Introduction.
Most new buy-to-let purchases are now made through limited companies rather than in personal names.
A company set up only to hold property, usually called a special purpose vehicle or SPV, is taxed differently from an individual landlord. For many higher-rate taxpayers that difference is significant, but a company also brings costs, paperwork and a smaller choice of lenders.
This guide explains how SPVs work, how lenders assess company borrowing, what to consider before moving existing properties into a company, and what it means to run one.
We arrange the mortgage and work alongside your accountant. We do not give tax advice, and whether a company suits you depends on your wider tax position, so please take specialist advice before you decide.
A company whose only business is owning and letting property. Lenders strongly prefer this simple structure.
01Why landlords use a company.
Individual landlords can no longer deduct mortgage interest from rental income. Instead they receive a tax credit at the basic rate. A company deducts its finance costs in full before corporation tax.
The same property, two ways
| Annual figures | Personal name | Limited company |
|---|---|---|
| Rent received | £24,000 | £24,000 |
| Running costs | −£3,000 | −£3,000 |
| Mortgage interest | −£12,000 | −£12,000 |
| Tax | −£6,000 | −£1,710 |
| Profit after tax | £3,000 | £7,290 |
Personal: higher-rate taxpayer at 40% on £21,000, less a 20% credit on £12,000 of interest. Company: 19% corporation tax on £9,000 of profit, before any dividends are paid out. Illustrative only.
What the comparison leaves out
- Taking money out. Profits paid to you as dividends are taxed again. Dividend tax rates rose from April 2026.
- Higher costs. Company mortgage rates are often a little higher, and accountancy costs more.
- Your tax band. Basic-rate taxpayers may gain little or nothing.
- Future rules. Separate, higher income tax rates for property income apply to individuals from April 2027.
Adviser’s note
A company tends to suit landlords who are higher-rate taxpayers, plan to keep profits invested in property, or are building a portfolio. Your accountant should model your own figures.
02Setting up an SPV.
Lenders want a company that does nothing except own and let residential property. Setting it up correctly from the start widens your choice of mortgage.
What lenders look for
| Item | Usually required |
|---|---|
| Registered | A private limited company in England and Wales, Scotland or Northern Ireland |
| Activity codes | Property SIC codes only, such as 68100, 68209 or 68320 |
| Directors | Usually individuals, often UK resident |
| Shareholders | Individuals; some lenders accept a holding company |
| Trading history | None needed: new SPVs are widely accepted |
SIC codes describe what a company does. 68100: buying and selling own real estate. 68209: letting and operating own or leased real estate. 68320: management of real estate on a fee basis.
Practical steps
- Register the company at Companies House
- Choose property SIC codes only
- Open a business bank account
- Agree with your accountant how you will fund the deposit
- Register for corporation tax with HMRC
Using an existing company
A company that already trades, for example your consultancy, can buy property, but far fewer lenders will consider it. A separate SPV is usually simpler.
03How lenders assess company borrowing.
Lenders look at the property’s rent first, then at the people behind the company.
The rental stress test
Lenders check that the rent covers the mortgage interest by a set margin, calculated at a notional stress rate rather than your actual rate. For limited companies the margin is often 125%, lower than the 145% many lenders use for higher-rate taxpayers buying personally.
| £300,000 loan, 5.5% stress rate | Rent needed |
|---|---|
| Limited company at 125% | £1,719 a month |
| Higher-rate taxpayer at 145% | £1,994 a month |
Illustrative. Stress rates and margins vary by lender, product and term of the fixed rate.
The people behind the company
- Personal guarantees. Most lenders ask each director and main shareholder to guarantee the loan personally.
- Credit history. Lenders check each director’s and shareholder’s credit file.
- Experience. First-time landlords can borrow through an SPV, but with fewer lenders.
- Income. Some lenders set a minimum personal income; others rely on the rent alone.
- Deposit. Usually at least 25%, often lent to the company by its directors.
Personal guarantees
A guarantee means you can be asked to repay the loan personally if the company cannot. Take independent legal advice before signing one.
04Rates, fees and products.
Company buy-to-let products are widely available, though the range is smaller than for personal borrowing and rates can be a little higher.
Choosing a product
| What to weigh up | |
|---|---|
| Five-year fix | Often assessed at your actual rate, which can increase how much you can borrow |
| Two-year fix | More flexibility, but a higher stress rate |
| Percentage fee | Lower rates with fees of 2% to 7% of the loan, which suit larger loans |
| Interest only | Common for buy-to-let; plan how you will repay at the end |
Costs to budget for
- Lender arrangement fee and valuation
- Your own and the lender’s legal fees; some lenders insist on separate solicitors
- Independent legal advice on the personal guarantee
- Stamp duty at the higher rates for additional properties
- Accountancy and Companies House fees each year
We compare products on their total cost over the fixed period, including fees, for your loan size.
05Moving existing properties across.
Transferring properties you already own into a company is treated as a sale at market value. That can create tax bills before you save any tax.
The main costs
- Stamp duty. The company pays stamp duty on the market value at the higher rates for additional properties.
- Capital gains tax. You may owe tax on any gain since you bought the property.
- Refinancing. Your personal mortgage must be repaid and a new company mortgage arranged, which may mean early repayment charges.
- Legal fees. A conveyancing transaction for each property.
Reliefs that may apply
Some landlords whose letting activity amounts to a business may qualify for incorporation relief on capital gains, and partnerships may have stamp duty options. These depend on detailed facts and HMRC’s view of your activity.
Take specialist tax advice
Moving a portfolio into a company is a major tax decision. We will arrange the new lending once your tax adviser has confirmed the approach.
Many landlords keep existing properties in their own names and buy new ones through a company.
06Running the company.
An SPV has legal duties of its own. The costs are modest, but they must be met every year.
Annual obligations
| Duty | When |
|---|---|
| Confirmation statement to Companies House | Every year |
| Annual accounts to Companies House | Every year |
| Corporation tax return to HMRC | Every year |
| Annual Tax on Enveloped Dwellings return | If a property is worth over £500,000; relief is usually available for let property |
Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between.
Taking money out
- Repaying your loan. Money you lent the company for deposits can usually be repaid to you tax free.
- Dividends. Profits paid out as dividends are taxed at dividend rates.
- Salary. Possible, but less common for property companies.
- Leaving profits in. Retained profit can fund the next deposit.
Adviser’s note
Lending your deposit to the company, rather than buying shares with it, keeps a simple tax-free route to take it back later. Agree the structure with your accountant first.
07Growing a portfolio.
Once a landlord has four or more mortgaged buy-to-let properties, lenders apply portfolio landlord rules, whether the properties are held personally or in companies.
What portfolio rules mean
- A schedule of every property, its value, loan and rent
- Business plans and cash flow for the portfolio as a whole
- Stress testing across all properties, not just the new one
- Some lenders limit total exposure or loan to value across the portfolio
Specialist property types
Houses in multiple occupation and blocks of flats on one title are often bought through companies. They need specialist lenders and, for many HMOs, a licence from the local council.
Keep a live schedule
An up-to-date portfolio schedule makes every new application faster. We can keep yours on file and update it with you.
Larger investors sometimes use a holding company above several SPVs. Fewer lenders accept this, so plan it with your accountant and with us before you set it up.
08An SPV purchase, illustrated.
A higher-rate taxpayer buying a first company flat
Two directors set up a new SPV to buy a £400,000 flat let at £2,000 a month.
- Deposit
- £100,000 lent to the company by the directors
- Mortgage
- £300,000 at 75% loan to value, five-year fix
- Stress test
- Rent covers interest 145% at 5.5%, above the 125% required
- Stamp duty
- £30,000 at the higher rates for additional properties
- Outcome
- Personal guarantees from both directors, independent legal advice, completed in eight weeks
This example is illustrative and does not describe a real client.
09Checklist and glossary.
Documents to have ready
- Company registration number and certificate of incorporation
- Details of every director and shareholder
- Photo ID and proof of address for each person
- Proof of the deposit and where it came from
- A rental valuation or letting agent’s estimate
- Your existing property schedule, if you have one
- Personal income evidence, if the lender asks for it
- Your accountant’s and solicitor’s contact details
Glossary
- SPV
- Special purpose vehicle: a company set up only to own property.
- SIC code
- The code that tells Companies House what a company does.
- ICR
- Interest cover ratio: how far the rent exceeds the stressed interest.
- Stress rate
- The notional interest rate a lender uses for its rent test.
- Personal guarantee
- A promise to repay the company’s loan personally if it cannot.
- Director’s loan
- Money a director lends to the company, repayable later.
- Portfolio landlord
- A landlord with four or more mortgaged buy-to-lets.
- ATED
- Annual Tax on Enveloped Dwellings, for company-owned homes over £500,000.
Related: Buy-to-Let / Investment · All guides · Calculators