Buy-to-let through a limited company: how the lending works

A buy-to-let limited company is a company that owns and lets out property, rather than you owning it personally. Many landlords set up a company for the purpose, often called a special purpose vehicle, so the company is the borrower, the owner and the landlord.

You become a director and usually a shareholder. The property, the mortgage, the rent and the costs all sit in the company’s accounts, which is a different position from owning in your own name. If you are new to the structure, our guide to setting up a limited company covers the basics.

Lenders treat a company as a different kind of borrower from an individual, and the loan is generally outside the FCA’s regulated mortgage rules. The legal definition of a regulated mortgage contract applies to credit given to an individual or trustees, so a loan to a limited company falls outside that wording.

In practice a lender looks at the company, the property and the directors. Expect questions about the rent the property will earn, the company’s accounts or, for a new company, the directors’ own position, and who stands behind the loan. Lenders may ask directors for a personal guarantee, which makes you personally liable if the company cannot pay.

It depends on what the property is. The British Business Bank describes a commercial buy-to-let mortgage as one for a business intending to rent the property to another business, as against an owner-occupied mortgage for a business that will use the premises itself.

A company letting homes to tenants is a different lending product from a company letting a shop or an office. Each has its own criteria, and the lender will set out which applies. Our guide to commercial mortgages covers lending against business premises, and the lender directory shows which providers work in that area.

A company pays Corporation Tax on its profits, not Income Tax. As of October 2026, GOV.UK shows the main rate at 25% for profits over £250,000, the small profits rate at 19% for profits of £50,000 or less, and marginal relief in between.

Tax thresholds can change and they can be reduced for companies with associated companies, so check the current figures on GOV.UK and ask an accountant how they apply to you.

The restriction on mortgage interest relief for residential landlords applies to individuals, and that is why some landlords compare the company route. HMRC’s guidance says that from 6 April 2020, 0% of an individual landlord’s finance costs are deducted from rental income and 100% is given as a basic rate tax reduction, worth 20% of eligible costs.

The guidance describes individual landlords, so it does not settle how interest is treated inside a company. That depends on the company’s own position, and it is a question for an accountant, who can compare the two routes using your figures rather than a rule of thumb.

A company buying residential property in England or Northern Ireland pays the higher SDLT rates. GOV.UK says companies must pay the higher rates for any residential property they buy if it costs £40,000 or more, unless a specific exemption applies, and separate rules apply to expensive purchases by companies.

Standard residential rates run from 0% up to £125,000 to 12% above £1.5 million, and individuals buying an additional property usually pay a surcharge of 5% on top. Non-residential and mixed property use a different table, covered in our guide to stamp duty on commercial property. The return and payment are due within 14 days of completion, and relief and exemptions are worth discussing with a solicitor before exchange.

Profit stays in the company until you take it out, usually as a salary, a dividend or a repayment of a loan you made to the company. Each route has its own tax and filing consequences, so the tax on rental profit is not the end of the story.

• Dividends: see our guide to dividend tax for the rules on what directors pay
• Salary: the company runs PAYE if it pays one
• Director’s loan: see directors’ loan accounts for what happens when you borrow from or lend to the company

You can, but it generally means the company buys the property from you, which can bring stamp duty, capital gains and legal costs. The existing mortgage usually has to be repaid or refinanced, so the lender’s terms and any early repayment charges matter.

Because the tax outcome depends on your facts, get an accountant to run the numbers before you instruct anyone. The sums that make the structure attractive for a new purchase may not work for a transfer.

Capzy is a credit broker, not a lender, and is paid by the lender. We focus on business finance, including finance secured on commercial property, and we can introduce you to lenders in that area and set out what comes back so you can compare it.

We do not advise on residential mortgages or on whether a company structure suits you, so speak to a regulated mortgage adviser and an accountant for that. If your plan involves business premises, you can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria.