What’s the Difference Between Buying in a Personal Name and a Limited Company?

Buying in your personal name

You take out a standard individual buy-to-let mortgage. The property, rental income and mortgage obligations sit with you personally.

Buying through a limited company

You set up or use an SPV (Special Purpose Vehicle), usually with the SIC codes for property letting. The company owns the property, and you act as a director/shareholder.

Each route affects tax, lender choice and long-term planning differently.

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Deposit Requirements

Deposit expectations differ slightly depending on structure.

Limited Company Buy to Let

• Typically 25% minimum deposit
• Some lenders prefer 30% for complex cases
• Wider flexibility for applicants with irregular income or recent credit issues

Personal Name Buy to Let

• Typically 20–25% deposit
• Standard for most first-time or occasional landlords

While deposit levels are broadly similar, limited company lending can be more favourable for specific investor types.

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Rental Stress Tests: How Affordability Differs

Lenders assess buy-to-let affordability using Interest Coverage Ratio (ICR) rules. These differ depending on how the property is owned.

Limited Company

Often assessed at lower ICR thresholds such as:

• 125%–145% rental coverage

These lower thresholds can allow:

• Higher borrowing
• More flexibility with rental yield
• Better outcomes for higher-rate taxpayers

Personal Name

ICR levels are typically higher:

• 140%–170% for individuals
• Higher rate taxpayers face stricter rules

This often limits maximum borrowing compared with a limited company.

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Mortgage Rates and Lender Choice

Limited Company

• Historically higher rates, but the gap has reduced in recent years
• Fewer lenders overall, but specialist lenders are competitive
• More flexible on complex income or adverse credit

Personal Name

• Broadest lender choice across the market
• Often lower rates than limited company alternatives
• Suitable for simple, small-scale investments

Rate differences vary over time, so product comparisons matter.

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Costs and Administration

Limited Company

Additional responsibilities include:

• Annual accounts
• Corporation tax returns
• Companies House submissions
• Potential accountant fees

This structure suits investors willing to manage administrative overheads.

Personal Name

• Straightforward to set up
• No company administration
• Rental income taxed directly under personal tax rules

Simple for investors with one or two properties.

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Tax Considerations (General Information Only)

This article does not provide tax advice. Investors should seek professional tax support. However, it’s useful to understand broad themes that influence investor decisions.

Limited Company

Potential advantages often cited by investors:

• Corporation tax rates may be lower than higher-rate income tax
• Interest relief can operate differently than for personal ownership
• Profits can be retained within the company for reinvestment

Drawbacks can include:

• Tax on extracting profits
• Stamp duty considerations when transferring properties
• Complexities around selling or restructuring

Personal Name

Often preferred by:

• Basic-rate taxpayers
• Small-scale landlords
• Investors planning short-term ownership

Tax on rental income, interest relief and capital gains may affect long-term profitability for higher-rate taxpayers.

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How Credit History Affects Each Route

Limited Company

Lenders still check:

• Director credit files
• Personal guarantees
• Bank conduct

However, many specialist lenders offering limited company mortgages are more flexible with adverse credit, provided strong rental performance is present.

Personal Name

Mainstream lenders often apply stricter rules on:

• Missed payments
• Defaults
• CCJs
• Recent credit events

Specialist buy-to-let lenders exist, but overall choices may reduce.

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Which Route Suits Which Type of Investor?

Limited Company May Suit:

• Investors planning multiple properties
• Higher-rate taxpayers (subject to advice)
• Long-term portfolio builders
• Those preferring to reinvest profits
• Applicants needing more rental stress test flexibility
• People with complex income profiles

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Personal Name May Suit:

• First-time landlords
• Basic-rate taxpayers
• Investors buying one or two properties
• Those wanting simpler administration
• Borrowers seeking the widest choice of lenders

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Example Scenarios

Scenario 1: Higher-Rate Taxpayer, Long-Term Portfolio Goal

A limited company may offer more flexibility with rental stress tests and reinvestment.

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Scenario 2: Basic-Rate Taxpayer Buying One Property

Buying personally may be simpler and more cost-effective.

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Scenario 3: Investor With Recent Adverse Credit

Specialist lenders in the limited company space may provide more options.

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Scenario 4: Investor Wanting to Maximise Borrowing

Limited company structures often allow higher borrowing due to lower ICR thresholds.

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Scenario 5: Investor Seeking Lowest Monthly Cost

Personal name lending may offer lower headline rates.

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How to Prepare for Either Route

(General Information Only)

1. Check your credit files

Ensure accuracy across Experian, Equifax and TransUnion.

2. Review bank statements carefully

Avoid unarranged overdrafts or returned payments.

3. Understand rental yield expectations

Higher yields support stronger affordability outcomes.

4. Build a realistic deposit

Most BTL lenders expect at least 25%.

5. Seek independent tax advice

Ownership structure has long-term implications for every investor.

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Summary

Choosing between limited company vs personal name buy to let depends on far more than just headline rates. Key considerations include:

• Rental stress tests
• Long-term investment plans
• Tax position (seek advice)
• Deposit and credit profile
• Portfolio size and future growth

Both routes can work well depending on circumstances, but understanding the practical implications helps investors make informed decisions.

This article provides general information only. For personalised support, regulated mortgage advice is required, and separate tax advice should be sought where relevant.