Some people invest in a buy to let property in the name of a limited company rather than their own name in order to use the property as a part of the company, or as a means for safe profit investment. Buying property through a business also has tax benefits.
For example, if a person decides to sell properties they have bought using standard buy to let mortgages, they will have to pay capital gains tax on their returns. However, if the properties have been purchased in a limited company name then the seller will be required to pay corporation tax on the proceeds, thus significantly reducing their tax liability.
Limited Company Lenders
There are fewer mortgage lenders in the UK who offer limited company buy to let mortgages than those who lend on a standard buy to let basis, but the market for this type of mortgage is growing. Some banks now offer a specialist range of limited company buy to let mortgage products.
However, these tend to come with less competitive rates and stricter criteria for the borrower and the business.
Some borrowers may wish to set up special purpose vehicle (SPV) limited companies to purchase buy to let properties. SPV limited companies are registered to solely buy, manage and rent out buy to let property. This option is often considered by landlords who want to establish a brand new company that will work as a buy to let business.