Putting your property in a Ltd company yes or no?

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Firstly, opening a ltd company is a relatively easy process. This can be done from as little as £20 but it is worth spending a little more to get the right paperwork. Alternatively, your accountant can arrange this with the right classification for a small charge.

So, bearing this in mind with the new section 24 tax implications, everyone should be opening a Ltd company, right? Well no, actually! It’s certainly not for everyone, it has its plus and minus point’s, and you must get professional advice before making this decision. We will explain some of the more common and less common parts below.

Firstly, please do remember that buying a buy to let property through a company is pretty much the same as buying as an individual, in that the extra stamp duty levy will become due based on the new regulations for 2nd properties as of April this year.

It is also worth mentioning at this point, that transferring your existing buy to let portfolio into a limited company will have its own tax implications, and you should definitely look at this in further detail before you proceed (The property will need to be sold to the company at market value, which has capital gains implications as well as stamp duty).

Also, Ltd Company mortgages and the fees involved with the setting up of the mortgage are normally a little bit higher than investing as an individual. They are reducing but they are still that little bit higher, which will need to be factored into your numbers.

The legal costs are also higher as your solicitor will have more work to do, and your accountancy costs will also increase as you now have a Ltd company (If you are doing your own accounts, you may need to hire an accountant going forward).

Timescale now has to be brought into play before you go any further. If you are looking at a very long-term investment then it is worth carrying on at this point (Inheritance tax becomes a benefit over a long term also).

However, if you are looking at only a few years, you need to weigh up the costs involved to see if the savings are worth the initial outlay that you will be making.


Timescale is also involved in actually getting a Ltd company mortgage, the average time taking at least three months and sometimes much longer!

This is due to the additional work required in obtaining a Ltd Company mortgage. Lenders want to see a lot more paperwork and if you have existing properties these will be looked into more deeply than before, especially if they are already in a company.


The options for a company mortgage are also smaller than that of an individual as the Company buy-to-let infrastructure is still very much in its infancy, whereas the individual buy-to-let market has been running for over thirty years now.

The problem here is that any slight difference in your property investment from the normal type of property (such as a 2 bed semi to one that has an unusual position or build material) , rules out potential lenders and can make your options very slim indeed.


One tip that can help at this point is to buy cash if at all possible, and then refinance into your Ltd Company when the time pressure is then off. You don’t want to be losing a deal because your mortgage didn’t go through in time!


You will now also have to go in person to see your solicitor and pay them to read a ‘personal guarantee’ out to you, which you must then sign. This will be required by the lender, so if 4 years down the line you say, “I didn’t understand what I was signing” they have adequate protection.

So, if you are not in the same country as your solicitor, or there are more than one of you that needs to sign a guarantee, this can hold up matters for a long period of time.



Just remember that while none of these points are deal breakers, investing in a Ltd company does require more money, more time and more effort, and it is only beneficial if the tax savings are there for you.

So please, please make sure that you look into everything thoroughly before you open ‘Peters Perfect Property Ltd’ as it may come around and bite you hard if you don’t!

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