Improving Limited Company Buy-to-Let Mortgages Are Transforming UK Property Portfolios

There have been some exciting changes in the UK buy-to-let mortgage sector that are great for landlords using limited companies. These updates open up new opportunities for investors to boost profits and save on taxes. 

Increased Acceptance for Limited Company Mortgages

Coventry Building Society has started offering mortgages to landlords with limited companies. They offer competitive fixed-rate deals: 5.36% for two years and 5.59% for five years, both up to 75% loan-to-value (LTV). This is a positive sign that more lenders are embracing limited company structures in property investment. 

At the same time, The Mortgage Works (TMW) has adjusted its criteria to better support landlords using limited companies. TMW now accepts applicants who own at least 20% of the company’s shares, even if they are not a director. TMW also lets these companies purchase properties owned by one of their directors, fitting with usual buy-to-let practices. 

More Flexibility and Lower Rates 

TMW is further helping limited company landlords by reducing rates on its mortgages. For instance, they now offer a two-year fixed rate at 4.44% with a 3% fee for up to 75% LTV—a cut of 0.45%. Additionally, TMW accepts intercompany loans for deposits, providing more flexibility in financing property purchases. 

Tax Advantages and Strong Returns 

Using a limited company for property investment provides significant tax benefits. Profits are typically taxed at corporation tax rates, often lower than personal income tax. Investors can also reduce taxable profits by offsetting mortgage interest against rental income. These benefits allow for reinvestment and significant growth of property portfolios. 

By leveraging these tax advantages and improved mortgage options, investors can achieve impressive returns. Building a property portfolio with these mortgages can yield returns exceeding 20%, factoring in capital growth and rental income, even after costs and taxes. 

Setting Up a Limited Company is Simple and Affordable 

Starting a limited company for property investment is straightforward and cost-effective. Registration with Companies House can be done online with minimal fees. This simplicity, along with the financial benefits, makes the limited company route appealing to both new and seasoned investors. 

Conclusion 

The evolving mortgage market, with more lenders and improved terms for limited company landlords, presents a timely opportunity for investors. Forming a limited company allows investors to capitalise on tax efficiencies, access competitive mortgage products, and develop profitable property portfolios. With the right strategy and guidance, achieving significant property investment returns is more accessible than ever. 

For personalized advice on forming a limited company and navigating the buy-to-let mortgage landscape, contact Magnate Assets today.