Limited Company Buy to Let

I want to use my limited company to purchase a buy-to-let property

A buy-to-let mortgage for limited companies is a way to take out a mortgage on properties through a limited company, rather than in your own name. If you are setting up a new limited company for the purchase, lenders will typically require a minimum 75% loan-to-value calculation and check the potential rental yield.

Company directors will also be subjected to a credit check as the company itself, as a new entity, will have no creditworthiness. This may mean that the lender will seek personal guarantees from you, rendering you responsible should the company fail.

If you already own rental properties in a private capacity, you may wish to consider creating a limited company to hold existing assets and take advantage of the tax differences and write off options.

However, the operation will involve a resale and purchase with associated legal costs, Capital Gains Tax and Stamp Duty. You will have to do your calculations carefully to ensure this is the right way forward.

In Budget 2017, a reduction was announced in the amount of tax relief that was available for interest on buy-to-let mortgages. Prior to 2017, landlords paid tax on the net rental income after allowable expenses, such as mortgage interest. However, some investors after the announcement found they had moved into a new tax bracket with a higher rate.

Alternatively, you could set up a Special Purchase Vehicle (SPV). This is a company set up for the sole purpose of buy-to-let by a private individual or existing company, covering the purchase or re-mortgage of residential properties for letting.