A limited company buy-to-let mortgage lets you buy a rental property through a company, usually a special purpose vehicle (SPV) set up only to hold property, rather than in your own name. For higher-rate taxpayers it has become noticeably more attractive since the October 2026 Budget, which raised personal tax on rental income for a second time. Lenders usually assess the rent at 125% of the mortgage interest, so a company may be able to borrow more against the same property than a higher-rate taxpayer could personally. The trade-offs are personal guarantees, fewer lenders, usually higher rates and fees, and the cost of running a company.
Key takeaway: Buying through a company is a tax decision first and a mortgage decision second. The mortgage side is now well established: mainstream lenders offer limited company buy-to-let, often to first-time landlords too. Whether it suits you depends on your tax band, your plans for the income and how many properties you intend to own, so speak to an accountant before you commit.
What changed for landlords in the October 2026 Budget?
The Budget on 28 October 2026 confirmed that, from 6 April 2027, rental income received personally in England will be taxed at its own property rates of 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. That is two percentage points more than the property rates announced in the November 2025 Budget, and four points above today's rates. Wales and Scotland can set their own property income rates.
Mortgage interest relief for individual landlords stays as a tax credit at the property basic rate, which will be 24%. A company works differently: it deducts mortgage interest from its rental income as a business cost and pays corporation tax on what is left, at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. The Budget kept the main corporation tax rate capped at 25%.
In short: a higher-rate landlord paying 44% tax and getting relief at only 24% can lose most of the profit on a well-geared property. A company paying corporation tax at 19% on its true profit does not have that problem, although tax is still due when you take money out.
How much more could a company keep? A worked example
The figures below compare one property held three ways from April 2027: by a basic-rate taxpayer, by a higher-rate taxpayer and by a company. They assume rent of £14,400 a year and mortgage interest of £10,000 a year, and ignore letting fees, repairs and other costs so the effect of the tax rules is easy to see.
| Basic-rate taxpayer | Higher-rate taxpayer | Limited company | |
|---|---|---|---|
| Rent received | £14,400 | £14,400 | £14,400 |
| Mortgage interest | £10,000 | £10,000 | £10,000 |
| Profit before tax | £4,400 | £4,400 | £4,400 |
| Tax on rent | £3,456 (24% of £14,400) | £6,336 (44% of £14,400) | £836 (19% of £4,400) |
| Less interest tax credit | -£2,400 (24% of £10,000) | -£2,400 (24% of £10,000) | Not applicable |
| Tax due | £1,056 | £3,936 | £836 |
| Profit kept | £3,344 | £464 | £3,564 (in the company) |
On these figures, a higher-rate landlord would keep roughly £1 in every £10 of profit. The company keeps about eight times as much, though it is held inside the company: if you take it out as dividends, dividend tax is due on top. For a basic-rate taxpayer the gap is small, which is why company ownership is not automatically the better choice. This is an illustration only, not tax advice, and Quanstrom Financial does not give tax or accountancy advice.
How do lenders assess a limited company buy-to-let mortgage?
Lenders base the loan mainly on the rent rather than on your salary. They check that the expected rent covers the mortgage interest by a set margin, called the interest cover ratio (ICR), calculated at a stress rate that is usually higher than the rate you will actually pay.
The ICR is where companies often have the edge. For borrowers in their own name, Accord and TSB, for example, ask for rent of 125% of the interest from basic-rate taxpayers but 145% from higher or additional-rate taxpayers. The Mortgage Works, The Nottingham and Coventry for Intermediaries all ask a limited company for 125%, whatever the directors earn.
The stress rate matters too. Some lenders stress a 5-year fix at a lower rate than a 2-year fix. The Mortgage Works, for instance, uses the higher of 5.5% or the pay rate plus 2% for a 2-year fix on a company purchase, but the higher of 4.5% or the pay rate for a 5-year fix. The Nottingham uses the pay rate for 5-year fixes.
| Rent of £1,200 a month | Rent cover required | Stress rate | Maximum loan the rent supports |
|---|---|---|---|
| Higher-rate taxpayer, personal name | 145% | 5.5% | About £180,500 |
| Limited company | 125% | 5.5% | About £209,500 |
| Limited company, 5-year fix stressed at 4.5% | 125% | 4.5% | About £256,000 |
Same property, same rent, and a difference of almost £29,000 in what the rent alone could support, before the choice of product is even considered. The loan is still capped by the maximum loan to value, so you need enough deposit for the property price. These are illustrations only, and each lender applies its own calculation.
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What lenders need from your company
Lenders are specific about the type of company they will lend to. These requirements come from the published criteria of The Mortgage Works, The Nottingham and Coventry for Intermediaries, read on 11 November 2026.
| Requirement | What lenders ask for |
|---|---|
| Company type | A special purpose vehicle that only buys, lets and sells residential property. The Mortgage Works and The Nottingham do not accept trading companies, partnerships or LLPs on these products. |
| SIC codes | All three accept 68100, 68209 and 68320. The Mortgage Works also accepts 68201. The Nottingham accepts no other codes. |
| Personal guarantees | The Mortgage Works requires them from all directors in all cases. The Nottingham requires every director to guarantee the full loan. |
| Directors and shareholders | Up to four at The Nottingham and Coventry for Intermediaries. At The Mortgage Works, anyone holding more than 20% of the shares must be a party to the mortgage. |
| Deposit | The Mortgage Works and The Nottingham lend up to 80% loan to value, so a deposit of at least 20%. |
| Personal income | The Mortgage Works and Coventry for Intermediaries set no minimum personal income. |
| First-time landlords | Accepted by The Mortgage Works and Coventry for Intermediaries. |
| Portfolio size | At The Mortgage Works, once the company and its directors have four or more mortgaged properties between them, portfolio landlord criteria apply. |
The SIC code is chosen when the company is registered at Companies House, so it is worth getting it right at the start. A company set up with a code lenders do not recognise, or one that also runs a trading business, can rule out much of the market.
Limited liability is more limited than it sounds
Because lenders ask directors to guarantee the loan personally, owning property through a company does not protect your personal assets from the mortgage debt in the way many people expect. This is why lenders such as The Mortgage Works require each guarantor to take independent legal advice.
Can you move properties you already own into a company?
You can, but it is rarely as simple as signing them over. Moving a property into a company you control is normally treated as selling it to the company at market value. That can mean stamp duty for the company, including the higher rates for additional properties, and capital gains tax for you on any increase in value since you bought it.
The company also needs its own mortgage, so your existing buy-to-let mortgage would be repaid, with any early repayment charges that apply. In some circumstances, such as a genuine property business, reliefs may reduce or defer the tax, but whether they apply depends on your situation and needs specialist tax advice before you do anything.
For many landlords the practical answer is to keep existing properties where they are and buy future properties through a company. A mortgage broker at Quanstrom Financial can arrange the company mortgages while your accountant advises on the structure.
Funding the deposit
A new company has no money of its own, so the deposit usually comes from the directors. Lending it to the company as a director's loan is a common approach, and you may later be able to take it back out without further tax. Some landlords raise the deposit by releasing equity from their own home or from properties they already own, which is often the quickest way to buy the next property. Each lender sets its own rules on where deposit money can come from, so check before you commit.
When a limited company may not be right
- You are a basic-rate taxpayer and expect to stay one: as the worked example shows, the tax saving can be small once running costs are counted.
- You need the rental income to live on: taking money out of a company as salary or dividends is taxed, which can erode the advantage.
- You are buying one property and do not plan to grow: accountancy fees, Companies House filings and usually higher mortgage costs weigh more heavily on a single property.
- You would need to sell existing properties to the company: stamp duty and capital gains tax on the transfer can outweigh years of savings.
- You want the widest choice of lenders and products: more lenders offer buy-to-let to individuals than to companies.
Help from a buy-to-let mortgage broker in Eastbourne
Quanstrom Financial is a whole-of-market mortgage broker based in Eastbourne, arranging buy-to-let mortgages for landlords across East Sussex, including Brighton, Hastings and Bexhill, and across the UK by phone or video. If you are new to letting, start with our guide to buy-to-let mortgages. If you are keeping your current home and renting it out, see let-to-buy mortgages. If you already run a trading company, our guide to limited company director mortgages explains how lenders assess your own income for a home. You can also estimate stamp duty with our stamp duty calculator.
A mortgage broker at Quanstrom Financial can check which lenders accept your company structure and which give you the strongest rent calculation. Book a free consultation through the contact page.
Frequently asked questions
Is it better to buy a buy-to-let through a limited company?
It depends mainly on your tax position. From April 2027, higher-rate taxpayers will pay 44% tax on rental income received personally, with mortgage interest relieved at only 24%, while a company pays corporation tax of 19% to 25% on its profit after interest. That often favours a company for higher-rate taxpayers building a portfolio, but less so for basic-rate taxpayers or anyone who needs to draw the income. Speak to an accountant before deciding.
What did the October 2026 Budget change for landlords?
The Budget on 28 October 2026 set property income tax rates of 24%, 44% and 49% from 6 April 2027 for landlords in England, two points higher than previously announced. Mortgage interest relief for individual landlords will be given at 24%. The main rate of corporation tax remains capped at 25%.
What is an SPV for buy-to-let?
An SPV, or special purpose vehicle, is a limited company set up only to buy, let and sell property, with no other trading activity. Most limited company buy-to-let lenders lend only to SPVs, identified by SIC codes such as 68100, 68209 and 68320.
Which SIC codes do buy-to-let lenders accept?
The codes most widely accepted are 68100 (buying and selling of own real estate), 68209 (other letting and operating of own or leased real estate) and 68320 (management of real estate on a fee or contract basis). Some lenders also accept 68201. A company registered with other codes may find far fewer lenders willing to help.
How much deposit do I need for a limited company buy-to-let mortgage?
Usually at least 20%, as many lenders cap limited company buy-to-let at 80% loan to value, and a 25% deposit tends to open up more lenders and better rates. The rent also has to cover the mortgage interest by the lender's required margin, which can limit the loan even when the deposit is larger.
Do I have to give a personal guarantee?
Almost always. Lenders such as The Mortgage Works and The Nottingham require every director to personally guarantee the loan, which means you could be personally liable if the company cannot repay. You will normally need independent legal advice on the guarantee.
Can a first-time landlord get a limited company buy-to-let mortgage?
Yes, some lenders accept first-time landlords buying through a company, including The Mortgage Works and Coventry for Intermediaries, subject to their wider criteria. Choice is narrower than for experienced landlords, so it helps to know which lenders will consider you before you apply.
Can I transfer my existing buy-to-let into a limited company?
You can, but it is normally treated as a sale at market value, so stamp duty and capital gains tax may be due, and the company would need a new mortgage, which could trigger early repayment charges on your current one. Reliefs may apply in some cases. Take specialist tax advice before moving any property.
Are limited company buy-to-let mortgage rates higher?
Generally, yes. Fewer lenders compete for company lending, so rates and arrangement fees tend to be higher than for buy-to-let in your own name. For a higher-rate taxpayer the tax position and the lower rent cover requirement can more than make up for that, but it is worth comparing both routes.
Lender criteria in this guide are taken from each lender's own published criteria, correct as at 11 November 2026, and are subject to change. Tax figures are based on rates announced for 2027/28 and may change. This article is for general information only and does not constitute advice, and nothing in it should be taken as tax or accountancy advice. Please speak to an adviser about your own circumstances, and to an accountant about how a purchase should be structured. Figures in tables are illustrations only.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex.
Most buy-to-let mortgages are not regulated by the Financial Conduct Authority.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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