Buy to Let Limited Company

In short, yes - but it comes with significant tax implications. 

If you live in a property owned by your limited company, HMRC considers this a benefit in kind. That means you’d likely be taxed personally for the benefit of living there rent-free or below market value. At the same time, the company itself may face a separate tax charge known as a benefit in kind Class 1A National Insurance contribution. 

What’s more, the company wouldn’t be able to claim mortgage interest and other costs in the same way it could for a buy to let property generating rental income. 

It’s also worth noting that most lenders don’t look favourably on this setup, as it can appear to be a way of bypassing standard residential mortgage rules. Since limited company buy to let mortgages are based on rental income via an AST (Assured Shorthold Tenancy), living in the property yourself raises red flags - after all, if you stop paying rent, you’re hardly going to evict yourself. 

In essence, holding property within a limited company is typically intended for investment purposes, not personal use. If your aim is to live in the property, it’s usually more tax-efficient to own it in your personal name - or at the very least, to seek specialist advice before making any decisions.

Yes, you can rent your personal property to your limited company - but there are a few things to bear in mind. 

This setup is sometimes employed when someone wants their company to use the property for business purposes, such as housing employees or running a serviced accommodation business. In these cases, a formal tenancy agreement should be drawn up, and rent should be paid at a fair market rate to ensure everything is above board from a tax and legal standpoint. 

However, this arrangement can become complicated if the company is using the property as a buy to let. For example, if you rent your house to your own limited company, which then lets it out to tenants, the tax treatment can vary and you may lose certain personal tax reliefs - such as Private Residence Relief on Capital Gains Tax when you eventually sell. 

There may also be implications for mortgage lenders. If the property has a residential mortgage in your name, renting it to a company may breach your mortgage terms. Similarly, if your company is applying for a limited company buy to let mortgage, lenders will expect to see a standard landlord–tenant setup - not one involving the director’s own home.

Your limited company can pay your rent, but whether it’s allowable - and tax-efficient - depends entirely on the circumstances. 

If you're renting a property to use as a genuine business premises, such as an office or workspace, the company can usually pay the rent and claim it as a legitimate business expense. This is common for freelancers or directors working from home in a separate rented property. In such cases, the arrangement should be properly documented, with a lease or licence agreement in place, and the rent set at a fair market rate. 

However, if you're living in the property and having the company cover your rent, it’s a different story. HMRC is likely to treat this as a benefit in kind - which means you'd be personally taxed on the value of the rent, and the company could also face National Insurance charges. Essentially, it's seen as the company providing you with free or subsidised accommodation, which is a taxable perk.

You can get a mortgage in the name of a limited company, as opposed to your own.

The eligibility criteria for a buy to let limited company mortgage is pretty similar to the eligibility criteria for a normal buy to let mortgage.

For example:

• Personal income - you might also be required to have a suitable personal income to help cover any quiet times in your rental business. Some lenders will accept proof of personal savings instead of a minimum income. For a private landlord this will be the borrower’s personal income. For a buy to let limited company, this will be company director’s personal income
• Good credit history - your credit history and the credit history of the company will be checked when applying for a mortgage. Some lenders will accept minor adverse credit events, but a history of severe negative credit events can make it much harder to get a mortgage
• Age of directors - some lenders might reject mortgage applications if the borrowers or directors of the company are past retirement age, unless they can prove they have another suitable income to cover the mortgage
• Other property ownership - whether you hold 4 or more other properties in your personal name or through an SPV, you might find it harder to get a mortgage through high street lenders. In this case, you would need to find a lender that can consider a portfolio landlord mortgage
• Exit strategies for limited company buy to let investors – whether you take out a buy to let mortgage through a limited company or in your personal name, it’s likely to be on an interest-only basis which means you’ll typically require an exit strategy. Buy to let limited company set ups have additional exit strategy options, including:
  • Selling properties: liquidate assets to repay debts and distribute profits (this is also an option for personally held buy to lets)
  • Transferring shares: pass company ownership to heirs or business partners
  • Dissolving the company: close the company once all properties are sold and debts are cleared

There are also some additional criteria specifically for buy to let limited company mortgages to bear in mind, including:

• Company purpose - the limited company must have been set up with the purpose of buying/selling/managing property
• How long the company has been incorporated - the company typically doesn’t need to have been incorporated for a minimum amount of time
• Personal guarantees for limited companies – lenders may require personal guarantees from directors when offering buy to let limited company mortgages. This is to reduce risk for lenders, ensuring directors are personally liable if the company cannot repay the loan. Guarantees often extend to all shareholders with significant stakes in the company
• SPV vs. trading companies - lenders typically favour SPVs for buy to let limited company mortgages because of their simplicity and focus. SPVs are used solely for property investment and management and are easier for lenders to assess risk due to their limited activities, whereas trading companies often operate across multiple sectors. Overall few lenders provide products to trading companies

You can get started by comparing limited buy to let mortgage rates currently on the market with our best buys tool.

Not all high street lenders offer limited company mortgages for buy to let properties. This can make it harder to find and find a suitable option. Mortgage brokers can help you secure deals that aren’t on offer from standard lenders, giving you more mortgages to consider. If you want help finding the right type of limited company mortgage for your needs, get in touch to see how we can help. Once you let us know what kind of mortgage you need, we’ll come back to you with a range of options. 

Setting up mortgages for limited companies is similar to setting up a buy to let mortgage as a private landlord. You need to meet the lender’s criteria and ensure you have a suitable repayment vehicle in place. 

Buy to let limited company mortgages can be obtained from various lenders, including high street banks, specialist lenders and through mortgage brokers like John Charcol. High street banks may have stricter criteria, while specialist lenders are more flexible and tailored to investment properties.

It’s best to use a mortgage broker for a limited company mortgage as many of these lenders require that borrowers use an intermediary like John Charcol.

It’s also important that you consult a tax adviser and/or accountant as they can ensure everything is set up correctly, giving you the best chance of a straightforward mortgage process.

Get in touch with our team to learn more on 0330 433 2927.

Everyone’s circumstances are different when it comes to buying property.

The combination of our expert staff and whole of market approach allows us to offer impartial advice and support for landlords. We’ll guide you through the finance options available step-by-step.

We also have access to a range of other trusted partnerships with professionals, such as insurers and solicitors. With the hard work of these partners and our staff, you'll receive a service that goes beyond the process from application to ownership. One that works around your needs and helps you protect your investments - so you can keep growing your portfolio.

Call us on 0330 433 2927 to learn about your buy to let limited company mortgage options.