Limited Company Buy to Let
If you already own a Limited Company and are looking to either refinance or purchase a new investment property, we understand that the process of getting a mortgage can feel challenging.
There are a range of options available for you and, for reasons that largely come down to tax efficiency, more and more investors are deciding to buy properties within a Limited Company. Our Specialist Mortgage Advisors can connect you with Mortgage Lenders who are used to working with Limited Company Buy to Let portfolios.
If your Limited Company receives money/income from any business or asset other than your Buy-to-Let property, then it is considered a Trading Company not a Special Purchase Vehicle (SPV), which most lenders cannot accept.
Lenders typically prefer SPV mortgages as opposed to trading company mortgages, as the inclusion of other income streams and business channels via the company structure could introduce a higher element of risk, which they are not comfortable with.
Mortgage assessment criteria for Limited Company Buy-to-Let mortgages varies with the personal financial history of the Director(s) often being considered and Mortgage Lenders will usually require the Director(s) to personally guarantee the debt.
Our aim is to compare the wide and comprehensive range of products to find you the most suitable deal and save you time and money by managing your mortgage application from start to finish. The advantages of buy-to-let mortgages for limited companies
It’s simpler and easier to transfer a Limited Company to another owner than a privately held property. The property does not change owners but remains under the company’s ownership, which could protect the transaction from Stamp Duty, Inheritance Tax and Capital Gains Tax (CGT). This is really useful if you plan to pass your business onto your younger family members in the future.
You can retain profits within the company helping you to protect yourself from tax liabilities because you’re not making a “capital gain”; your business is making a profit.
If you own a limited liability company then you’re not personally liable for any debts held by the company, including those on buy-to-lets. However, bear in mind that you’re not absolved of the personal guarantees often required by your mortgage lender, as the Lender will often get you to sign a personal guarantee.
The disadvantages of purchasing a buy-to-let through a limited company:
– No Capital Gains Tax Allowance: When a limited company sells a property, no Capital Gains Tax (CGT) Allowance is given.
– There may be a requirement to pay Corporation Tax.
– There are additional costs for running a Limited Company. These costs and tasks tend to be:
– The preparation of accounts – which is a legal requirement
– Corporation Tax
– Filing at Companies House
– Legal fees
– Annual auditing – if applicable
– Accountants may also charge a higher fee when preparing accounts for Companies House.
– Higher Mortgage Rates: A Reduction in the Choice of Lenders and Availability of Mortgages.
– Not all buy-to-let lenders offer mortgages to limited companies and those that do tend to offer somewhat smaller product ranges.
We recognise that everyone’s circumstances are different when it comes to buying property; our Specialist Mortgage Advisors have plenty of experience working closely with Limited Company Mortgage Lenders. We have access to a wide range of products from High Street Lenders and specialists products not available by going direct to a lender, which allows us to offer impartial advice and support to portfolio landlords.
When choosing the best Buy-to-Let mortgage for your Limited company, we ensure our expertise counts and we are happy to share with you our list of recommended and trusted professionals such as insurers, tax accountants and legal professionals.
Before pursuing Limited Company Buy To Let – it is recommended you seek expert advice from a Tax Expert, to ensure it is the correct way to purchase the property and to ensure the company is set up in the correct manner. Tax treatment depends on the individual circumstances of each client, and may be subject to change in the future.
The Financial Conduct Authority does not regulate some forms of Buy to Lets.
Your property may be repossessed if you do not keep up repayments on your mortgage.