Last reviewed: June 2026
TL;DR- Limited company BTL mortgages are taken in the name of a company - typically a special purpose vehicle (SPV) - rather than in the individual landlord's personal name.
- Limited companies are not subject to the Section 24 mortgage interest restriction - mortgage interest remains fully deductible as a business expense.
- Limited company BTL mortgage rates are typically higher than personal name BTL rates, and lender choice is more restricted.
- Transferring existing personally held properties into a limited company triggers stamp duty and capital gains tax - the tax case is strongest for new purchases.
Why Landlords Use Limited Companies for Buy-to-Let
The primary driver for limited company buy-to-let ownership is the Section 24 mortgage interest restriction, which was phased in between 2017 and 2020. Under Section 24 of the Finance Act 2015, individual landlords can no longer deduct mortgage interest as an expense from rental income - instead they receive a basic rate (20%) tax credit on the interest paid. For higher and additional rate taxpayers, this significantly increased the effective tax rate on rental profits.
Limited companies are not subject to Section 24 - mortgage interest paid by a company remains fully deductible as a business expense against rental income before corporation tax is calculated. For landlords in the higher rate tax bracket with significant mortgage interest costs, holding properties through a limited company can produce a materially lower tax charge on rental profits.
However, the tax position involves complexities beyond the mortgage interest comparison: corporation tax rates, the tax treatment of profits extracted from the company as salary or dividends, capital gains tax on eventual sale (which is not subject to the annual exempt amount when the property is held in a company), and inheritance tax planning. Specialist tax advice is essential before deciding on ownership structure.
Special Purpose Vehicle (SPV) Structure
Most limited company BTL mortgage lenders require the company to be a special purpose vehicle (SPV) - a company incorporated specifically for the purpose of holding residential investment properties. SPVs are typically incorporated at Companies House with a specific SIC (Standard Industrial Classification) code for residential property letting - commonly 68100 (buying and selling of own real estate) or 68209 (other letting and operating of own or leased real estate).
Lenders prefer SPVs because the company has a single clear purpose, making underwriting more straightforward. Trading companies - limited companies with other business activities - are less commonly accepted by BTL lenders and may require specialist lending.
Limited Company BTL Mortgage Criteria
Limited company BTL mortgages are assessed differently from personal name BTL products:
- The mortgage is taken in the company name, not the individual's name.
- Most lenders require personal guarantees from the directors/shareholders of the SPV, making the individuals personally liable for the mortgage debt.
- Rental income coverage requirements are similar to personal name BTL - typically 125-145% of the mortgage payment at a stressed rate.
- Minimum deposits of 25% are standard, giving a maximum LTV of 75%.
- Rates are typically 0.5-1% higher than equivalent personal name BTL products.
- Arrangement fees and legal costs may be higher, as company lending involves additional legal documentation.
Transferring Existing Properties into a Company
Landlords with existing personally held properties sometimes consider transferring them into a limited company to benefit from the corporate tax treatment. However, a transfer of property from personal ownership to a company is treated as a disposal for capital gains tax purposes at market value - CGT is payable on any gain above the annual exempt amount. Stamp duty land tax is also payable by the company on the acquisition at market value. These upfront tax costs mean that incorporation of existing portfolios rarely makes financial sense unless the portfolio is large, the mortgage interest restriction impact is severe, and the landlord has a long holding period to recover the upfront costs. Specialist tax advice is required.
Frequently Asked Questions
Do I need a personal guarantee for a limited company BTL mortgage?
Yes, in most cases. Almost all limited company BTL lenders require personal guarantees from the directors or shareholders of the SPV. This means that if the company defaults on the mortgage, the lender can pursue the guarantors personally. The personal guarantee effectively removes the limited liability protection for the mortgage debt.
What SIC code should an SPV use for buy-to-let?
The most commonly used SIC codes for BTL SPVs are 68100 (buying and selling of own real estate) and 68209 (other letting and operating of own or leased real estate). Some lenders specify acceptable SIC codes. The company should be registered at Companies House with the appropriate SIC code before applying for a limited company BTL mortgage.
Is corporation tax lower than income tax for landlords?
The main rate of corporation tax in the UK is 25% for companies with profits above £250,000, with a small profits rate of 19% for profits below £50,000 and marginal relief between these thresholds. Individual higher rate income tax is 40% and additional rate is 45%. However, the comparison is not straightforward because profits extracted from a company as dividends or salary attract additional personal tax. The overall tax position depends on the specific numbers and the landlord's other income - specialist advice is required.
Can I use a limited company BTL mortgage for an HMO?
Yes. Limited company BTL mortgages are available for HMO properties as well as standard single-household BTL properties, subject to the lender accepting HMO use and the property meeting HMO licensing requirements. Lender choice for limited company HMO mortgages is more restricted than for standard properties and rates are typically higher.
