4 November 2026 | Written by Shideh Mirashrafi
Setting Up a Limited Company for a Buy-to-Let Mortgage
If you’re buying a rental property, one of the first questions is whose name should be on the paperwork: yours or a limited company’s?
The answer can affect more than your tax bill. It can change the mortgages available to you, the information a lender needs and how you take money from your rental business.
At Mercantile Trust, we consider buy-to-let applications from individual landlords and limited companies. Here’s a look at what setting up a company involves, where it might help and what matters when you come to arrange the mortgage.
Why do landlords set up limited companies?
For some, it’s about keeping rental profits in the business to help fund another purchase. Others want a clear ownership structure when investing with a partner or family member. Tax treatment can also be part of the decision.
Company ownership remains common. Hamptons recorded 41,483 new buy-to-let companies in Great Britain between January and August 2026. That was 8% fewer than the 44,802 formed over the same period in 2025, although the total number of active buy-to-let companies reached 469,165 by the end of August.
Those figures count companies, rather than individual landlords or properties. They also cover only part of the year.
Of course, another landlord’s reasons for incorporating may be quite different from yours. How much you borrow, whether you need the rent as personal income and what you plan to do with the property all matter.
How does a limited company buy-to-let mortgage work?
The company buys the property and takes out the mortgage. Rent is paid to the company, which meets its expenses and mortgage payments.
You might be the company’s only director and shareholder, but you and the company are legally separate. The property belongs to the company.
That doesn’t mean the lender only looks at the business. The people who own and run it still form part of the mortgage assessment, and personal guarantees may be required.
You’ll also come across the term Special Purpose Vehicle, or SPV. In this context, it means a company set up for a particular purpose, such as owning and letting property. Some lenders only accept property SPVs.
At Mercantile Trust, we can consider both SPVs and trading limited companies. You can read more in our guide to buy-to-let mortgages with a limited company.
What are the benefits — and what could cost more?
One reason landlords explore company ownership is the treatment of mortgage interest.
Individual residential landlords generally receive a basic-rate tax reduction for eligible finance costs, subject to restrictions. Companies fall outside that particular restriction, with qualifying borrowing costs dealt with under company tax rules.
A company can also retain profits after Corporation Tax to support future investment. If you’re building a portfolio, keeping money in the business may be part of your plans.
But the money still belongs to the company. Taking it out for personal use, for example through salary or dividends, can create further tax liabilities. Comparing Corporation Tax with your personal Income Tax rate won’t give you the full picture.
There are running costs too. Accounts, tax returns, Companies House filings and professional fees all need to be factored in. Mortgage rates, fees and legal requirements may also differ from those for borrowing in your own name.
An accountant or qualified tax adviser can work through the figures with you. As a lender, we can explain our mortgage requirements, while your advisers help you assess how to own the property.
Personal name or limited company: what changes?
|
Buying in your own name |
Buying through a limited company |
|
|
Who owns the property? |
You, alone or jointly |
The company |
|
Who takes out the mortgage? |
The individual borrower or borrowers |
The company |
|
What does the lender assess? |
The borrowers, property and affordability |
The company structure, people behind it, property and affordability |
|
How are rental profits taxed? |
Under the applicable personal tax rules |
Under company tax rules, with possible further tax when money is withdrawn |
|
Is there extra company administration? |
No company filings arising from this ownership route |
Company accounts, records, tax returns and filings |
|
Can you still be personally responsible? |
You are responsible for your mortgage |
Personal guarantees can make you responsible for covered company debts |
There’s no single answer that works for every landlord. The mortgage, tax position and ongoing costs need to be considered together.
What do you need to set up the company?
You can register through Companies House yourself or use an accountant or company formation provider.
For a private company limited by shares, the main things you’ll need are:
- A company name and addresses. You’ll need an appropriate registered office address and a registered email address. The office address is public; the email address is not.
- Directors and shareholders. You need at least one director and one shareholder, and they can be the same person
- Details of people with significant control. Known as PSCs, these include people who meet ownership or control conditions, such as holding more than 25% of the shares or voting rights.
- A SIC code. This describes what the business does. For property letting, 68209 — Other letting and operating of own or leased real estate is commonly relevant. The code needs to match your activities.
- Formation documents. These include the memorandum and articles of association, which cover forming and running the company.
- The required identity verification. Directors and PSCs have Companies House verification requirements. If you hold both roles, your verified identity needs to be linked to each.
As at 4 November 2026, online incorporation through Companies House costs £100, and registration is usually completed within 24 hours, although complex applications may take longer.
Once registered, the company receives its certificate of incorporation. You’ll then need to arrange its banking, keep proper financial records and meet its tax and filing obligations.
From a mortgage point of view, it helps to discuss the company structure early. Registering a company confirms that it exists; mortgage approval involves a separate assessment.
What will a lender want to know?
A company number is a starting point. A lender also needs to understand the business, the property and the borrowing.
Who owns and runs the company?
Directors, shareholders and the ownership structure help establish who is behind the application. More complicated arrangements may need further information.
What property are you financing?
Its value, construction, condition and intended use can affect the mortgage assessment.
What rent does it receive, or is it expected to receive?
Rental income is an important part of assessing whether the borrowing meets the lender’s affordability requirements.
Where is the deposit coming from?
For a purchase, the lender will need to understand the source of funds and confirm what evidence is required.
The exact documents and checks vary by lender and case. An early conversation can help establish what you’ll need before you submit an application.
At Mercantile Trust, we assess applications manually, considering the property, rental income and the borrower’s circumstances. Lending is subject to our criteria, valuation and underwriting.
Can you apply through a brand-new company?
Yes, some lenders consider newly formed companies, so a long trading history is not always necessary.
The lender will still assess the company, the people behind it and the property. A new company doesn’t remove those checks or guarantee that the mortgage will be accepted.
If you’re planning to borrow through a new company, our team can discuss the case and explain our requirements.
What if you already own the rental property?
Setting up a company won’t move an existing property into it. That requires a separate legal transfer, and any existing mortgage needs to be addressed.
There may be tax to pay, along with legal costs, new mortgage fees and early repayment charges on your current borrowing. Transfers to a connected company can also be assessed using market value for tax purposes.
Property transaction taxes differ between England and Northern Ireland, Scotland, and Wales. Your solicitor and tax adviser can explain the costs and any reliefs that may apply to your circumstances.
It’s a different calculation from buying your next property through a company, so the upfront costs need to be included.
Will you need a personal guarantee?
A lender may ask for one, even though the mortgage is in the company’s name.
A personal guarantee can make you responsible for covered debts if the company cannot repay them. The lender will confirm who needs to provide a guarantee and whether independent legal advice is required.
How can Mercantile Trust help?
Whether you’re buying your first company-owned rental property or adding to an existing portfolio, you can speak to us about the finance.
We consider buy-to-let applications from individuals, property SPVs and trading limited companies. Tell us about the property, the rent and what you want to achieve, and we can explain whether the case falls within our lending criteria.
Find out more about our buy-to-let mortgages or call 0800 032 3737.
This article is for general information and does not constitute financial or legal advice.
Our loan products are not regulated by the Financial Conduct Authority.
Subject to status and lending criteria.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Reviewed by: Tara Evans, Chief Executive
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