Buy-to-Let Limited Company Mortgage FAQ
General information only. This is not financial or tax advice.
Last reviewed: 2026-06-06
Why do landlords buy buy-to-let properties through a limited company?
The primary driver is Section 24 of the Finance Act 2015, which restricts individual landlords from deducting mortgage interest from rental income before calculating tax, replacing full relief with a 20% basic-rate tax credit. Higher and additional-rate taxpayers are significantly worse off under Section 24. A limited company pays corporation tax on net profit after mortgage interest deduction, which is currently more tax-efficient for higher earners and growing portfolios. Secondary reasons include ring-fencing liability, succession planning, and the ability to retain profits within the company at a lower tax rate. You should obtain independent tax advice before structuring a buy-to-let via a company — the benefits depend on your personal tax position.
What is an SPV company for buy-to-let mortgages?
SPV stands for Special Purpose Vehicle — a limited company incorporated solely to hold investment properties. Lenders prefer SPVs over trading companies because the mortgage underwriter can assess a clean company balance sheet without trading history complications. The most common SIC codes lenders accept are 68100 (buying and selling own real estate) and 68209 (other letting and operating of own or leased real estate). When forming an SPV, check that it has the correct SIC code before applying for a mortgage; some lenders refuse to lend to companies with a SIC code associated with trading rather than property holding.
Is it harder to get a buy-to-let mortgage through a limited company?
The product range is narrower than personal buy-to-let. Fewer lenders offer limited company buy-to-let, which tends to mean slightly higher rates and fees compared to personal name. The ICR (Interest Coverage Ratio) stress test — typically rental income must cover 125–145% of the interest at a stress rate — applies to company applications in the same way as personal ones. However, lenders generally assess affordability at the company level without requiring the director's personal income to service the mortgage, which is a meaningful distinction for those with limited personal income. Personal guarantees (PGs) are almost universally required by lenders for company buy-to-let.
Do I have to provide a personal guarantee for a limited company buy-to-let mortgage?
Almost certainly yes. Virtually all lenders offering company buy-to-let products require a personal guarantee from the company director(s) and/or significant shareholders (typically anyone holding 25%+ equity). A personal guarantee means you are personally liable for the mortgage debt if the company defaults. This negates the limited liability benefit in the event of default, but most landlords accept this in return for the tax efficiency of the corporate structure. The PG requirement means your personal credit profile and financial position remain relevant to the lender even though the borrower is the company.
What are the ICR requirements for a limited company buy-to-let mortgage?
Interest Coverage Ratio (ICR) requirements for company buy-to-let are broadly similar to personal buy-to-let: most lenders stress the interest at a notional rate (typically 5.5–6.5%) and require the rental income to cover that figure by 125–145%. For limited companies, lenders typically use the 125% ICR threshold because corporation tax is lower than higher-rate income tax, meaning the company retains more of the rental income. Some lenders apply more favourable ICR calculations for company borrowers. A specialist broker will identify which lender's ICR calculation works best for your specific property and rental income.
Can I transfer my personally held buy-to-let properties into a limited company?
Technically yes, but incorporation is treated as a disposal and repurchase for tax purposes, triggering Capital Gains Tax (CGT) on any gain and Stamp Duty Land Tax (SDLT) on the market value — including the 5% SDLT additional dwelling surcharge from October 2024. For most landlords with meaningful equity, the CGT and SDLT costs outweigh the future tax savings, at least in the short to medium term. Incorporation Relief (HMRC extra-statutory concession) can defer CGT in some circumstances where a genuine property business is being transferred, but the rules are restrictive and disputed by HMRC in some cases. Always obtain specialist tax and legal advice before attempting incorporation of an existing portfolio.
Risk warning
Buy-to-let mortgages are not regulated by the Financial Conduct Authority. Your rental property may be repossessed if you do not keep up repayments. Tax treatment depends on individual circumstances and may change. Always obtain independent tax advice before structuring property investment through a company.
Explore further