HMO Mortgage for Ltd Company: Criteria & LTV (2026)

Paid to:

Lender

When:

Completion

Fee charged by the lender for setting up the limited company HMO mortgage. Can typically be added to the loan amount.

Paid to:

Surveyor/Lender

When:

Application

Professional valuation of the HMO property for limited company lending. Includes assessment of commercial viability.

Paid to:

Solicitor

When:

Completion

Legal costs including company documentation, property searches, and registration. More complex than personal mortgages.

Paid to:

Accountant/Agent

When:

Before Application

Cost of setting up SPV company if required. Includes company registration and initial documentation.

Paid to:

Broker

When:

Completion

Fee for arranging the limited company HMO mortgage, reflecting the additional underwriting and structuring work involved.

Paid to:

Various

When:

Annually

Ongoing costs including Companies House filing, accountancy, and corporate banking fees.

A limited company HMO mortgage is a specialist buy-to-let mortgage where the borrowing entity is a registered UK limited company rather than an individual. Since tax changes introduced in 2017 (Section 24 of the Finance Act 2015), which phased out the ability for individual landlords to deduct mortgage interest in full from rental income, there has been a significant shift toward purchasing and refinancing HMOs through limited company structures — most commonly Special Purpose Vehicles (SPVs) set up specifically to hold property. The key advantage is that a limited company can still deduct 100% of mortgage interest as a business expense before calculating corporation tax, unlike individual landlords who are now restricted to a 20% basic rate tax credit. This makes the limited company route particularly attractive for higher or additional rate taxpayers. The mortgage itself works similarly to a personal HMO mortgage: the lender assesses the company's ability to service the debt based on rental income, applies a stress test, and requires a minimum deposit (typically 25-30%). The main differences are that rates are generally 0.5-1% higher than personal mortgages, the lender will require personal guarantees from the directors, and company accounts or a business plan will be needed if the company is newly formed. Most lenders require the company to have an SIC code of 68100 or 68209 (property rental activities). If you are considering whether to buy in personal name or through a limited company, always take personalised tax and legal advice first, as the decision depends on your income level, portfolio size, and longer-term strategy.

David Sampson · Updated 17 May 2026

Limited company HMO rates are often similar to personal ownership at the same LTV, though the best deals depend on trading history, director guarantees, and rental stress tests. Some lenders add a small premium (typically 0.1–0.3%) for newer SPVs with no track record. The real saving is usually tax efficiency — mortgage interest remains deductible in the company, unlike personal Section 24 restrictions. Compare net cost after corporation tax and dividend tax, not just the headline rate.

Milly Turner · Updated 17 May 2026

You will need company documents (certificate of incorporation, memorandum, shareholders), latest company accounts or accountant's certificate, three to six months of business bank statements, director ID and proof of address, property details, HMO licence, tenancy schedule, and personal guarantees from directors where required. Lenders also want to see the property is held in an SPV or trading company acceptable to their panel. Having a clean company structure without unrelated activities speeds underwriting.

Sarah Johnson · Updated 17 May 2026

The primary tax advantage of holding an HMO through a limited company is the ability to deduct 100% of mortgage interest as a business expense against rental income before calculating corporation tax. For individual landlords, since Section 24 changes took full effect from April 2020, mortgage interest deductions have been replaced by a 20% basic rate tax credit — meaning higher and additional rate taxpayers effectively pay tax on gross rental income before interest costs, significantly reducing net returns. By contrast, a limited company holding the same property can deduct the full mortgage interest, reducing the taxable profit and paying corporation tax (currently 19-25% depending on profit level) on the remainder. As a concrete example: an HMO generating £30,000 in annual rent with £15,000 in mortgage interest would have taxable profit of £15,000 in a limited company (after deducting interest). An additional rate taxpayer owning personally would pay 45% on roughly £27,000 (after only a 20% credit on the £15,000 interest). The net tax saving can be substantial. Additional benefits include: profits retained within the company are taxed at corporation tax rates rather than income tax rates, allowing more cash to be retained for reinvestment; and Entrepreneurs Relief (now Business Asset Disposal Relief) may apply to future disposals. Offsetting factors include the higher mortgage rates for limited companies (0.5-1% premium), double taxation risk when drawing profits as dividends (corporation tax plus dividend tax), and additional accounting and compliance costs. Tax laws change and individual circumstances vary significantly — always take advice from a qualified tax adviser before deciding on your ownership structure.

David Sampson · Updated 3 May 2026

Most investors use a special-purpose vehicle (SPV) — a Ltd company whose articles restrict activity to property letting. Register via Companies House (or use a formation agent), open a business bank account, and hold each property in the company name. You will need an accountant for corporation tax returns and payroll if you pay yourself. Before buying, confirm your chosen lender accepts new SPVs and whether they require personal guarantees from directors — most do on first property.

Milly Turner · Updated 2 October 2025

For Ltd/SPV HMO purchases, many lenders accept newly incorporated companies if directors have personal landlord or employment track record. Trading history of 1–2 years in the company helps for higher LTV but is not always mandatory. Personal affordability is often assessed via directors' income, tax returns, or portfolio performance.

Sarah Johnson · Updated 3 May 2026

Yes, via a company purchase of the property from yourself, but it triggers SDLT (including surcharges), capital gains tax, and legal costs. Many landlords use incorporation relief or s.162 incorporation only in specific circumstances — take tax advice first. Lenders treat it as a new purchase or remortgage into the company. The transfer must stack up on overall tax and fees; it is not automatically cheaper than retaining personal ownership.

David Sampson · Updated 17 May 2026

Limited company HMO mortgages typically require a minimum deposit of 25-30% of the property value, meaning the maximum loan-to-value available is 70-75%. While this mirrors the requirement for personal HMO mortgages, there are some differences in practice. Newly incorporated companies with no trading history or no track record of holding property will generally be required to provide a 30-35% deposit, as lenders view a brand-new SPV as higher risk than an established company. Experienced property investors who have been borrowing through a limited company structure for several years, and whose company demonstrates strong rental income, may access 75% LTV (25% deposit) from a wider range of lenders. The deposit must come from legitimate business funds — either equity already in the company from previous transactions, or a director's loan injection from personal funds. Gifted deposits are generally not accepted for limited company purchases, and lenders will require a clear audit trail of where the deposit originated. As an illustration: purchasing an HMO worth £400,000 through a limited company at 75% LTV would require a £100,000 deposit and a £300,000 mortgage. At 70% LTV, the deposit rises to £120,000. It is also worth noting that Stamp Duty Land Tax (SDLT) is payable at the higher 3% surcharge rate on top of standard rates for company purchases in England, which adds a further significant upfront cost — on a £400,000 purchase this surcharge alone would be approximately £12,000. Budget for this alongside the deposit when assessing total funds required.

Milly Turner · Updated 19 April 2026

Limited company HMO mortgage rates are typically 0.5-1.5% per annum higher than equivalent personal HMO mortgages. This premium reflects the additional risk and administrative complexity for lenders when lending to a corporate entity: the company structure adds a layer of separation between the lender and the underlying asset, personal creditworthiness assessments are more complex, and the legal processes involved in enforcement in the event of a default are more involved. As a practical illustration: if a personal HMO mortgage for an equivalent property is available at 5.5% on a five-year fix, a limited company mortgage for the same property and LTV might be available at 6.0-6.5%. On a £300,000 mortgage, that 0.5% premium adds £125 per month (£1,500 per year) in additional interest costs; a 1% premium adds £250 per month (£3,000 per year). This cost differential is a key consideration in the personal-versus-company ownership decision: for a higher-rate taxpayer, the tax savings from operating through a limited company (via full mortgage interest deductibility against corporation tax) can significantly outweigh the higher mortgage rate premium. However, for a basic rate taxpayer with a small portfolio, the rate premium may wipe out any tax advantage. The number of lenders active in the limited company HMO space has grown considerably since 2017, increasing competition and narrowing the rate gap compared to a few years ago. A specialist broker will be able to run a side-by-side comparison of personal versus limited company rates from current live products, which is the most reliable way to quantify the actual cost difference for your specific situation.

Sarah Johnson · Updated 8 March 2026

Lenders typically want a UK-registered Ltd/SPV, directors with acceptable credit, demonstrable rental income on the HMO, valid licensing, and LTV up to 75% (sometimes 80% for strong cases). New SPVs are accepted by many specialists without trading history if directors have landlord experience. Personal guarantees are common. Properties must meet minimum room sizes and HMO standards; some lenders cap number of rooms or require experienced management.

David Sampson · Updated 26 April 2026