Limited Company buy-to-let mortgages
Limited company buy-to-let mortgages are popular among UK landlords. Our expert team will explore a range of options for your circumstances.
Limited Company buy-to-let
The UK limited company buy to let mortgage market is growing, as more portfolio landlords take advantage of paying a lower rate of corporation tax.
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Whether you're a first-time investor in a residential property or want to expand your portfolio, our expert team will explain the process, and identify the right limited company buy-to-let mortgage for your circumstances.
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What is a Limited Company buy-to-let mortgage?
Limited company buy-to-let mortgages are specifically designed for limited companies. As such, they are subject to different eligibility criteria and interest rates compared to traditional, personal buy-to-let mortgages.
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With a limited company buy-to-let mortgage, the business buys rental properties as an investment. It becomes the legal owner of the buy-to-let property and is responsible for managing the rental income as well as associated expenses.
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The limited company then rents out the property and uses that income to cover mortgage payments and any other expenses.
One of the main reasons for limited companies making buy-to-let investments is the potential for tax benefits.
Government changes reduced the personal income tax relief available to individual private landlords, whereas limited companies can claim tax relief on mortgage interest payments as a business expense, which can make it more tax efficient.
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That means landlords that own a property through a limited company mortgage pay corporation tax on any rental income rather than income tax which, for those in the higher earners tax bracket, can be higher.
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Our expert team will ensure you're fully informed about corporation tax and income tax requirements at every stage of the limited company buy-to-let mortgage decision-making process.
Potential landlords can secure a limited company buy-to-let mortgage in two ways: first, through an existing firm or business that is able to buy, sell or manage property.
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Second, by creating a new special purpose vehicle (SPV) to manage the rental property portfolio. To do this you must:
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Register as a limited company with Companies House, process known as incorporating. This can be done online, costs £12 and takes 24 hours to complete. Paper applications cost £40 and can take up to 10 days to process.
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Provide details including the company name, address, the director, details of any shares/shareholders and what it does.
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Register for corporation tax via Companies House. It can also be done online using the 10-digit unique taxpayer reference (UTR), sent to your company address after incorporation. This must be done within three months of incorporation.
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Tell HMRC your company's registration number, when your business started business and the date your annual accounts are made up to.
Be aware that landlords can also transfer their properties into a SPV to take advantage of tax relief offered to limited companies with a buy-to-let mortgage. It can be worthwhile to seek professional tax advice before investing in a buy-to-let property.
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As with traditional buy-to-let mortgages, a limited company buy-to-let mortgage is not regulated by the Financial Conduct Authority (FCA).
Do I need a specialist buy-to-let mortgage lender?
The short answer is yes. Few of the UK's High Street lenders regularly provide limited company buy-to-let mortgages.
That said, we work with a wide range of specialist mortgage lenders who do.
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Whether you have one property or you're a portfolio landlord, our expert mortgage brokers can find a limited company buy-to-let mortgage that works for your circumstances.
What are the lenders' criteria?
Lenders that provide limited company buy-to-let mortgages often have specific criteria.
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They will examine the rental income potential of the property, the financial standing of the limited company, and the creditworthiness of the directors or shareholders.
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Requirements can include:
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A minimum property value of £50,000
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Minimum rental income thresholds
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Minimum and maximum age terms
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Up to 80% Loan to Value (LTV) for a limited company buy-to-let mortgage​
As with all buy-to-let mortgages, lenders also apply a stress rate to their calculations, to ensure the limited company can make the monthly payments even if the mortgage interest rate changes.
Does a Limited Company buy-to-let mortgage pay Stamp Duty?
Yes. All buy-to-let properties worth more than £40,000 will pay Stamp Duty at the additional surcharge rate.
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It's worth noting that Stamp Duty will also be levied when any individually owned buy-to-let properties are incorporated into your SPV.
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Our team will ensure you're fully aware of any and all additional charges associated with limited company mortgages, including legal fees and capital gains tax.
Can I have more than one Limited Company buy-to-let mortgage?
Legally, there are no restrictions to how many limited company buy-to-let mortgages an SPV can have. That said, lenders could impose a maximum number of their own.
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Alternatively, a lender could restrict the total borrowing figure in relation to how many mortgages one has, versus the property numbers.
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If you want to expand your investment portfolio beyond a lender's limits and learn more about the buy to let market, we can help ensure your limited company buy-to-let mortgage needs are met.
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Targeted help for your Limited Company buy-to-let mortgage needs
At Your Mortgage Room, we take pride in guiding you through the entire limited company buy-to-let mortgage process, taking into consideration your financial circumstances.
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Our dedicated team works with specialist limited company buy-to-let mortgage lenders to craft bespoke solutions that are tailored specifically to your needs.
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Your journey to securing the right limited company buy-to-let mortgage begins and evolves with us.
Contact us
Email us at info@yourmortgageroom.co.uk, call 01273 039500, or fill in this contact form and we'll get back to you straight away.
Your home may be repossessed if you do not keep up with your repayments.
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There may be a fee for mortgage advice. The precise amount will depend upon your circumstances and certain criteria but will be agreed with you before proceeding.