You’ve decided your next rental property should sit inside a company, then discover the mortgage works quite differently from the one on your own home or your first buy to let. Fewer lenders offer it, the paperwork asks about directors and SIC codes, and someone mentions a personal guarantee. This guide explains how a limited company buy to let mortgage works, what lenders usually look for, and the tax points that decide whether it’s worth it in 2026/27.
- The company borrows the money, but its directors usually guarantee the loan personally.
- Most lenders want a company registered under a property SIC code that does nothing except hold and let property.
- Inside a company, mortgage interest is a full deduction. Landlords who own personally only get a basic-rate tax credit under Section 24.
- Companies pay the 5% higher-rates stamp duty surcharge on every residential purchase.
- Moving property you already own into a company counts as a sale, so stamp duty and Capital Gains Tax can both apply.
What Is a Limited Company Buy to Let Mortgage?
It’s a buy to let loan where the borrower is a company rather than you as an individual. The company buys the property, receives the rent, pays the mortgage and is taxed on its profit. You own the company as a shareholder and run it as a director.
Most lenders only offer these mortgages to a special purpose vehicle, or SPV. That’s simply a limited company whose only activity is owning and letting property. When you register the company, you choose a standard industrial classification (SIC) code describing what it does. Lenders commonly accept:
| SIC code | Description |
|---|---|
| 68100 | Buying and selling of own real estate |
| 68209 | Other letting and operating of own or leased real estate |
| 68320 | Management of real estate on a fee or contract basis |
| 68201 | Renting and operating of Housing Association real estate (accepted by some lenders) |
Why lenders prefer an SPV
A company that also trades, such as a building firm or a consultancy, carries risks unrelated to the property. A lender lending to an SPV only has to judge the property, the rent and the people behind the company. That’s why many lenders won’t lend to a trading company at all, or treat it as a commercial case.
How It Differs From a Personal Buy to Let Mortgage
| Personal buy to let | Limited company buy to let | |
|---|---|---|
| Borrower | You, in your own name | The company, with directors as guarantors |
| Affordability test | Rent must cover payments by a set margin, often higher for higher-rate taxpayers | Rent must cover payments, often at a lower margin because the company pays Corporation Tax |
| Typical deposit | Often 25% | Often 25% or more |
| Rates and fees | Wider choice | Usually somewhat higher, with fewer lenders |
| Tax on profit | Income Tax at your rate | Corporation Tax on company profit |
| Mortgage interest | Basic-rate tax credit only (Section 24) | Deducted in full from profit |
Limited Company Buy to Let Mortgage Criteria
Every lender sets its own rules, but the same themes come up again and again. The table shows what’s typical, not what any one lender requires.
| Area | What lenders commonly look for |
|---|---|
| Company type | An SPV registered in England, Wales, Scotland or Northern Ireland with a property SIC code |
| Loan to value | Often up to 75%, sometimes 80% at specialist lenders |
| Rental cover | Rent often needs to be at least 125% of the monthly interest, tested at a stressed rate |
| Directors and shareholders | Often the same people, with a limit on how many (four is common) |
| Personal guarantees | Usually required from every director, sometimes every shareholder |
| New companies | Many lenders accept a newly formed SPV with no accounts yet |
| Directors’ finances | Credit history, personal income and other borrowing are checked |
| Portfolio landlords | With four or more mortgaged rentals, expect a review of the whole portfolio |
| Property type | Standard homes are easiest; HMOs and multi-unit blocks narrow the choice |
Because lenders may ask for evidence of directors’ personal income, it helps to have your tax documents ready. Our guide on how to get your SA302 explains how to download them. A specialist mortgage broker can compare criteria across lenders, which matters more here than for a standard mortgage.
How lenders test affordability for a company
For a limited company buy to let mortgage, affordability is mostly about the rent rather than your salary. The lender takes the expected monthly rent and checks it covers the interest by a set margin, calculated at a stressed interest rate rather than the actual pay rate. Prudential Regulation Authority rules mean lenders generally stress-test at a higher rate unless the deal is fixed for five years or more, which is one reason five-year fixes are popular with company borrowers. Because the company pays Corporation Tax rather than higher-rate Income Tax, many lenders apply a lower rental cover ratio than they would to a higher-rate individual, so the same rent can sometimes support a larger loan.
Personal Guarantees: What You’re Signing
The company is a separate legal person, so in theory its debts aren’t yours. A personal guarantee changes that for the mortgage. If the company can’t pay and the sale of the property doesn’t clear the debt, the lender can pursue the directors personally for the shortfall.
- Guarantees are often joint and several, so the lender can claim the full amount from any one guarantor.
- A guarantee can show up when you apply for personal borrowing, such as a residential mortgage.
- Some lenders require guarantors to take independent legal advice before signing.
The limited liability that makes companies attractive, explained in our guide to unlimited liability, is therefore much weaker when it comes to the mortgage itself.
Setting up the SPV
Before you apply, the company needs to exist. Registering online with Companies House costs £100 (from 1 February 2026), and every director now has to verify their identity. You’ll also need a business bank account, because lenders and accountants expect rent and mortgage payments to run through the company, and you must register the company for Corporation Tax within three months of it starting to do business. Set the company up with the right SIC code from day one. Changing it later is possible but can slow down a mortgage application.
Funding the Deposit and Getting Money Out
A new SPV has no money of its own, so the deposit and purchase costs usually come from the directors. There are two main ways to put money in:
| Director’s loan | Share capital | |
|---|---|---|
| How it works | You lend money to the company and it owes you | You buy shares in the company |
| Getting it back | The company can repay the loan to you without further tax | Usually only through dividends or when the company is wound up |
| Records needed | A clear director’s loan account | Share records at Companies House |
Most landlords fund the deposit with a director’s loan, then take repayments as rent builds up. Once the loan is repaid, profit usually reaches you as dividends. For 2026/27, dividend tax is 10.75%, 35.75% or 39.35% above the £500 dividend allowance, depending on your tax band.
The Tax Side of a Limited Company Buy to Let Mortgage
This is where the company route can pay off. A company pays Corporation Tax at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. Its mortgage interest is deducted from rental income like any other cost.
If you own property personally, Section 24 stops you deducting mortgage interest. Instead you get a tax credit at the basic rate: 20% in 2026/27. Following the Autumn Budget 2026, personal property income is due to be taxed at 24%, 44% and 49% from April 2027, with the finance cost credit at 24%.
Rent £18,000 a year, mortgage interest £9,000, other costs £2,000. The landlord is a higher-rate taxpayer in England.
| Owned personally (2026/27) | Owned by an SPV | |
|---|---|---|
| Cash profit | £7,000 | £7,000 |
| Tax on the profit | 40% of £16,000 = £6,400, less £1,800 credit = £4,600 | Corporation Tax at 19% = £1,330 |
| Left after the first layer of tax | £2,400 | £5,670 in the company |
| If all paid out as a dividend | — | Dividend tax £1,848.28, leaving £3,821.73 |
Personally, from 2027/28 the tax would rise to £4,880, leaving £2,120. The figures ignore company running costs, which narrow the gap. They’re illustrative, not a recommendation.
The company comes out ahead here mainly because interest is fully deductible. The advantage is biggest when profits stay in the company to fund more purchases, and smallest when you need every pound as personal income. For more on how mortgage interest is taxed personally, see MTDFix’s guide to buy-to-let mortgage loans.
Stamp Duty, ATED and Other Costs
- Stamp Duty Land Tax: companies buying residential property in England and Northern Ireland pay the higher rates, which include a 5% surcharge on top of the standard rates (since 31 October 2024). Scotland and Wales have their own taxes.
- The 17% rate: according to GOV.UK, a company buying a home worth more than £500,000 can pay a flat 17%. Relief is available for a genuine property rental business, which most SPV landlords will be.
- ATED: the Annual Tax on Enveloped Dwellings applies to company-owned homes worth over £500,000. For 2026/27 the charge starts at £4,600 a year. Letting to unconnected tenants on commercial terms usually qualifies for relief, but a relief declaration return must still be filed each April.
- Running costs: annual accounts, a confirmation statement, a Corporation Tax return and a business bank account all add cost and time.
Major Accountancy’s guide to setting up a buy to let limited company covers the company set-up in more detail.
Moving an Existing Buy to Let Into a Company
Many landlords ask whether they can simply move their current rentals into an SPV. You can, but the company is treated as buying the property from you at market value. That usually means:
- Stamp duty for the company, at the higher rates, on the market value.
- Capital Gains Tax for you, on any rise in value since you bought it.
- A new mortgage: your personal mortgage is repaid and the company takes out its own, possibly with early repayment charges and new fees.
In some cases, incorporation relief can defer the gain, for example where letting is run as a genuine business. From 6 April 2026 it has to be claimed rather than applying automatically. This is an area where professional advice really matters before you commit.
Is a Limited Company Buy to Let Mortgage Right for You?
| Your situation | Usually points towards |
|---|---|
| Higher or additional-rate taxpayer with large mortgages | A company, because full interest relief is worth more to you |
| Plan to reinvest profits into more properties | A company, because profits are taxed at Corporation Tax rates |
| Basic-rate taxpayer who needs the rental income | Personal ownership, because dividend tax and company costs eat into the gain |
| One small, low-mortgage property | Personal ownership, because company costs may outweigh the benefit |
| Already own several mortgaged properties personally | Get advice first, because transfer costs can be high |
A limited company buy to let mortgage isn’t automatically cheaper or better. It’s one part of a wider decision about structure, tax and how long you plan to hold the property.
Questions to ask before applying
Before you commit to a limited company buy to let mortgage, it’s worth getting clear answers to a few questions:
- Will I need the rental profit as personal income, or can it stay in the company?
- What will the company’s accounts and tax returns cost each year?
- How will I fund the deposit, and how will I get that money back?
- Am I comfortable personally guaranteeing the loan?
- Do I plan to buy more properties through the same company?
Your answers decide whether the tax savings outweigh the extra cost and admin.
Common Mistakes
| Mistake | Why it causes problems |
|---|---|
| Using the wrong SIC code | Many lenders decline a company that isn’t set up as a property SPV |
| Mixing company and personal money | Rent paid into personal accounts creates accounting and tax issues |
| Forgetting the personal guarantee | You can still be personally liable for the mortgage |
| Ignoring dividend tax | Profit isn’t yours to spend until it’s paid out and taxed again |
| Transferring property without costing it | Stamp duty and Capital Gains Tax can wipe out years of savings |
| Comparing rates without fees | Arrangement fees on company mortgages can be a percentage of the loan |
Limited Company Buy to Let Mortgage FAQs
Can a new limited company get a buy to let mortgage?
Yes. Many lenders accept newly formed SPVs with no trading history. They rely instead on the property, the rent and the directors’ personal finances and guarantees.
What deposit do I need?
Most lenders want at least 25% of the property’s value, and some ask for more. A few specialist lenders go to 80% loan to value.
Do I have to give a personal guarantee?
Usually, yes. Most lenders ask each director, and sometimes each shareholder, to guarantee the loan personally.
Which SIC code should an SPV use?
Lenders most often accept 68100, 68209 and 68320, and some also accept 68201. Check the lender’s criteria before you register the company.
Are limited company mortgage rates higher?
They tend to be somewhat higher, and fees can be larger, because fewer lenders offer them. Compare the total cost, not just the rate.
Can I deduct all the mortgage interest in a company?
Yes. A company deducts its mortgage interest from rental income before Corporation Tax. Section 24’s restriction only applies to individuals.
Can I transfer my existing buy to let into a company?
You can, but it’s treated as a sale at market value. Stamp duty and Capital Gains Tax may be due, and you’ll need a new company mortgage.
Does the company pay the stamp duty surcharge?
Yes. Companies pay the higher rates on residential purchases, including the 5% surcharge, even on their first property.
Final Verdict
A company mortgage gives you full relief on interest and lower tax on retained profits, in exchange for higher rates, personal guarantees, extra stamp duty and more admin. It tends to suit higher-rate landlords building a portfolio, and is less often worthwhile for basic-rate landlords who rely on the rental income. Run the numbers on your own figures, including dividend tax and company costs, and speak to a specialist broker and a tax adviser before you buy.
- Compare personal and company ownership on your own rent, interest and costs.
- Check lender criteria before choosing the company’s SIC code.
- Work out the stamp duty at the higher rates.
- Speak to a specialist mortgage broker and a tax adviser.
- Tax rates and stamp duty rules come from GOV.UK, checked in November 2026.
- The lender criteria are typical ranges from published lender and broker criteria, not one lender’s rules.
- No lenders are recommended and no live rates are quoted.
- Last reviewed: November 2026.
- GOV.UK – Set up a limited company
- Companies House – SIC codes
- GOV.UK – Corporation Tax rates
- GOV.UK – Tax on dividends
- GOV.UK – Stamp Duty Land Tax: corporate bodies
- GOV.UK – Annual Tax on Enveloped Dwellings
- HMRC – Property Income Manual PIM2052: finance cost restriction