Limited Company Property Finance
Buying and refinancing property through a limited company changes almost everything about how a landlord is lent to and taxed. This is the map of that decision, and the route into every part of it.
Limited company property finance is the funding a landlord raises when a company, rather than an individual, owns the property. Most landlords use a special purpose vehicle, a company set up only to hold property, and borrow through a limited company buy to let mortgage. Rental profit is taxed at corporation tax rates rather than income tax, mortgage interest stays fully deductible, and lenders take a personal guarantee from the directors. The trade off is higher rates, a smaller lender panel and the cost of running a company.
At a glance
- Who it suitsHigher rate taxpayers and portfolio landlords holding for the long term
- Usual structureA special purpose vehicle (SPV) with property SIC codes
- Typical deposit25% of value, so lending to around 75% LTV
- Tax on profitCorporation tax, not income tax; interest fully deductible
- Security takenFirst charge on the property plus a personal guarantee from directors
- Main trade offRates and fees run higher than personal buy to let
What limited company property finance actually means
When a landlord buys property through a company, the company is the borrower and the legal owner. The individual behind it becomes a director and shareholder, not the owner of the bricks. That single change reshapes the tax treatment, the lender panel, the paperwork and the way risk is shared between borrower and lender.
Most property is held in a special purpose vehicle, a limited company set up to do nothing but own and let property. Lenders prefer this clean structure because it is easy to underwrite: no trading debts, no unrelated liabilities, no surprises hiding in the accounts. A company that also trades in something else is possible to finance but narrows the panel sharply.
We arrange this lending every week, and the pattern is consistent: the landlords who benefit most are higher rate taxpayers building for the long term. If that is you, start with can a limited company get a mortgage for the eligibility picture, then SPV vs trading company to get the structure right before you file anything at Companies House.
Why landlords use a company: section 24 and corporation tax
The reason most landlords ask about companies at all is tax. Since section 24 was fully phased in, a landlord holding property in their own name can no longer deduct mortgage interest from rental income before tax. Instead they get a basic rate tax credit worth 20% of the interest. For a higher rate taxpayer with a big interest bill, that can push the effective tax rate on rental profit past the point where the property makes money on paper.
A company is not caught by section 24. It pays corporation tax on rental profit after deducting mortgage interest in full: 19% on profits up to £50,000, rising towards 25% on higher profits with marginal relief between the two. Interest is a normal business expense again. That is the core of the arithmetic, though extracting the profit as dividends brings a second layer of tax that has to be modelled.
The company route wins for some landlords and loses for others. Our limited company vs personal calculator models both sides side by side, and the section 24 guide shows exactly how the tax credit erodes higher rate returns.
Read section 24 mortgage interest relief in full, then compare outcomes with the limited company vs personal calculator.
The spokes: everything under limited company property finance
This pillar breaks the decision into the questions landlords actually ask us. Work through the ones that apply to your situation.
- Can a limited company get a mortgage: eligibility, deposit, how much a company can borrow and which lenders lend to newly formed SPVs.
- SPV vs trading company: why lenders prefer a special purpose vehicle and what a trading company does to your rate and panel.
- SIC codes for property companies: the exact codes (68209, 68100, 68320) lenders expect on your company and why the wrong one causes declines.
- Transfer buy to let to a limited company: the incorporation route, the stamp duty and capital gains cost, and when relief applies.
- Limited company buy to let stamp duty: why companies always pay the surcharge and what a purchase really costs.
- Section 24 mortgage interest relief: the tax change that started the whole company trend, explained with worked numbers.
- Limited company director mortgages: how directors are assessed for lending on salary, dividends and retained profit.
- Personal guarantees on company mortgages: what you are signing, how much it covers and how to limit exposure.
- Deposits and directors loans: how to get deposit money into the company cleanly and draw it back out later.
How lenders underwrite a company case
The mechanics of a limited company buy to let mortgage are close to a personal one, with a few company specific steps. The lender secures a first charge on the property, takes personal guarantees from the directors, and often registers a debenture or floating charge over the company. Affordability is assessed on rental income against an interest cover ratio, not on the director's salary.
| Underwriting factor | How lenders treat it |
|---|---|
| Company type | SPV strongly preferred; correct property SIC codes expected |
| Deposit | Usually 25%, so a maximum around 75% loan to value |
| Affordability | Rental income stress tested against an interest cover ratio, often 125% to 145% |
| Directors | Personal guarantees taken; background portfolio and credit reviewed |
| Rate | Higher than personal buy to let to reflect the smaller specialist panel |
The stress test is where deals are won or lost. Our tax guides handle the profit side; for the lending maths, the limited company buy to let mortgages page and the limited company mortgage calculator show how much a given rent will support.
What it costs, and where the trade offs sit
Company lending is not free money. Rates run higher than personal buy to let, arrangement and product fees are common, and there is the ongoing cost of company accounts and filing. Against that sit the tax saving for higher rate taxpayers, cleaner succession planning, and the ability to retain and reinvest profit inside the company without drawing it as taxable income.
For a landlord holding one or two properties as a basic rate taxpayer, the company route often does not pay. For a portfolio landlord building past four or five properties, or anyone paying tax at 40% or above on rental profit, it frequently does. The honest answer is that it depends on the numbers, the holding period and the plan for the profit.
Everything here is illustrative and general. Company structuring has real tax consequences, and the right answer turns on your wider position. Speak to a qualified accountant before you incorporate, and let us structure the finance around whatever they recommend.
- Special purpose vehicle (SPV)
- A limited company set up solely to hold and let property, with no unrelated trading activity, which is the structure most buy to let lenders prefer.
- Interest cover ratio (ICR)
- The ratio of rental income to mortgage interest at a stress rate that a lender requires before approving a buy to let, commonly 125% to 145%.
- Personal guarantee
- A director's personal promise to cover the company's mortgage debt if the company cannot, giving the lender recourse beyond the property.
- Section 24
- The rule that removed higher rate mortgage interest relief for individual landlords, replacing it with a 20% basic rate tax credit.
- Corporation tax
- The tax a company pays on its profit, currently 19% on profits up to £50,000 and up to 25% above that, with marginal relief in between.
Limited Company Property Finance: common questions
Is it a good idea to buy property through a limited company?
It depends on your tax position and plans. For higher rate taxpayers building a portfolio to hold long term, a company usually improves the after tax return because mortgage interest stays fully deductible and profit is taxed at corporation tax rates. For a basic rate taxpayer with one or two properties, the extra rates, fees and running costs often outweigh the benefit. Model both routes and take accountancy advice before you decide.
How much can a limited company borrow for a mortgage?
Borrowing is driven by rental income rather than the director's salary. Lenders stress the rent against an interest cover ratio, usually 125% to 145%, at a notional rate. In practice most limited company buy to let lending goes up to around 75% of the property value, provided the rent covers the stressed payment. Our limited company mortgage calculator shows the ceiling for a given rent.
How much deposit does a limited company need to buy a property?
Typically 25% of the purchase price, giving a mortgage up to about 75% loan to value. A few lenders go to 80% at higher rates. The deposit usually enters the company as a directors loan, which the company can later repay to the director tax efficiently once it has retained profit.
Should I put my rental properties in a limited company?
Moving existing personally held property into a company is a sale in the eyes of HMRC, which can trigger stamp duty and capital gains tax on the way in. That cost has to be weighed against future tax savings. Incorporation relief can defer the capital gains charge in some cases, but not the stamp duty. Read our transfer guide and take advice before moving anything.
Refinancing or growing a portfolio?
Send us the portfolio schedule, the rents and the balances and we will come back with a view on structure, lender appetite and likely terms within one working day.