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Tips on Limited Company Buy-to-Let Borrowing


These days, whilst it is certainly feasible to invest in buy-to-let properties as an individual, doing so as a business entity may make matters easier over the medium to long term.

This is largely because of all the top-down reforms that have occurred over the last 5 years or so – most notably, Section 24 of the Finance Act.  This legislation, phased in over the last 4 years, eliminates many landlords’ ability to offset the majority of their mortgage costs against tax.

Here, the specialists at Property Solvers – experts in buying homes fast – explain why you might prefer to borrow and invest as a limited company and provide some tips on how to do so…

Buying Property to Let as a Limited Company

If you’re planning to make buy-to-let a long-term income-generating strategy, it’s likely that you will require a mortgage.

Acquiring a buy-to-let property with a basic residential mortgage is not possible, however, so you’d need to borrow under a specific buy-to-let finance arrangement.

In some circumstances, whether you do this as a limited company or under your own name as an individual makes no difference.

However, it’s a good idea to research whether you could save money and stress by setting up a basic property business and borrowing that way instead.

Benefits of Limited Company Buy-to-Let

As an individual, you’ll have to pay income tax on any money you earn from rent when you buy to let. If you later sell the property for a profit, you will also have to pay capital gains tax.

You’ll have to pay stamp duty land tax (plus the second property surcharge) whether you decide to approach the purchase of your rental property as an individual or a business.  But limited companies are required to pay corporation tax in place of the other duties mentioned above.

In many cases, your taxes as a business may be considerably lower than they would be should you buy to let as an individual – though this is not always the case, and it is something that should be looked into on a case-by-case basis.

To find out which option is best for you, always speak to a tax advisor before taking the plunge.

Steps to Take When Borrowing as a Limited Company

1.     Educate Yourself

It’s important to do thorough research and seek guidance when looking into buy-to-let mortgages. This will help you to determine which is the best option for you.

We highly recommend speaking to specialist mortgage brokers with extensive experience of lending to both individuals and companies, as they will be able to offer you knowledgeable and objective advice that will best suit your circumstances and objectives.

2.     Know Your Goals

Many lenders have a variety of options available – whether you decide to borrow under your own name or as a business.

To find out which type of mortgage is best for you, you’ll need to have a plan in mind. Are you planning to be a landlord for the foreseeable future, using the rent you earn to supplement your income? Are you just letting a property for a short-term financial boost?

Explain your intentions to your mortgage broker in full to help them understand your case and offer you tailored advice.

3.     Tick the Right Boxes

As with regular residential mortgages, you’ll need to jump through the correct hoops and show that you are happy to adhere to certain guidelines before you can be granted a buy-to-let mortgage.

When borrowing as a limited company, you’ll need to confirm that you will be paying the right taxes and insurances, provide transparent information about any other sources of income you may have.

Some lenders may require a clear business plan – complete with cash flow projections.

Crucially, lenders need to be confident that you’ll have the financial security to be able to make regular mortgage repayments.

4.     Be Sensible with Your Arrangements

You must ensure that your plan is financially viable.

You need to be able to keep up with all mortgage repayments, and it isn’t always feasible to demand rental amounts that are large enough to cover them alone.

There are a number of responsibilities required of a buy-to-let landlord that you need to be aware of before you begin your journey, so we highly recommend that you do your due diligence and talk to other rental property owners.

You need to be able to keep each property you own fully insured and maintained while also adhering to all legal regulations and legislation affecting landlords. Failing to do this could see you blacklisted and even prosecuted.

5.     Why Not Build a Portfolio?

Once you have let your first property as a limited company, why not use that status to your advantage as you begin to make a profit?

Only take the leap into the management of multiple properties if you’re certain that you can afford to maintain, insure and make mortgage repayments on each.

Much of the day-to-day administration of a property portfolio can be taken on by a property management firm or through the use of various types of software and applications.

So if you’re organised, making a living as a landlord can be reasonably straightforward.

As you grow your portfolio, be sure to seek advice from specialists regarding where you could be saving money or how your property business could perform better.

Our key piece of advice is to keep yourself informed of everything that is required of you as a landlord, both financially and legally, and to speak to those with experience within the field at every opportunity.

There are a wide variety of buy-to-let mortgages available from Coreco, for example.

Their specialist advisors are always on hand to discuss your options. Whatever the type of property you wish to invest in, and whether you wish to borrow as an individual or a business, they can help.

Their range of products includes commercial mortgages, offshore mortgages, options for freelancers and many more besides – as they know that every person’s circumstances are different.



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Andrew Montlake

Written by Andrew Montlake

Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.

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