Learning Outcomes
By the end of this guide you will be able to:
- Understand the key differences between personal and limited company buy-to-let mortgages.
- Advise clients on the benefits and drawbacks of using a limited company for BTL investments.
- Recognize common pitfalls and mistakes brokers and landlords should avoid.
- Identify when a limited company buy-to-let mortgage is suitable and when it is not.
- Navigate lenders' requirements and criteria for limited company BTL mortgages.
What Is a Limited Company Buy-to-Let Mortgage?
A limited company buy-to-let mortgage is a specialist mortgage product available to landlords who purchase rental properties through a limited company. Most lenders require the company to be a Special Purpose Vehicle (SPV) registered under specific SIC codes related to property letting (e.g., 68209 - Other letting and operating of own or leased real estate).
While trading companies can also apply for buy-to-let mortgages, the process is more complex and lender options are limited. That's why the majority of landlords using a company structure set up an SPV specifically for property investment.
Why Landlords Use Limited Companies
Landlords have increasingly turned to limited company structures for buy-to-let investment due to tax changes introduced in 2017.
- Higher Borrowing Potential - Limited companies are assessed differently for affordability, often allowing landlords to borrow more than they would personally.
- Tax Efficiency - Corporation tax on profits is currently lower than higher-rate income tax, which benefits landlords who would otherwise fall into higher tax brackets.
- Retaining Profits in the Business - Unlike personally owned properties, profits can be retained within the company for reinvestment without triggering personal tax liabilities.
- Inheritance Planning - Limited companies provide more flexibility in passing property portfolios to heirs without triggering as much inheritance tax liability.
Limited company buy-to-let mortgages are more popular than ever, with more landlords choosing this structure to maximize tax efficiency and long-term growth. As a mortgage broker, it's essential to understand this market shift to best serve your clients.
With demand growing and lenders evolving their offerings, now is the perfect time to deepen your knowledge. That's why we've created this guide—to give you clear, practical insights into limited company BTL mortgages ahead of the National Buy to Let Adviser Event in June. Whether you're advising first-time landlords or experienced investors, this guide will help you navigate key considerations, benefits, and potential pitfalls to ensure you provide the best possible advice.
