Why Limited Company BTL Has Grown
Since the phased withdrawal of mortgage interest tax relief for individual landlords (Section 24), holding buy-to-let property in a Special Purpose Vehicle (SPV) limited company has become increasingly attractive for higher-rate taxpayers. In a limited company structure, mortgage interest remains fully deductible against rental income before corporation tax, which is currently 25% for companies with profits above £250,000 and 19% for those below £50,000.
How Limited Company BTL Mortgages Work
A limited company BTL mortgage is a mortgage taken out by a company (not an individual) to purchase or remortgage a buy-to-let property held within that company. The company is typically an SPV -- a limited company set up specifically to hold property, usually with SIC code 68209 or 68100.
The mortgage is assessed based on the company's rental income coverage (the interest coverage ratio, or ICR) rather than solely on the directors' personal income. Most lenders require the rental income to cover the mortgage interest by 125% at a stress-tested rate.
| Feature | Personal BTL | Limited Company BTL |
|---|---|---|
| Mortgage interest relief | 20% tax credit only | Fully deductible |
| Corporation / income tax rate | Up to 45% | 19%–25% (corp tax) |
| Mortgage rates | Lower typically | Slightly higher |
| Lender choice | Wider | Growing but narrower |
| Personal guarantee | N/A | Usually required |
| Annual accounts required | No | Yes |
What Lenders Look For
Limited company BTL lenders typically assess: the SPV's rental income vs mortgage interest (ICR), the directors' personal credit history and income, the property type and condition, and whether the company is an SPV or trading company (most lenders prefer SPVs). Personal guarantees from directors are almost universally required.
The number of lenders offering limited company BTL products has grown significantly since 2020. Lenders active in this space include Paragon, The Mortgage Works, Landbay, Foundation Home Loans and various specialist lenders accessible through brokers.
Why You Need an FCA-Authorised Broker
Limited company BTL mortgages are complex and the available products change frequently. A specialist FCA-authorised broker will have access to the full market, understand which lenders are most competitive for your specific SPV structure, and can advise on lender criteria that are not always publicly listed.
Key Takeaways
Limited company BTL is genuinely advantageous for higher-rate taxpayers with long-term property portfolios, where the tax efficiency outweighs the higher mortgage rates and administrative overhead. The decision requires proper tax and financial modelling for your specific situation, and the mortgage application requires an experienced specialist broker. This guide provides an overview only.
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