards.
This guide explains how limited company buy-to-let mortgages work, what the advantages and disadvantages are, and what you need to know to make an informed decision.
What changed and why limited companies became more attractive
Before 2017, individual landlords could deduct 100% of their mortgage interest from their rental income before calculating tax. The changes introduced under Section 24 phased this out and replaced it with a basic rate tax credit. For higher and additional rate taxpayers, this significantly increased the tax burden on rental income.
A limited company is not subject to the same restrictions. A company can still deduct mortgage interest as a business expense, which means higher rate taxpayers holding property in a company can retain significantly more of their rental profit. This is the core reason the limited company route has become increasingly popular.
However, it is important to understand that this is a tax consideration, not simply a mortgage one. The decision about whether to use a limited company structure should always be made with the input of a qualified accountant who can model the numbers for your specific situation.
How a limited company buy-to-let mortgage works
When you buy a property through a limited company, the mortgage is taken out in the company's name rather than in your personal name. The company owns the property, the company services the mortgage, and the rental income is received by the company.
The type of company most commonly used for this purpose is a Special Purpose Vehicle, often referred to as an SPV. This is a limited company set up specifically to hold property, with the appropriate SIC code for property investment. Most specialist lenders prefer this structure to a trading company that also holds investment property.
Lenders will assess the application based on the rental income of the property and its ability to cover the mortgage payments. They will also carry out checks on the company and its directors. Even though the mortgage is in the company's name, lenders will almost always require personal guarantees from the directors.
Advantages of buying through a limited company
The main advantages are connected to tax efficiency. A company pays corporation tax on its profits rather than income tax, and the rates are typically lower for smaller companies. Mortgage interest remains fully deductible as a business expense. Profits can be retained in the company and drawn down at a time that suits your personal tax position.
There are also potential inheritance planning advantages. Shares in a company can be structured, transferred or placed in trust in ways that property held personally cannot. This is an area where specialist legal and tax advice is essential.
From a portfolio management perspective, a limited company structure can also make it easier to bring in partners or investors and to separate the property business from personal finances.
Disadvantages and costs to consider
The interest rates on limited company buy-to-let mortgages are generally higher than on personal name mortgages. The difference has narrowed over recent years as more lenders have entered this market, but it is still a real cost that needs to be factored into any financial modelling.
Personal guarantees are almost always required. Even though the mortgage is in the company name, the directors are personally on the hook if the company cannot service the debt. This is not the same as the unlimited personal liability you might expect, but it is a significant commitment.
The administration burden is higher. A limited company requires annual accounts, confirmation statements, corporation tax returns, and potentially payroll if directors draw a salary. These costs are manageable but real.
If you already own properties personally and want to move them into a company, you should be aware that this is not a simple process. A transfer of property from personal to company ownership triggers Stamp Duty Land Tax and potentially Capital Gains Tax. Whether this is worthwhile depends entirely on your individual circumstances, and this is a question for your accountant rather than your mortgage broker.
What SIC code does the company need?
Most lenders who offer limited company buy-to-let mortgages require the company to have an appropriate SIC code for property investment. The most commonly used code is 68209, which covers other letting and operating of own or leased real estate.
Some lenders will also accept companies with other property-related SIC codes, but a trading company with an unrelated primary SIC code is less likely to be accepted by mainstream specialist lenders. If you are setting up a company specifically to hold property, it is worth getting the SIC code right from the outset.
The lender landscape
The limited company buy-to-let market has grown considerably in recent years. There are now a significant number of specialist lenders active in this space, including some who are not available directly to the public and can only be accessed through an intermediary.
High-street banks vary in their appetite for this product. Some have developed specific limited company propositions, others prefer not to touch it. The right lender for your situation depends on your specific circumstances, the property type, and the company structure.
Frequently asked questions
Is it always better to buy in a limited company?
Not always. The answer depends on your tax position, your plans for the income, your timeframe, and how many properties you plan to hold. For higher rate taxpayers building a portfolio, the limited company route often makes sense. For basic rate taxpayers with one or two properties, the additional costs may outweigh the benefits. This is a question for your accountant.
Can I transfer my existing properties into a company?
Technically yes, but it involves Stamp Duty Land Tax and potentially Capital Gains Tax on the transfer. Whether it is financially worthwhile depends on your specific numbers. This decision requires professional tax advice before any action is taken.
Do I still need to give a personal guarantee?
Almost always, yes. Even where the mortgage is in the company name, lenders will require the directors to provide personal guarantees. This is standard practice in the limited company buy-to-let market.
Can I get a higher LTV in a limited company?
LTV limits for limited company BTL mortgages are broadly similar to personal name BTL mortgages. There is no structural advantage in terms of how much you can borrow relative to the property value.
What ongoing administration is required for the company?
A limited company requires annual accounts filed at Companies House, a confirmation statement, corporation tax returns filed with HMRC, and any relevant payroll administration if directors are drawing a salary. These are standard requirements for any UK limited company.
Last updated: 10 May 2026