Limited Company Buy to Let Mortgages

Following comprehensive tax advice, you should set up your property business with SIC (Standard Industrial Classification Code) In Section L of the attached Companies House business classes; the universally acceptable code being ‘68209’; ‘Letting and operating of own or leased real estate’. Don’t forget that you will need to open a bank account for the business prior to purchase completion, in order to pay direct debits to the lender following completion.

It’s worth noting that the underwriting is almost exactly the same as borrowing on a personal basis; the strength for the application comes from yourself as the director(s)/shareholder(s) of the business.  SPV companies can therefore be brand new, in place of a trading history as a personal guarantee, much like how it is with personal borrowing.

Yes, it’s true to say that rates of borrowing and in some cases fees are more expensive with limited company borrowing, however many of our clients are finding that once tax costs are factored in, they are considerably better off. There are other advantages too;

Stress calculations are more lenient with limited company mortgages, i.e. you can generate larger loans from the same rental income.

You can retain profit in the company and only pay corporation tax rates of 19% (subject to change). This enables you to re-invest income back into your portfolio without being subject to harsher personal tax rates.

There are certain succession planning advantages creating flexibility for Inheritance Tax purposes.

You can inject deposit funds as director loans, or move capital from a trading business using an inter-company loan, making your affairs as efficient as possible.
We also always advise that you talk to your accountant about the best way to structure your property ownership, inject deposit funds and how Capital Gains Tax (CGT) is treated in differing structures etc.

We have many lenders available in the Buy to Let market, some of whom The Buy to Let Broker assisted in their proposition development or in piloting their limited company schemes, we are indeed currently discussing with a number of vanilla lenders, piloting their new limited company propositions.

Here are a number of our key lender relationships;
Paragon Bank, Kent Reliance, Precise, The Mortgage Works, Landbay, Foundation Homeloans, West Bromwich BS, LendInvest, Aldermore Commercial, Fleet Mortgages, Vida Homeloans, Shawbrook Bank and Interbay Commercial.

In terms of underwriting, there are lenders who only underwrite and require personal guarantees from directors only, which allows beneficial owners not to give personal guarantees. The usual level at which lenders will wish to underwrite non-directors is a 25% shareholding.