In a nutshell: Buying property through a limited company could save you tax and limit your liability, but it requires careful planning. This guide covers how it works, the costs involved, and the steps you’ll need to take – plus how Tide could help you finance your purchase.
Over 400,000 UK limited companies now hold property, and the trend isn’t slowing down. In 2024 alone, 61,500 new companies were set up specifically to buy property – a 23% increase from the previous year.
Whether you’re a freelancer, a growing business, or an investor, using a limited company to buy residential, commercial, or mixed-use property can offer tax advantages and protect your personal assets. But it’s not quite as simple as buying a property in your own name.
The process of buying property through a limited company involves different types of mortgages, higher stamp duty, and extra responsibilities. And while it could save you money in the long run, it’s not the right choice for everyone.
If you’re considering using a limited company to buy property – such as residential rentals, offices, retail spaces, or industrial units – you’ll need to understand how it works, what it costs, and how to navigate the legal and financial steps.
In this article, we’ll cover why buying through a limited company could be right for you, how the process works, the tax implications and costs to consider, the pros and cons compared to personal ownership, and how to get expert help to make the right decision.
Why buy property through a limited company?
A company may buy property for several reasons. They might be looking to expand their business operations with commercial premises, diversify into buy-to-let, or acquire mixed-use properties like shops with flats above.
More and more businesses are choosing to buy property through a limited company, and for good reason. The biggest draw is usually the tax benefits. When you buy residential or commercial property personally, your rental income is taxed as personal income, which can mean paying up to 45% in tax depending on your total taxable income. But if your limited company owns the property, you’ll pay corporation tax instead – currently 25% on profits over £250,000. That’s a big saving, particularly if you’re earning a high rental income or leasing to business tenants.
Another benefit of buying property via a limited company is limited liability. If something goes wrong (eg a tenant suing for damages or a commercial lease dispute) your personal assets will be protected. Instead, only the company’s assets are at risk. This can give you peace of mind, particularly if you’re building a residential or commercial property portfolio.
Buying through a limited company could also make it easier to grow your portfolio. The average company-owned property portfolio held 14.4 properties in 2024. And with 70-75% of new buy-to-let purchases now made through limited companies, it’s clear that this approach is becoming standard procedure for serious investors.
That said, it’s not the right choice for everyone. If you’re buying a property to live in yourself, for example, you won’t get the same mortgage interest relief as you would with a personal purchase. And, if you’re just starting out, the extra admin and costs might not be worth it. You’ll need to carefully weigh up the pros and cons for your specific situation.
How does buying property through a limited company work?
When you buy property through a limited company, the company itself owns the property – not you personally. This means the company is responsible for the mortgage, taxes, and any legal obligations (eg commercial lease agreements or residential tenancy laws) that are tied to the property. But it also means you’ll need to follow different rules compared to buying a property in your own name.
The type of property you’re buying will impact the kind of mortgage you’ll need. For example, if you’re buying a residential rental property, you’ll typically need a buy-to-let mortgage. But for commercial properties (like offices, shops, or warehouses), you’ll need a commercial mortgage – read our guide to purchasing commercial property for more information. And if you’re buying a mixed-use property (like a shop with a flat above), you might need a semi-commercial mortgage.
It’s important to note that mortgages for limited companies can be more expensive than personal mortgages. But the tax savings could outweigh the extra cost, depending on the product and lender you choose.
When purchasing property through a limited company, you’ll also need to think about how you structure the purchase. Many investors set up a Special Purpose Vehicle (SPV), which is a type of limited company created specifically to hold property. This can make it easier to manage your portfolio and keep your property assets separate from your trading business. But whether you use an SPV or your existing limited company, you’ll need to make sure you’re set up correctly from the start.
The step-by-step process of buying property through a limited company
1. Set up your limited company or SPV
You’ll need to have a company in place before you can buy property through a limited company. If you don’t already have one, you can register a limited company with Tide in minutes. It’s a straightforward process, and you’ll get your certificate of incorporation within a day.
Once your company’s registered, it’s important to open a dedicated business bank account to keep your property finances separate from your personal money. This makes it easier to track income and expenses, manage tax obligations, and apply for mortgages. With a Tide Business Current Account, you can get set up quickly and start managing your company’s finances right away.
If you’re setting up a Special Purpose Vehicle (SPV), make sure it’s classified under the right Standard Industrial Classification (SIC) code for property investment. This should make it easier to apply for mortgages later on.
2. Save for your deposit
Most lenders will require a deposit of at least 25-40% of the property’s value. So if you plan to buy a property worth £500,000, you might need to save at least £125,000. This is higher than the deposit you’d typically need for a personal mortgage, so you’ll need to make sure you’ve got enough savings in place.
If you’re saving up for your deposit, you can grow your funds faster with a Tide Instant Saver Account, which offers a competitive rate on your savings.
3. Find the right mortgage
Not all lenders offer mortgages to limited companies, and even fewer specialise in commercial property financing. So you’ll need to shop around. A mortgage broker can help you find the most suitable deal, but it’s worth checking out Tide’s commercial mortgage options too. We work with a network of lenders who specialise in limited company mortgages, so you can compare rates and terms in one place.
When you apply for a mortgage, the lender will look at your company’s financial health – if you applied as an individual, they’d be more interested in your personal credit score. For commercial properties, they’ll also evaluate the lease length, tenant quality, and property type. They’ll want to see proof of income (usually at least one to two years of accounts) so if your business is new, you might need to build up your trading history first.
4. Make an offer and go through the legal process
Once you’ve found a property and secured a mortgage in principle, you can make an offer. If it’s accepted, you’ll need to instruct a solicitor to handle the legal work. This includes property searches, surveys, and drawing up contracts.
The process usually takes around 15-20 weeks from offer to completion, but it could take longer if you’re buying a leasehold property or a portfolio of properties. Your solicitor will guide you through each step, but it’s important to stay on top of things to avoid delays.
5. Complete the purchase
Once everything’s in place, you’ll exchange contracts and pay your deposit. On completion day, the remaining funds will be transferred, and the property will officially belong to your limited company.
Don’t forget to budget for stamp duty, legal fees, and any other costs like surveyor fees or insurance!
What are the tax implications of using a Ltd company to buy property?
Buying property through a limited company comes with several tax advantages, but there are also extra costs and responsibilities to consider:
Corporation tax on rental income
19% for profits under £50,000 (the small profits rate)
A marginal rate applies for profits between £50,000 and £250,000
25% for profits over £250,000 (the main rate)
This is typically lower than personal income tax rates, which can reach up to 45%
Full mortgage interest relief
Limited companies can deduct 100% of mortgage interest from rental income before calculating corporation tax (individual landlords continue to receive only a 20% tax credit on mortgage interest)
Capital allowances
Claim tax relief on fixtures, fittings, and improvements (eg furniture, appliances, or renovations) for commercial properties
Corporation tax on gains when selling
Gains are subject to corporation tax (19-25%) rather than individual capital gains tax rates (currently 18% or 24% for residential property for individuals)
No lower ‘entrepreneurs’ relief’ rate for companies
Higher stamp duty costs
3% ‘Additional Dwelling’ surcharge applies to all company purchases of UK residential property
Up to 17% for properties over £500,000 (compared to 12% for individuals)
Extra admin and compliance
Limited companies must file statutory annual accounts and corporation tax returns
Directors must ensure all Companies House filings and deadlines are met
Dividend tax if extracting profits
If you take profits out as dividends, you’ll pay 8.75-39.35% dividend tax (depending on your income bracket)
If you’re not sure how the tax rules apply to your situation, it’s worth speaking to an accountant. They can help you structure your purchase in the most tax-efficient way and make sure you’re not missing out on any reliefs or allowances.
Buying property through a limited company vs a personal purchase
Buying property through a limited company isn’t the same as buying it in your own name. There are two important differences to be aware of.
The biggest difference is how you’re taxed. With a limited company, you’ll pay corporation tax on rental income and capital gains, which is often lower than the personal tax rates. But you’ll also face higher stamp duty and more admin.
The other big difference is liability. If you buy property yourself, your personal assets (like your home or savings) could be at risk if something goes wrong. But if the property’s owned by your limited company, only the company’s assets are on the line.
However, many lenders will ask for a personal guarantee when you take out a limited company mortgage. This means you’ll still be personally liable if the company can’t keep up with the repayments. So while limited liability offers some protection, read the terms carefully so you’re not caught out.
The pros and cons of buying property through a limited company
Before you decide, let’s break down the key advantages and drawbacks:
The pros of buying property using a limited company
Tax efficiency: Lower corporation tax rates and full mortgage interest relief could save you money
Limited liability: Your personal assets are usually protected if the company faces legal issues
Easier to grow your portfolio: Lenders often view limited companies as lower risk, making it easier to secure financing for multiple properties
Commercial flexibility: It’s easier to secure financing for multiple properties, including portfolios of shops, offices, or industrial units
Succession planning: It’s simpler to transfer ownership of a property by selling shares in the company rather than transferring the property itself
The cons of buying property using a limited company
Higher stamp duty: You’ll pay an extra 5% surcharge, with rates increasing up to 17% for higher-value properties
More admin: You’ll need to file annual accounts, pay corporation tax, and keep up with Companies House filings
Higher mortgage rates: Limited company mortgages can be slightly more expensive than personal mortgages
Personal guarantees: Some lenders will require you to personally guarantee the mortgage, which reduces the limited liability protection
The importance of seeking professional advice when buying property as a limited company director
Buying property through a limited company is a big decision, and most of us haven’t done it before. Without this experience, you may find it harder to navigate the tax rules, mortgage options, or legal requirements.
It’s therefore worth considering speaking with a good accountant who can help you understand the tax implications and structure your purchase in the most efficient way. Using a solicitor will also make sure the legal process runs smoothly, and a mortgage broker can help you find the most suitable financing options available.
Wrapping up
Buying residential or commercial property through a limited company can be a smart way to save on tax, protect assets, and scale your investments – particularly if you’re looking to build a diversified portfolio or house your business operations. But it’s not without its challenges. You’ll need to weigh up the tax benefits against the higher costs and extra admin, and make sure you’ve got the right team in place to support you through the process.
If you’re ready to take the next step, registering a limited company with Tide is a great place to start. And if you need financing, our commercial mortgage options can help you find the right deal for your business.
FAQs
Can I buy property through a limited company with less than one year of trading?
You’ll have some options, but they’ll be more limited. Many lenders require at least one to two years of accounts, so you might need to build up your trading history first. In the meantime, you can focus on improving your business credit score with tools like Tide’s Credit Score Insights.
What’s the fastest way to get a mortgage for a limited company?
Bridging loans can provide short-term financing in as little as a few days, but they’re more expensive than traditional mortgages. For a long-term solution, Tide’s commercial mortgage options can connect you with lenders who specialise in limited company mortgages.
How do I refinance a property held personally into a limited company?
You can transfer ownership of the property to your limited company, but you’ll need to budget for stamp duty and legal fees. It’s also worth speaking to an accountant to make sure it’s the right move for your tax situation.
Can a limited company buy a house to live in?
You can use a limited company to buy a house to live in, but you won’t get the same tax benefits as you would with a rental property. If you’re buying a property to live in, it’s usually better to purchase it in your personal name.
What’s the difference between a buy-to-let mortgage and a commercial mortgage?
A buy-to-let mortgage is for residential rental properties, while a commercial mortgage is for business premises – like offices, shops, or warehouses. The type of mortgage you need will depend on the property you’re buying.
Do I need a solicitor to buy property through a limited company?
Yes, you’ll need a solicitor to handle the legal work, including property searches, surveys, and contracts. They’ll also make sure the property’s transferred into your company’s name correctly.
Photo by tierramallorca on Unsplash
