Thinking about buying rental property through a limited company? You’re not alone. Since the Section 24 tax changes kicked in, thousands of UK landlords have made the switch—and 2026 is shaping up to be a pivotal year for property investors weighing their options.
Let’s cut through the jargon and get straight to what matters: should you use a limited company for your next buy-to-let purchase? This guide breaks down everything you need to know—without the boring bits.
What Exactly Is a Limited Company BTL Mortgage?
Simply put, it’s a mortgage where your company owns the property—not you personally. The company applies for the mortgage, receives the rental income, and pays the mortgage. You own shares in the company.
Most landlords set up what’s called a Special Purpose Vehicle (SPV)—a company created specifically for holding property. It’s registered with Companies House and typically uses SIC code 68209 (letting and operating of own or leased real estate).
Why the Sudden Interest?
Back in 2017, the government started phasing out mortgage interest relief for individual landlords. By 2020, you could only claim a basic rate tax credit of 20%—regardless of whether you’re a higher-rate taxpayer. Ouch.
Limited companies? They can still deduct 100% of mortgage interest as a business expense. That’s a game-changer for many investors, and exactly why Hamptons research shows that over 80% of new buy-to-let purchases are now made through companies.
Personal vs Limited Company BTL: The Real Differences
Not sure which route is right for you? Here’s the honest comparison:
| Factor | Personal Ownership | Limited Company |
|---|---|---|
| Mortgage Interest Relief | 20% tax credit only | 100% deductible as expense |
| Tax Rate on Profits | Up to 45% (income tax) | 19-25% (corporation tax) |
| Initial Costs | Lower | Higher (setup + accounting) |
| Mortgage Rates | Typically lower | Usually 0.5-1% higher |
| Privacy | Private ownership | Public records at Companies House |
| Extracting Profits | Direct access | Via salary/dividends (additional tax) |
Considering Personal Buy-to-Let Instead?
If you’re a basic-rate taxpayer with just one or two properties, personal ownership might still make sense. The maths often works out simpler, and you’ll avoid the admin headaches of running a company.
First-time landlord? Check out our dedicated resources at First Time BTL Mortgage for guidance tailored specifically to new property investors.
For comprehensive information on all buy-to-let options available in the UK market, visit First Buy to Let Mortgage UK.
The Tax Benefits (Let’s Talk Numbers)
Here’s where things get interesting. Let’s say you’re a 40% taxpayer with a property generating £2,000/month in rent and a £1,200/month mortgage payment.
Personal Ownership Scenario
- Annual rent: £24,000
- Taxable (after expenses, excluding mortgage): ~£22,000
- Tax at 40%: £8,800
- Less 20% mortgage interest credit: -£2,880
- Tax bill: £5,920
Limited Company Scenario
- Annual rent: £24,000
- Less mortgage interest: -£14,400
- Less other expenses: -£2,000
- Taxable profit: £7,600
- Corporation tax at 19%: £1,444
That’s a potential saving of over £4,000 per year on a single property. Scale that across a portfolio, and you can see why limited companies have become so popular.
Important: These are simplified examples. Your actual tax position depends on your personal circumstances—always consult a qualified accountant or check HMRC guidance for the latest rules.
What Lenders Look For in 2026
Getting a limited company BTL mortgage isn’t quite as straightforward as a personal one. Here’s what most lenders want to see:
Company Requirements
- UK-registered Ltd company (England, Wales, Scotland, or Northern Ireland)
- SPV structure preferred—property-focused SIC codes (68100, 68209, 68320)
- Maximum 4 directors (some lenders allow more)
- No complex shareholding structures
Director Requirements
- UK resident (at least one director, some require all)
- Minimum age 21-25 (varies by lender)
- Good personal credit history
- Personal guarantees almost always required
Property & Rental Criteria
- Rental coverage: 125-145% of mortgage payment
- Minimum property value: typically £75,000+
- Standard construction (non-standard may limit options)
- EPC rating: E or above (C or above from 2025 for new tenancies)
The Financial Conduct Authority (FCA) doesn’t regulate most buy-to-let mortgages, but lenders still apply rigorous affordability checks.
Current Rates and What to Expect
As of early 2026, limited company BTL mortgage rates typically sit between 4.5% and 6.5%, depending on:
- Loan-to-value (LTV) ratio
- Fixed rate period (2, 3, 5, or 10 years)
- Property type and location
- Your experience as a landlord
Typical Costs to Budget For
| Cost | Typical Range |
|---|---|
| Arrangement fee | £999 – £1,999 or 1-2% of loan |
| Valuation fee | £150 – £1,500 |
| Legal fees | £800 – £2,000 |
| Broker fee | £300 – £500 or 0.5-1% of loan |
| Company formation | £12 – £100 |
| Annual accounting | £500 – £1,500 |
Deposit requirements: Expect to put down at least 20-25%. Some specialist lenders offer 15% LTV products, but rates will be higher.
Step-by-Step: Getting Your Limited Company Mortgage
1. Set Up Your Company (If You Haven’t Already)
Register your SPV through Companies House. Choose appropriate SIC codes and keep the structure simple. This takes about 24 hours online.
2. Gather Your Documents
Lenders will want to see:
- Certificate of incorporation
- Memorandum & articles of association
- ID and address proof for all directors
- 3-6 months’ bank statements (personal)
- SA302s or accounts if self-employed
- Details of existing property portfolio (if any)
3. Speak to a Specialist Broker
Many limited company BTL products aren’t available on the high street. A whole-of-market broker can access deals you won’t find yourself—and often at no direct cost to you (they’re paid by the lender).
4. Get Your Agreement in Principle
This confirms roughly how much you can borrow before you find a property. Most AIPs are valid for 60-90 days.
5. Find Your Property & Apply
Once you’ve found a suitable investment property, submit your full application. The lender will arrange a valuation and, if everything checks out, issue a formal mortgage offer.
6. Complete & Exchange
Your solicitor handles the legal work. From application to completion typically takes 6-12 weeks for limited company purchases.
Common Mistakes That Cost Landlords Money
We see these trip-ups time and again. Don’t let them catch you out:
❌ Not Running the Numbers First
A limited company isn’t right for everyone. If you’re a basic-rate taxpayer with one property, the extra costs might outweigh the tax savings. Always do the maths before committing.
❌ Choosing the Wrong Company Structure
Using an existing trading company for property? That can limit your lending options significantly. Most lenders prefer clean SPVs.
❌ Forgetting About Stamp Duty
Transferring existing personal properties into a company triggers stamp duty (SDLT). This can run into tens of thousands of pounds. Check current SDLT rates before making any decisions.
❌ Underestimating Admin Costs
Annual accounts, confirmation statements, corporation tax returns—running a company takes time and money. Budget £500-£1,500/year minimum for a good accountant.
❌ Going It Alone on a Complex Portfolio
The bigger your portfolio, the more you need professional advice. A specialist property accountant and a good broker can save you far more than they cost.
Frequently Asked Questions
Can I transfer my existing buy-to-let into a limited company?
Technically yes, but it’s often not cost-effective. You’d need to “sell” the property to your company at market value, triggering stamp duty and potentially capital gains tax. For most landlords, it makes more sense to keep existing properties personal and use a company for new purchases only.
Do I need a business bank account?
Yes. Keeping company finances separate from personal finances is both a legal requirement and makes accounting much simpler.
What happens when I want to sell?
You have two options: sell the property (company pays corporation tax on gains) or sell the company shares (potentially more tax-efficient, but limits buyer pool). Get advice from a tax specialist before selling.
Can I get a limited company mortgage with bad credit?
It’s harder, but not impossible. Some specialist lenders work with landlords who have credit issues. Expect higher rates and larger deposit requirements.
Is it worth it for just one property?
It depends on your tax bracket and plans. For higher-rate taxpayers planning to grow a portfolio, even one property can justify the structure. For basic-rate taxpayers with no expansion plans, probably not.
How long does the application take?
From application to completion, typically 6-12 weeks. Having all documents ready upfront speeds things up considerably.
Ready to Make Your Move?
Whether you’re a seasoned portfolio landlord or just exploring your first investment property, getting the right mortgage structure in place is crucial for long-term success.
Here’s what to do next:
- Run the numbers for your specific situation
- Speak to an accountant about the tax implications
- Get expert mortgage advice from specialists who understand limited company lending
Our network of FCA-regulated advisors can help you find the right mortgage for your investment goals—whether that’s a limited company structure or a personal buy-to-let.
Important: This guide is for informational purposes only and does not constitute financial advice. Buy-to-let mortgages are not regulated by the FCA. Tax rules can change, and their effects depend on individual circumstances. Always seek professional advice before making investment decisions. Your property may be repossessed if you do not keep up repayments on your mortgage.
Last updated: January 2026