Instead of owning the property directly as an individual, the property is owned by a limited company that you (and potentially others) set up specifically for this purpose. This type of company is often referred to as a Special Purpose Vehicle (SPV), which is a company formed solely to hold and manage buy-to-let properties.
The mortgage for the buy-to-let property is taken out in the name of the limited company rather than in your personal name. Many lenders offer buy-to-let mortgages specifically designed for limited companies, though they may have stricter lending criteria and require higher deposits (typically 25-40%).
There are additional administrative costs involved in running a limited company, including filing annual accounts and possibly paying for professional accounting services.
This approach is especially attractive to landlords with multiple properties, as the tax benefits can be significant. It also allows investors to reinvest profits into more properties, as the tax burden is often lower than it would be for individual landlords.
However, this structure might not suit everyone, especially smaller landlords or those with only one or two properties, due to the costs and complexities of running a limited company.
Self-build mortgages can be ideal for those with a specific vision for their home and the resources to manage the construction process.
Limited company buy to let mortgages are more complex than personal buy to let and the right structure matters from day one. Get in touch and we’ll talk you through the options before you make any decisions.
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