Limited Company Buy-to-Let Mortgages 2026: What Changed and What Hasn't

Buy-to-let | 8 minute read

By Kieran Ali, Mortgage and Protection Adviser at CiK Finance. Published 26 May 2026.

Key takeaways

• Around 75 to 80 percent of new UK buy-to-let purchases are now completed through a limited company, according to Hamptons research. The number was under 50 percent before 2017, when Section 24 began phasing out mortgage interest relief for many personal-name landlords.
• A record 66,587 new buy-to-let limited companies were set up in 2025 (Hamptons, February 2026). The number of active UK buy-to-let companies at Companies House crossed 443,000 by year end.
• Limited company buy-to-let mortgage rates are typically 0.3 to 0.6 percent higher than equivalent personal-name buy-to-let rates. For many higher-rate borrowers, the tax position can recover that gap across a 5-year plus hold, though the specifics will depend on individual circumstances.
• Inside a limited company, most lenders apply a 125 percent interest coverage ratio at a stress rate of around 5.5 to 7 percent. In personal name as a higher-rate taxpayer, the same property is typically stress-tested at 145 percent, which may support a smaller mortgage on the same rent.
• As a general rule, Section 24 does not apply to limited companies in the same way it applies to personal-name landlords. Mortgage interest is generally treated as a deductible business expense in an SPV, subject to standard tax rules. Individual treatment will depend on your specific position; speak to a qualified tax adviser.
• The Renters' Rights Act, effective 1 May 2026, applies equally to limited company and personal landlords. The company structure does not help with the new compliance obligations.

Should I buy this through a limited company?

Most landlords I speak to start with the same question. "Should I buy this through a limited company?"

That isn't the wrong question. But it isn't the first question either.

The first question is: which lender will lend to me on this property, at the borrowing I need, against the rental income it produces, in a structure I can defend to HMRC three years from now?

Limited company versus personal name is one decision inside that question. It is not the whole of it. And the answer in 2026 is, for many landlords, different from the answer in 2022.

A note on what follows. This article covers the broker side of buy-to-let, which is our lane, and the tax side, which is your accountant's lane. We've explained the general principles below as they sit in 2026, but every borrower's situation is different. Tax treatment depends on individual circumstances and may be subject to change. Anything tax-related in this article is general information, not personal advice. Speak to a qualified tax adviser before making decisions.

Why this changed: Section 24 and the rise of the SPV

Section 24, the legislation that altered the tax relief on mortgage interest for personal-name landlords, was phased in over four tax years from April 2017. By April 2020 it was fully in effect.

As a general rule, what this means in practice is that if you own a buy-to-let in your personal name and you pay higher-rate income tax, you are typically no longer able to deduct your mortgage interest from your rental income before tax in the way you could previously. Most affected landlords now receive a 20 percent tax credit instead, which can be less generous than the deduction it replaced. For a higher-rate taxpayer with significant interest costs, the difference can move a property from cash-flow positive to cash-flow negative on paper.

A limited company is generally taxed differently. The company typically pays Corporation Tax on its profits after allowable expenses, and mortgage interest is usually treated as a deductible business expense in this structure, subject to standard tax rules. Profits left in the company are normally taxed at Corporation Tax rates (currently in the 19 to 25 percent band depending on profit level, subject to standard rules). Profits extracted as dividends are then typically taxed at your personal dividend rate, with the specifics depending on your overall tax position. The exact figures for any individual borrower will depend on circumstances; your accountant is the right person to model the numbers for your specific situation.

Hamptons has tracked the shift in detail. A record 66,587 new buy-to-let limited companies were set up in 2025, an 8 percent rise on 2024 and a 363 percent increase over the last decade. Around 75 to 80 percent of all new buy-to-let purchases are now completed through a limited company, particularly among landlords on higher-rate income tax. The structure has gone from specialist to mainstream in roughly eight years.

What "limited company buy-to-let" actually means

When people say "buying through a limited company", they usually mean a Special Purpose Vehicle, or SPV.

An SPV is a limited company set up specifically to hold one or more rental properties. It has its own Companies House registration, its own bank account, and its own tax filings. You are typically the sole director and shareholder, though some structures use a spouse, partner, or business associate as a second director.

The SPV is not a tax dodge or a loophole. It is a standard property-investment company structure that lenders recognise, that HMRC understands, and that many landlords have moved toward because the personal-name route has become less efficient for higher-rate taxpayers since Section 24.

Lenders that lend to limited companies typically require the SPV to use specific SIC codes (Standard Industrial Classification, the codes that describe what a company does on its Companies House record). The two most lenders look for are 68100 (buying and selling of own real estate) and 68209 (other letting and operating of own or leased real estate). If your accountant sets the company up with a different code, most lenders will require it to be updated before they will lend.

How the maths is different inside a limited company

The rental stress test is the calculation lenders use to decide if your rental income covers your mortgage payment with enough margin to absorb a rate rise. The framework comes from the Prudential Regulation Authority's Supervisory Statement SS13/16, which has been in force since 1 January 2017.

Inside a limited company, most lenders apply an interest coverage ratio (ICR) of 125 percent. That means the monthly rental income generally needs to equal at least 125 percent of the monthly mortgage interest at a stress rate, often 5.5 to 7 percent depending on lender, product, and fix length.

In your personal name, if you are a higher-rate taxpayer, most lenders apply a more conservative 145 percent ICR at the same stress rate. The same property producing the same rental income will, in most cases, support a smaller mortgage in your personal name than in a limited company.

That structural difference is one of the main reasons many higher-rate personal landlords have moved toward limited company structures since 2017.

By way of illustration. Take a property producing £1,500 a month rent. At a stress rate of 6 percent on a £200,000 loan, the monthly interest is £1,000. In a limited company (125 percent ICR), the rent needs to cover £1,250 of interest, which it does comfortably. In personal name as a higher-rate taxpayer (145 percent ICR), the rent needs to cover £1,450, which it just about does. Push the loan to £225,000 and the limited company calculation can still pass; the personal-name calculation may not. Exact outcomes will depend on the specific lender's policy, stress rate, and rental valuation.

What changed in 2026

Three developments that matter to a limited company buy-to-let landlord this year.

The Renters' Rights Act took effect on 1 May 2026. It applies equally to limited company and personal landlords. The company structure does not help with the Section 21 changes, the rolling tenancy framework, or the new compliance documents you now need to send tenants. Speak to a property solicitor about the operational changes. The financing changes are a separate conversation.

Several major lenders adjusted their criteria in May 2026. Accord raised its minimum income threshold for higher-multiple residential borrowing (a residential change but one that may affect landlords whose personal mortgage sits alongside their portfolio). Glenhawk expanded its automated valuation criteria for residential properties up to £1.25 million in London and £750,000 elsewhere. Halifax and Skipton cut rates across multiple product ranges. The buy-to-let lender pool is moving more than the headline rate picture suggests.

The interest-rate backdrop softened. Bank of England base rate is held at 3.75 percent (April 2026 MPC, 8-1 vote to hold). The next MPC decision is Thursday 18 June 2026. Inflation dropped to 2.8 percent in April 2026, which is putting downward pressure on swap rates and may filter through to fixed buy-to-let rates over the coming months.

When a limited company may make sense, and when it may not

The rule of thumb most accountants use: if you pay basic-rate income tax and you plan to hold the property for fewer than five years, personal-name purchase often comes out roughly even or slightly ahead. If you pay higher-rate income tax and you plan to hold for ten years or more, a limited company is usually the structurally better answer. These are broad generalisations and your individual position may well point a different way.

The middle ground (a 5 to 10 year hold, mixed-rate taxpayer, growing portfolio) is where it gets case-specific. This is the conversation worth having with an accountant before you form the company. It depends on your other income, your spouse's income, your existing portfolio, your borrowing needs, and your exit strategy.

A limited company is generally more expensive to administer than a personal portfolio. You are likely to pay roughly £800 to £2,000 a year in accountancy fees per company (more for larger portfolios). You may also need a separate bank account and separate insurance arrangements, and as a general rule you cannot move money between you and the company freely without potential dividend tax implications. Whether the tax saving outweighs the admin cost depends on portfolio size, your marginal rate, and how long you plan to hold.

An anonymised case from this month

Status quo. A doctor came to us in April with two existing rental properties held in her personal name, both bought before 2017. She was about to complete on a third property at £340,000, with a £255,000 buy-to-let mortgage required.

Inciting incident. Her income tax position had shifted in the previous two years from upper-band higher-rate to additional-rate. The personal-name route for the new property would have been cash-flow negative on paper after the Section 24 changes to interest relief, even though the rental yield on the new property was a strong 7 percent.

What was at stake. Completion was four weeks away. The tenant was lined up. She'd lived in the town for fifteen years and the property was a strong long-term hold. She didn't want to walk away, but she also didn't want to commit to a cash-negative asset.

The turn. We worked with her accountant. Three routes were modelled. Route one: buy in personal name and accept the tax position as it stands. Route two: form a new SPV, accept the slightly higher mortgage rate (around 0.5 percent), and let the company tax position run from year one on the new property. Route three: form the SPV, use "incorporation relief" (an HMRC mechanism that may, in qualifying cases, allow some landlords to transfer personal-name properties into a limited company potentially without triggering an immediate Capital Gains Tax charge), move the two older properties into the SPV, and buy the third directly into the SPV.

Resolution and lesson. Route three was the right answer for her specific situation, on the strength of advice from her accountant. The accountant ran the incorporation relief work. We placed the mortgage on the new property in the SPV name with a specialist lender. The mortgage went through at £255,000 against the £340,000 property value, on a five-year fixed. The two older properties moved into the SPV in the same quarter. The lesson isn't "always use a limited company." It's that the right answer to a third buy-to-let is rarely the same answer as the right answer to the first one. The structure your accountant chose two years ago may not be the structure that works for your next purchase, and qualifying conditions for tax mechanisms like incorporation relief are tight.

Five questions to ask before forming an SPV

1. What is my marginal income tax rate now, and is it likely to change in the next three years? Limited company structures are typically most powerful for higher-rate and additional-rate taxpayers.
2. How long do I plan to hold this property? Shorter holds may erode the limited company advantage. The breakeven point against personal-name is often somewhere around year five, though this depends on the numbers.
3. Do I plan to add more properties to this portfolio? One property in an SPV is rarely worth the admin cost. Three or more usually is, but the maths is case-specific.
4. Where does the rental income need to go? Money held in the company is typically taxed at corporation rates. Moving it to you as dividends generally triggers personal dividend tax. Plan the cash flow with your accountant before you form the company, not after.
5. What is my exit strategy? Selling property from a limited company can have different Capital Gains Tax implications from selling in personal name. Plan the exit before the entry, not afterwards.

What to do next: a practical five-step sequence

1. Speak to your accountant about your specific tax position. Ask for a side-by-side comparison of personal-name versus limited company across realistic 5-year and 10-year holds for the property you're buying. The structuring is the accountant's call, on the advice they hold a regulatory permission to give.
2. Speak to a broker about which lenders may fit the structure you choose. Limited company buy-to-let lenders typically have specific SIC code requirements, director affordability tests, and stress-test models. A broker who works with portfolio landlords most days will, in most cases, know which lenders fit your case in 24 to 48 hours.
3. If incorporation relief might apply (you're considering moving existing personal-name properties into a new SPV), get the accountant's written view before you instruct anything else. Incorporation relief has tight qualifying criteria and the relief is not automatic.
4. Set up the SPV with the correct SIC codes (68100 and 68209) before you apply for the mortgage. Forming the company after the mortgage application has started can add delay and may trigger an unnecessary re-key of the case.
5. Plan the cash flow from the company before you complete. Where will the rental income sit? When will you extract dividends? How will you fund the next property? This sits in the accountant's lane more than the broker's, but it shapes the structure.

Frequently asked questions

Is a limited company buy-to-let mortgage harder to get than a personal-name one?

Not harder, just different. The lender pool is smaller (around 40 to 50 active limited company buy-to-let lenders versus 80+ for personal-name), but the criteria are well-established and the rental stress test is generally more generous for higher-rate borrowers. The application paperwork tends to be heavier because the lender needs both the personal-side affordability and the company-side documentation.

Can I move my existing buy-to-lets into a limited company?

In some cases, yes. The mechanism is called "incorporation relief" and it may, in qualifying circumstances, allow some landlords to transfer personal-name properties into a limited company potentially without triggering an immediate Capital Gains Tax charge. The qualifying criteria are tight and the relief is not automatic. Speak to an accountant who has run incorporation relief cases before. Not all accountants have.

What's the typical rate difference between personal-name and limited company buy-to-let?

Limited company rates are typically 0.3 to 0.6 percent higher than equivalent personal-name rates. The exact figure varies by lender, loan-to-value, and product term. For many higher-rate borrowers, the tax position can recover that rate difference across a 5-year hold, though the maths is case-specific and depends on your individual circumstances.

Do I need personal income to get a limited company buy-to-let mortgage?

Most lenders require the director to have a minimum personal income, often around £25,000 a year, though this varies. The income is used to assess the director's ability to support the company if rental income falters. A small number of lenders look at the company's commercial position rather than personal income, but they are the minority and the criteria can be tighter elsewhere.

Does the Renters' Rights Act treat limited companies and personal landlords differently?

No. The Renters' Rights Act, effective 1 May 2026, applies equally to both structures. The Act changed how Section 21 works, introduced rolling tenancies, and added documentation requirements. The company structure does not help with these. Speak to a property solicitor about the operational compliance changes.

What's an SIC code and why does it matter for a buy-to-let SPV?

SIC stands for Standard Industrial Classification, the code that describes what a company does on its Companies House record. For an SPV holding buy-to-let property, the two codes most lenders look for are 68100 (buying and selling of own real estate) and 68209 (other letting and operating of own or leased real estate). If your accountant has set the company up with a different code, most lenders will require it to be updated before they will lend.

Final word

The limited company buy-to-let route has shifted from specialist to mainstream in roughly eight years. It is not the right answer for every landlord. It can be the right answer for many higher-rate-tax landlords who plan to hold for the medium-to-long term, though every situation depends on its own facts.

The decision is rarely "limited company versus personal name" in isolation. It is "this specific property, at this specific borrowing, with this specific tax position, on this specific timeline." The two pieces of advice that move you through it cleanly are an accountant on the tax side and a broker on the lending side. They are not interchangeable conversations.

If you're standing at the start of that decision now, the door is open whenever you are.

Looking at a limited company buy-to-let?

We work with portfolio landlords across the UK. A 30-minute call gives you a clear sense of which lenders may fit your situation, what your accountant should be looking at, and what to do next.

Book a call with CiK Finance

Kieran Ali

Mortgage and Protection Adviser | Founder, CiK Finance

Kieran works with limited company directors, portfolio landlords, contractors, and complex-income professionals on UK mortgage cases. CiK Finance is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority. CiK Finance is not authorised to give tax advice; the tax content of this article is general information only. Sources for the statistics in this article: Hamptons (February 2026 lettings index and incorporation tracker), Mortgage Solutions (16 February 2026), Prudential Regulation Authority Supervisory Statement SS13/16.

Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. CiK Finance is a trading name of CiK Finance Ltd. CiK Finance Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority. Information correct at the time of writing (26 May 2026). This article is general information, not personal advice. Tax treatment depends on individual circumstances and may be subject to change. Any specific tax outcome will depend on your particular position; speak to a qualified tax adviser and a mortgage broker before making a decision.