Buy to let mortgage products for first-time landlords with a limited company

If you are thinking about getting into the property market and using a limited company to secure a buy to let mortgage, this article is for you. As a niche mortgage adviser, we can help you to secure a buy to let mortgage from a limited company. However, it’s worth noting that we are not a tax specialist. If you are looking to maximise your tax position, we recommend working with a tax advisor or solicitor.

As a first time landlord, you will be in a unique position. As you have no legacy preventing you from holding properties in a limited company, you can take advantage of the following perks:

• All of your company profits will be taxed at corporation tax rates.
• Income from the property will be drawn from the directors’ remuneration, which means it will utilise the personal tax allowance. It may also be drawn as dividends which is a lower tax rate than income tax.
• You can offset a greater portion of property and interest charges.
• You can use multiple limited companies to offset management expenses.
• It’s much easier to add or remove share/titleholders to aid in succession planning.
• The current buy to let mortgage rental coverage calculations may be lowered, as these are aimed at protecting individuals rather than limited companies.

Many buy to let lenders want to see the company set up as a special purpose vehicle, which means it is used only for the property. This helps to keep everything within the correct SIC codes. You can easily set up a company online and use a tax specialist to ensure you are maximising your position. As a new buy to let landlord, the lender might want to see a personal guarantee as added protection.

In general, the number of directors will be limited to 4 and you will need a minimum 25% deposit to secure a buy to let mortgage.

If you are interested in exploring the possibilities of using a limited company to manage your buy to let portfolio, we recommend seeking expert advice from a solicitor, accountant or tax advisor. Once you have chosen the right route, we can help to connect you with a buy to let lender. There will be restrictions on the type of property you can buy as a first-time buy-to-let landlord.