Typically these include:
- 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
For those classed as SPVs, getting a BTL is now more straightforward than for firms trading as other SIC categories, and there are several options, depending on the situation.
Are there dedicated SPV buy to let lenders?
There are several main players in the industry nowadays, and with the high street lenders that used to throw money in that direction now only offering finance to existing customers, you’ll need to go through a specialist broker to access them.
The acceptable loan-to-value (LTV) ratio can start from 85% and may vary in rate, with a range available including fixed rates and variable rates, with the most competitive being discount variables (at the time of writing).
The experts we work with are happy to go all the legwork for you in order to find the best deal for your needs. Make an enquiry today to get started.
Existing trading Ltd companies (not SPV)
There’s a small number of lenders who consider mainstream buy-to-let mortgages to Ltd companies that already run as a trading business. This business does not necessarily need to be trading in property either.
Typically, you need a 25% deposit for these mortgage types because the number of lenders available is restricted.
Setting up a new property company for buy to let
Newly registered limited company mortgages are also possible based on current criteria with a few select lenders. Basically, the Ltd company would need to be created at the time of application and would be best being registered with companies house as an SPV (see definition above).
Lenders will start lending at 85% loan-to-value and base affordability on the rental yield, with income needing to be at least 125% of the mortgage payment to be acceptable. However, some lenders may require more than this, for example up to 150% or even 180%, depending on the situation.
At least two (or one if in sole name) of the directors will need credit scoring to show that the company is creditworthy as it will have no history of its own. The lender will also need to verify the directors income to establish there is a level of underlying affordability.
If the directors have any adverse credit, it still may be possible to obtain the finance if other factors meet the lender’s criteria.
NOTE: If you are a director of a limited company looking for a commercial mortgage to buy/remortgage a commercial property, read our guide on commercial finance.
Directors of limited companies love the specialists that work with us because they use the following criteria…
- No minimum income required
- 1 years accounts accepted
- 2 years accounts accepted
- No income at all needed for experienced landlords
The advantages and disadvantages
For those interested in purchasing property through their limited company with a buy-to-let mortgage, there are certain advantages and disadvantages to consider.
Advantages:
- Tax: Can be seen as more tax efficient than personal income, especially for higher rate or additional earners.
- Limited liability: If the company dissolves it is not forced to sell other personal assets (unless guarantees or other security is given).
- Multiple shareholders on title deeds: Can make it easier to manage proportions of ownership and share of profits etc.
- Increased potential borrowing: Other lenders for new personal mortgages may not take these into account as commitments and therefore may allow increased personal borrowing.
Disadvantages:
- Limited number of lenders to choose from: More restrictive criteria and choice of products, which may mean higher rates/costs and less value on investment.
- Potential fees: Consider any increased legal costs and paperwork (likely to include property details and tax returns).
- Complications: A buy-to-let mortgage for a limited company may be slightly more complicated to set up.
Mortgages for Ltd companies on residential and buy-to-let investment properties can be a tricky thing to source, as not all lenders (in fact very few when you look at the whole market) are happy with such a setup.
*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 a property.
Buy to let limited company mortgages for new companies
The main issues here surround the risk to the lender. If the mortgage is for a completely new company, then there will be no trading history or track record of success that the mortgage provider can base their lending decision on.
Without any credit history, it’s hard for the lender to establish the chances of the loan being repaid. In these circumstances, the lenders that do consider such applications often ask for personal guarantees from the directors so that, should the mortgage not be repaid, the directors become personally responsible.
They may also request additional security such as equity in other properties or a larger deposit etc.
Buy to let mortgages for existing limited companies
If the company already has a trading history and proven experience with renting properties, it is easier for a lender to approve an application, although certain lenders may still ask for personal guarantees.
The added consideration here would be if the company already owns multiple properties, because certain lenders do limit the number and total amount of mortgages each borrower or company can have.
As ever though, there are lenders that accommodate professional landlords with mortgages for large property portfolios, and the experts we work with might be able to help you. Make an enquiry to get started.
Buy to let mortgage rates for limited companies
All lenders are different and offer different rates, depending on their lending criteria and your personal circumstances. An existing Ltd buy-to-let company with a good track record in managing rental properties profitably will be looked on more favourably than a new company.
For the best rates, talk to one of the advisors we work with. They have whole-of-market access, which means they can find the best buy-to-let mortgages for limited companies available. There may even be broker-exclusive deals that aren’t available to the general public that could potentially save you even more.
Is stamp duty payable on a limited company buy to let?
Yes. Any purchase of a residential property is subject to stamp duty and there is a sliding scale based on the value of a property that determines how much sales tax you will have to pay.
| Property Value |
Stamp Duty Due |
| Up to 125,000 |
0% |
| £125,000.01 to £250,000 |
2% |
| £250,000.01 to £925,000 |
5% |
| £925,000.01 to £1,500,000 |
10% |
| £1,500,000.01 |
12% |
If you’re unsure how much stamp duty you will need to pay on your limited company BTL mortgage get in touch and the advisors we work with will calculate it for you.
Will I pay a surcharge with limited company buy to let Stamp Duty?
If you’re unsure how much stamp duty you will need to pay on your limited company BTL mortgage get in touch and the advisors we work with will calculate it for you.
Will I pay a surcharge with limited company BTL stamp duty?
There is a 3% surcharge which applies to the total purchase price on residential properties, such as buy-to-let.
Moving a buy to let property into a limited company
With the changes to the tax rules, transferring a buy-to-let property into a company name is becoming an increasingly attractive proposition for many landlords.
The changes include loss of mortgage interest tax relief and wear and tear for landlords with the property in their own name.
The good news is that these changes don’t apply to buy-to-lets owned by a limited company, because the properties are seen as a business, so expenses can be written off for tax purposes.
The downside is that if you already own buy-to-lets and want to transfer them, it will usually mean a sale and repurchase.
This could mean incurring a range of additional costs, including:
- Capital gains tax
- Stamp duty (including the surcharge)
- Legal fees
- Valuation and mortgage fees
There are exceptions to this in some scenarios, where if you can evidence being a portfolio landlord is your full-time role, and you own enough property (among some other things) you may be eligible for relief.
*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.
How does bad credit affect buy to let for limited companies?
If there’s previous bad credit showing on your credit file, then this can limit the options to you in purchasing a limited company BTL.
Below is a list of potential credit issues that may affect your ability to obtain a mortgage:
- Adverse credit overview
- Low credit score
- Mortgage arrears
- Defaults
- County Court Judgements (CCJs)
- Individual Voluntary Arrangements (IVAs)
- Debt Management Plans (DMPs)
- Bankruptcy
- Repossession
Some lenders are happy without the bad credit showing as being satisfied as long as they’ve been registered over a certain time.
Talk to a buy to let expert about limited company mortgages today
If you have questions or want to speak to an expert for the right advice on getting a buy-to-let mortgage through a limited company, call us on 0808 189 2301 or make an enquiry online.
Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.
