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Buy-To-Let Properties

Statistical analysis shows higher and additional rate tax payers who invest in a buy-to-let property could potentially benefit by holding the property and the rental income in a limited company.

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General Information

Statistical analysis shows higher and additional rate tax payers who invest in a buy-to-let property could potentially benefit by holding the property and the rental income in a limited company.

Not only can limited companies offset the full mortgage interest payments against their tax bill, rental profits are taxed at the corporation tax rate of 19%, as opposed to up to 45% if held personally.

If you are considering investing in buy-to-let properties through a limited company, it is important that you understand the advantages, disadvantages and responsibilities associated with company ownership before making a decision.

Some frequently asked questions about limited company buy to let mortgages

No, even though there are fewer lenders offering loan facilities, there are still some 100+ products available to limited companies.

Yes on average, you can expect to pay around 1%-1.5% more on interest rates. In addition, arrangement fees tend to be charged as a percentage figure rather than a fixed amount.

Also, it’s worth noting that the lender will probably to want their own solicitor to act for them so you may end up covering the cost of two legal bills.

However, while the initial pricing is higher, many landlords find that the tax advantages outweigh the additional costs.

Yes, all lenders will require that the director’s/majority shareholders provide personal guarantees.

No, a personal guarantee means that if the lender has to repossess the property and after sale, they are still owed money, the person offering the personal guarantee will be liable for that money. This would be exactly same if you had borrowed personally.

Yes, most lenders are offering 2, 3 and 5 year fixed rates as well as discounts and trackers.

No, Limited Company buy-to-let mortgages are available up to a maximum of 85% loan to value.

In the mortgage world, there are two types of companies. The first are those which only hold property and do nothing else - these are known Special Purpose Vehicles (or SPVs). Companies which do anything other than this are known as trading companies. Many buy-to-let lenders will lend only to SPVs although there are some who will lend to trading companies.

Yes, directors and/or majority shareholders are always required to offer a personal guarantee and as such, the lender’s focus is on these people and the mortgage is underwritten on them. Therefore, a new company is no problem as long as the director’s/majority shareholders are able to satisfy the lender.

Holding investment property in a limited company is not suitable for everyone and careful tax planning is required before taking any action.

Contact Us

For more information and advice simply request a call back or contact one of our advisors on 0161 703 2549. Alternatively please email us on info@championcontractors.co.uk.

Disclaimer: Please note, buy-to-let options are complicated and the correct course of any action will be dependent on the personal/bespoke needs of each individual. The above information does not constitute professional advice, only general information.