Limited Company HMO Mortgages; SPV Rates from 5.2% Mar 2026

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.

Rates are typically 0.5-1% higher than personal HMO mortgages due to increased risk. This reflects the additional complexity and regulatory requirements for company structures.

You'll need company accounts, director details, a business plan, and property details. Most lenders also require proof of trading history and projected rental income.

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For individual landlords, since Section 24 changes took full effect from April 2020, mortgage interest deductions have been replaced by a 20% basic rate tax credit — meaning higher and additional rate taxpayers effectively pay tax on gross rental income before interest costs, significantly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.

You can set up a limited company through Companies House or use a formation agent. You'll need to choose a company name, appoint directors, and register for corporation tax.

Most lenders require the limited company to have been trading for at least 12-24 months, though some specialist lenders may accept newer companies with strong business plans.

Yes, you can transfer properties to a limited company, but this may trigger capital gains tax and stamp duty. You'll need to remortgage the properties in the company name.

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.

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.

Criteria include minimum company trading history, strong business accounts, director experience, property suitability, and adequate rental income projections.