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Since Section 24 came into full effect in the 2020/21 tax year, higher- and additional-rate taxpayer landlords have faced a significant erosion of buy-to-let profitability when holding property in personal names.
Under Section 24, individual landlords can no longer deduct mortgage interest from rental income before calculating tax. Instead, they receive a basic-rate tax credit worth 20% of the mortgage interest paid. For a higher-rate taxpayer, this means paying income tax at 40% on income that includes the interest cost, then receiving back only a 20% credit. The difference is a real, ongoing tax liability that did not exist before April 2017. One response to this change is to hold new property purchases through a Special Purpose Vehicle limited company. A company pays corporation tax on its net profit, and mortgage interest remains a legitimate business expense deductible before calculating that profit. Corporation tax in 2026 sits at 25% for profits above £250,000 and 19% for profits below £50,000. For many landlords, this produces a significantly lower overall tax burden compared to personal ownership at the 40% or 45% rate. But the decision is not purely about tax. There are additional mortgage costs, restricted product availability, complications with existing residential finance, additional accounting requirements, and a different set of estate planning implications. We help landlords understand the full picture before committing to any structure.
An SPV, or Special Purpose Vehicle, is a company set up for the sole purpose of holding property. The Companies House SIC code for a property SPV is typically 68100 (buying and selling of own real estate) or 68209 (other letting and operating of own or leased real estate). Lenders who offer SPV mortgages require the company’s trading activity to be restricted to property ownership and rental. A company with diverse trading activity is not an SPV and will be declined by most specialist BTL lenders.
Specialist BTL lenders assess SPV mortgages not just on the company but on the individual shareholders and directors behind it. All shareholders above a defined threshold, typically 20 to 25%, are required to provide a personal guarantee for the mortgage. This means the lender has recourse to your personal assets if the company cannot meet its obligations. Lenders also review the personal financial positions of all guarantors, including existing personal mortgages, credit commitments, and other BTL exposure.
Specialist BTL lenders assess SPV mortgages not just on the company but also on the individual shareholders and directors behind it. All shareholders above a defined threshold, typically 20% to 25%, are required to provide a personal guarantee for the mortgage. This means the lender has recourse to your personal assets if the company cannot meet its obligations. Lenders also review the personal financial positions of all guarantors, including existing personal mortgages, credit commitments, and other BTL exposure.
If the company does not yet exist, we advise on the appropriate structure before Companies House registration. If the company already exists, we verify that it meets lender requirements, including SIC codes and share structure.
Not all BTL lenders offer SPV products. We search across specialist lenders, assessing both rate and the specific eligibility requirements around shareholder structure, number of directors, company trading history, and geographic restrictions.
We gather the financial information for all directors and shareholders who will be providing personal guarantees, including existing property portfolios, income, and credit positions.
We submit the full company application alongside personal guarantee documentation. SPV underwriting is more comprehensive than standard BTL and takes longer. We manage all lender queries throughout.
The lender values the property and assesses the rental income. The mortgage offer is issued in the company name.
Run the numbers, then talk to us. Our financial calculators cover mortgage repayments, how much you could borrow, stamp duty, bridging finance and rental yield. Results are estimates only and should not be relied on as financial advice.
Company landlords come with specific questions and challenges that do not arise in personal name lending. Here are the most common ones we deal with.
Section 24 means higher-rate taxpayers can no longer deduct mortgage interest from rental income when holding property personally. Whether a company structure benefits you depends on your total income, dividend plans, and how long you intend to hold the property. We work through the numbers with you before you decide.
A small number of lenders will not proceed where there are more than two directors or shareholders. Others are comfortable with four or more, provided each shareholder passes credit and background checks. We identify the right lender upfront so the structure does not cause delays.
You do not need to transfer your existing portfolio. Many landlords run a hybrid model, with older properties held in personal names and new acquisitions held through a company. We understand how lenders view the two structures alongside each other and ensure the background portfolio is presented accurately.
SPV mortgages for non-UK nationals are available, but lender choice narrows considerably depending on your visa type and residency history. We work with lenders who routinely handle these applications and know exactly what documentation they require.
Speak to an adviser to discuss your circumstances and find out how we can help.
Clear,honest answers to the questions we hear most from clients and introducers.
Technically, yes. But incorporation triggers a Stamp Duty Land Tax charge and Capital Gains Tax liability on the transfer unless Partnership Incorporation Relief or a similar structure applies. These are significant tax events. Incorporation is generally most sensible when starting fresh with new purchases. We recommend speaking with a specialist property tax accountant before making any incorporation decision.
Most SPV lenders require SIC code 68100, 68209, or both. Some also accept 68320. If your company has nonproperty SIC codes listed, some lenders will accept this if the property-related codes are also present and the nonproperty activity is minimal or historical. We check this against each shortlisted lender criteria before applying.
For SPV mortgages, the ICR test is applied at 125% rather than the 145% applicable to higher-rate taxpayers in personal names. This is because the company is a separate legal entity taxed at corporation tax rates rather than personal income tax rates, and lenders use the lower threshold on this basis. The stress rate of 5.5% still applies. For a £200,000 BTL mortgage, the stressed monthly interest is £917, and the required rental income at 125% ICR is £1,146.
Specialist BTL lenders who lend to SPVs generally require the company to hold only residential BTL properties. Mixing in commercial units or mixed-use properties significantly restricts the lender pool. A separate company is typically the cleanest way to hold commercial property assets.
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We handle the paperwork and liaise with lenders on your behalf
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