Many landlords consider holding rental property through a limited company rather than in their own name. It is a structural decision with mortgage and tax consequences, and it is not automatically the better route.
Morrow does not give tax advice
Tax treatment depends on your individual circumstances and may change in the future. The tax position is often central to whether a company structure makes sense, and it sits outside mortgage advice. Speak to a qualified tax adviser or accountant before making a decision.
What is an SPV?
A special purpose vehicle (SPV) is a limited company that can be set up to hold property rather than to trade.
- Lenders often prefer SPVs because the company’s activity is limited to one activity, which can make it simpler to assess.
- Companies are typically expected to be registered under property-related SIC codes.
- Mortgages may also be available to trading companies that own property, though the lender criteria may differ.
How company buy-to-let mortgages differ from personal buy-to-let
- A more specialist group of lenders typically operate in this part of the market.
- Rates and fees can differ from equivalent mortgages held personally.
- Lenders normally underwrite the directors and shareholders as well as the company.
- Personal guarantees from the directors are usual.
- Rental stress testing may be applied differently from personally held buy-to-let.
Moving property you already own into a company
Transferring a property you own personally into a company is generally treated as a sale to a separate legal entity rather than an internal reorganisation. That can have Stamp Duty and Capital Gains Tax consequences, and there may be early repayment charges on an existing mortgage.
This is an area where professional tax advice matters before anything is committed.
Is it the right structure?
The answer depends on your circumstances, your plans for the portfolio and your wider tax position. A structure that suits one landlord may be a poor fit for another, and the mortgage cost is only one part of the comparison.
Get Professional Advice
Choosing a Buy-to-Let mortgage can feel daunting, but you don’t have to do it alone. Speaking with a mortgage advisor can help you understand your options and find a product that fits your budget and long-term plans.
At Morrow, we have expert mortgage advisors who are here to help and find the best solution for you, we work with lenders across the whole market, so we can compare a wide range of products and help you make an informed decision with confidence.
Your property may be repossessed if you do not keep up repayments on your mortgage.
