Limited Company Buy-to-Let Mortgages

A limited company buy-to-let mortgage is a mortgage provided to a company rather than an individual landlord.

The company purchases and legally owns the property. The mortgage is secured against that property, and the rental income belongs to the company.

Although the company is the borrower, lenders will normally assess the directors and shareholders behind the business. They may require personal guarantees, making those individuals personally responsible if the company cannot repay the mortgage.

An SPV is a limited company established for a specific purpose. In this context, its main activity is buying, owning and renting property.

Many buy-to-let lenders prefer SPVs because the company does not normally conduct unrelated trading activities. This can make its finances, ownership and liabilities easier to assess.

The company will usually need suitable property-related Standard Industrial Classification codes registered at Companies House.

Commonly accepted activities can include:

• Buying and selling property
• Letting and operating owned or leased property
• Managing property

The exact company structure and acceptable SIC codes vary between lenders. You should check the structure with your accountant and mortgage adviser before submitting an application.

Some lenders consider established trading companies that want to purchase investment property. However, the number of available products may be more limited than for an SPV.

A lender may review:

• The company’s trading history
• Business accounts
• Existing liabilities
• Profitability and cash flow
• The intended use of the property
• The directors and shareholders
• Any other business activities
• The source of the deposit

Using an existing trading company can expose the property to risks arising from the wider business. Tax and legal advice should be obtained before deciding how to structure the purchase.

Limited company buy-to-let lending is a specialist market. Lenders apply different rules to company structures, rental calculations and director backgrounds.

MortgageKey can help you:

• Compare SPV and trading-company mortgage options
• Assess the property’s rental coverage
• Review company ownership against lender criteria
• Identify lenders accepting first-time landlords
• Explore HMO and portfolio landlord options
• Explain personal guarantee requirements
• Compare rates, fees and early repayment charges
• Support the application through to completion

We recommend obtaining independent tax and legal advice before deciding whether to purchase through a company.