Limited company buy to lets

You can use a limited company to purchase a property, whereby the limited company buy to let mortgage will be held in the name of a company. Whether it ultimately works out as being cost effective for you depends on your income, mortgage rates and fees, along with capital gains tax, inheritance tax and income from dividends.

This type of mortgage is very similar to that of a standard buy to let mortgage in your personal name, but as your company will own the property & mortgage, your mortgage repayments and rental earnings are treated different for tax purposes.

Buying property under your limited company is possible, depending on the buy-to-let company structure. Many lenders will take the following criteria into consideration:

• An existing special purpose vehicle (SPV) limited company or existing trading limited company that are classified under specific Standard Industry Classification (SIC) code such as the following:
  • 68100: Buying and selling own real estate
  • 68201: Renting and operating of Housing Association real estate
  • 68209: Other letting and operating of own or leased real estate
  • 68320: Management of real estate on a fee or contract basis

• Starting up a new limited company at the time of purchase
• Limited companies with personal guarantees (PGs) usually set at £25,000 per annum
• Up to 85% loan to value (LTV)
• Rental income needs to be at least 125% of mortgage payment
• Adverse credit issues are subject to circumstances and may be accepted depending on lender

*We recommend that you speak to a tax specialist such as an accountant to assess the advantages and drawbacks of using a limited company for purchasing/managing buy-to-let properties. Our advisers will talk you through your options and able to recommend you to a tax specialist if you do not already have one in place.