Buy-to-Let Mortgages 2026: Limited Company vs Personal Name
Section 24 changed UK BTL forever. For higher- and additional-rate taxpayers, holding rentals in a limited company (SPV) often saves thousands per year — but it isn't always the right answer for first-time landlords.
Why Section 24 matters
Since April 2020, individual landlords can no longer fully deduct mortgage interest from rental income. You instead receive a 20% tax credit. If you're a 40% or 45% taxpayer, this means a chunk of your "rental profit" is taxed even when your real cashflow is break-even.
Limited company (SPV) advantages
- Mortgage interest fully deductible against profits (corporation tax 25% on profits >£250k).
- Profits retained inside the company can fund the next deposit.
- Easier inheritance/succession planning via shares.
- Stamp Duty is the same as personal name (3% surcharge applies).
When personal name still wins
- You're a basic-rate taxpayer with limited rental income.
- You only own 1–2 properties and don't plan to scale.
- You want to live in the property at some point (residential rules apply).
- Personal-name BTL rates are typically 0.3–0.6% lower than limited-company rates.
2026 lender landscape
Around 35 lenders now lend to limited companies, up from 12 in 2017. Top SPV lenders in 2026 include Paragon, Aldermore, Kent Reliance, Foundation, Precise, and BM Solutions. Standard 2-yr fixed rates for limited-co BTL sit around 5.0–5.5%, with 5-yr fixes around 5.2–5.7%.
Stress test maths
Most BTL lenders require rent to cover 125% (basic-rate) or 145% (higher-rate / limited-co) of monthly mortgage interest at a notional stress rate of 7–8%. If your rent doesn't fit, "top-slicing" using surplus personal income is available with selected lenders.
HMOs & student lets
HMO rates are typically 0.3–0.5% higher than vanilla BTL but yields can be 8%+. Article 4 areas (where HMO planning permission is required) need additional documents. We work daily with HMO-friendly lenders.
Should you transfer existing properties to an SPV?
This is "incorporation relief" territory and has CGT and SDLT implications. It can work brilliantly for portfolio landlords with significant gains — but requires accountancy + legal advice. Our broker team works alongside specialist tax advisors to model the full picture.