Limited Company Buy To Let Mortgages

Can I get a Buy to Let mortgage via a limited company? Is it difficult to do this?

We’re seeing more and more people apply for a Buy to Let mortgage through a limited company, so yes, you can definitely do it. The limited company is typically set up as a Special Purpose Vehicle (SPV) to buy and sell properties.

That’s what lenders want to see. It’s not compulsory, but lenders prefer that, so I would advise you to have an SPV in place.

Lenders will assess both the company structure and the people behind it. Be aware that the client is still assessed, even though it is in a company name. If you are looking to buy via a limited company, go to a broker that’s experienced and has done this before.

How do limited company Buy to Let mortgages work? What’s the eligibility criteria?

Limited company Buy to Let mortgages are designed for properties purchased and rented out through a company rather than an individual. Lenders typically look at the company type, and prefer an SPV or a company that is set up with certain codes known as SIC codes – a typical one is 68100.

Also bear in mind that the director’s financial standing and experience as a landlord is taken into account. Some lenders will require personal guarantees from directors and shareholders.

How much deposit do I need for a Buy to Let through a limited company?

It’s the same for a Buy to Let mortgage through a limited company as in a personal name. The standard is a 25% deposit, although some lenders may require more and some will accept less.

Is it worth setting up a limited company for a Buy to Let?

It depends on your goals and circumstances. One reason some investors choose limited companies is for potential tax efficiency.

For example, limited companies can offset mortgage payments against the rental income. This is not available with mortgages in your personal name. Speak to an accountant to find the benefits of getting a mortgage via a limited company.

We find that most people looking to buy through a limited company already have one or two properties in their personal name. They find this is a more tax efficient way to manage their mortgages. Again, this should be discussed with a qualified tax advisor or an accountant to ensure it aligns with your wider financial situation.

Do limited companies pay stamp duty on Buy to Let? What other costs are involved?

Yes, limited companies pay the same stamp duty as individuals, including the additional 3% surcharge for second properties. You can find up-to-date stamp duty land tax rates on the gov.uk website. Other costs might include legal fees, valuation fees and mortgage arrangement fees.

Also, bear in mind that there are potentially higher interest rates for limited company products than for personal Buy to Let products.