The Pros and Cons of Owning Buy-to-Lets Through a Company

New research from 2025, reveals there are now over 401,000 buy-to-let companies in the UK—making this the most common type of business in the country.

Why Set Up a Limited Company?

The potential for tax efficiency is one of the key reasons landlords choose to hold property via a limited company. Here are some of the main benefits:

• Mortgage interest relief: Limited companies can usually offset 100% of mortgage interest against rental income when calculating taxable profit. In contrast, individual landlords are restricted by Section 24 rules, which limit relief to a 20% tax credit.
• Tax-efficient withdrawals: Owners of limited companies may be able to withdraw money from the company more tax-efficiently than individuals.
• Lower tax rates: Limited companies pay lower rates of corporation tax on their profits (either 19% or 25%). Landlords who are higher or additional rate income taxpayers pay 40% and 45% respectively.

Additional advantages: These include limited liability protection, the ability to bring in investors, and options for succession planning—such as selling or transferring company shares instead of the property itself.

Points to Consider

• Financing challenges: Securing a mortgage through a limited company can be harder. Fewer lenders operate in this space, and interest rates and arrangement fees are often higher.
• Personal guarantees: Directors may need to personally guarantee their company’s debts, increasing their financial exposure.
• Admin and compliance: Running a limited company involves extra paperwork, including filing annual accounts with Companies House and maintaining accurate financial records.

Transferring Existing Properties to a Limited Company

Thinking of moving personally owned buy-to-lets into a limited company? It’s important to factor in:

• Stamp Duty Land Tax (SDLT): The company will need to pay SDLT on the market value of the property.
• Capital Gains Tax (CGT): You may also face a personal CGT bill, as the transfer is treated as a sale for tax purposes.

Seek Professional Advice

It’s vital to consult with a solicitor and/or financial adviser to assess whether it’s the right choice for your situation.

We’re always here to support you with any other aspect of letting or managing your property, get in touch with us today on 020 3000 6787

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