UK's Largest Lenders Avoid Buy-to-Let Mortgages for Limited Companies

The top thirteen mortgage lenders represent 81% of the value of mortgages outstanding in 2022, according to UK Finance. However, our research indicates that only two of those lenders offer Limited Company Buy-to-Let Mortgages.

Limited Company Buy-to-Let Mortgages are still a Specialist Buy-to-Let Mortgage in 2024. This is highlighted by the lack of competition in mortgage rates. For instance, when comparing fee-free mortgages at 75% Loan to Value (LTV), rates start at 6.74% for a Limited Company, whereas landlords purchasing in their personal name pay 5.33%.

#1 The former Head of BM Solutions, Phil Rickards, has been considering offering services to limited company landlords since 2017. However, seven years later, the UK's largest mortgage lender has not entered the market. Phil notably refused BM Solutions to enter the market in 2019 due to concerns that landlords were not receiving expert tax advice. It is unknown if new leadership thinks differently.

#2 The Mortgage Works entered the Limited Company BTL Market 4 years ago in 2018, a move that would have contributed to challenging BM Solutions as the largest BTL Lender in 2019.

#3 & 4 NatWest and Santander are two giant mortgage lenders overall but topping the largest BTL Lenders (6th & 7th in value of BTL mortgages outstanding). Have no Limited Company Buy-to-Let Offering

#5 Barclays historically had Limited Company BTL and still serves existing clients but has nothing for new borrowers. Barclays has acquired Kensington Mortgages (the 28th largest BTL lender), which specializes in this area of lending and often leads in best-buy tables. We see this as Barclay's entry into the market and could offer some competition.

#12 Leeds Building Society launched Limited Company BTL Mortgages in July 2023. The relatively small lender should not be overlooked by property investors, offering mortgages for Holiday Lets, HMOs, Limited Company BTL, and Portfolio Landlords.

Why Limited Company Buy-to-Let

The shift in portfolio landlords buying property in a limited company since 2015, after George Osborne's tax changes (Section 24). From that point on, private landlords buying in personal names became the only businesses taxed on revenue instead of profit.

The shift to Limited Company BTL was accelerated in 2016 when new regulations resulted in a more challenging rental affordability stress test for non-basic rate taxpayers. Higher Rate Taxpayers could lower the affordability stress tests by buying property in a Limited Company.

Buying in a limited company gave investors greater cash flow to expand their portfolio or pay down the mortgage more quickly. There are often few 'tax advantages' in using an LTD Company if you intend to use rental profits to live life.