In 2025, many UK landlords are exploring the benefits of a limited company buy to let mortgage accountant letter new company arrangement. This refers to securing a buy-to-let mortgage through a newly formed limited company, often requiring an accountant’s letter to confirm financial viability. With changes in tax treatment under Section 24 and rising interest rates, landlords are increasingly using limited companies to manage their property portfolios more efficiently. This type of investment property finance is especially appealing to those looking to mitigate personal tax liabilities and grow their holdings under a corporate structure. Buy-to-let lending in this space is becoming more mainstream, with lenders adapting criteria to accommodate new company borrowers. A landlord mortgage through a limited company can offer better long-term tax planning, though it does come with stricter affordability assessments and documentation requirements. Understanding the nuances of this mortgage type is essential for successful property investment in today’s evolving market.
Quick Facts
– Interest rates: 5.25% to 6.75% (as of early 2025)
– Minimum deposit: 25% (some lenders may require 30%)
– Rental coverage: 125% to 145% of mortgage interest at 5.5% stress rate
– Maximum loan-to-value (LTV): 75%
– Arrangement fees: Typically 1% to 2% of loan amount
– Application timeline: 4 to 8 weeks from submission to completion
Limited company buy-to-let mortgages typically come with higher interest rates than residential products, but offer tax advantages for many investors. Lenders assess rental income more stringently and require detailed documentation, especially when the company is newly formed. Accountant letters play a key role in verifying the financial stability of the business and its directors.
How This Mortgage Works
A limited company buy to let mortgage accountant letter new company product allows landlords to purchase or remortgage investment properties through a Special Purpose Vehicle (SPV) limited company. This structure is often preferred due to favourable tax treatment, especially post-Section 24, which restricts mortgage interest relief for individual landlords.
Lenders offering these products typically require the company to be registered with Companies House under specific SIC codes related to property letting (e.g., 68209). Since the company is newly formed, lenders will often request an accountant’s letter to confirm the directors’ financial standing, projected rental income, and the company’s capacity to meet mortgage obligations.
Mortgage options include fixed-rate deals (usually 2 to 5 years), variable rates, and tracker products. Fixed rates offer certainty in budgeting, while trackers may appeal to those expecting interest rate reductions in the medium term.
This mortgage type suits a range of investors—from first-time landlords setting up their first SPV to experienced portfolio landlords seeking to expand tax-efficiently. It differs from residential mortgages in that affordability is based on rental income rather than personal income, and stress testing is more rigorous.
Eligibility and Criteria
Getting approved for a limited company buy to let mortgage accountant letter new company requires meeting specific lender criteria, especially given the additional risk perceived with new SPVs.
Income Requirements:
While personal income is not the primary basis for affordability, most lenders still require directors to demonstrate a minimum income—typically £25,000 to £30,000 per annum. This reassures lenders of the borrower’s ability to support the property during void periods.
Rental Coverage and Stress Testing:
Lenders calculate affordability based on the rental income the property is expected to generate. Most require a rental coverage ratio of 125% to 145% of the mortgage interest, stress-tested at 5.5% or higher. For limited companies, some lenders apply a lower stress rate due to the absence of Section 24 tax restrictions.
Property Type:
Standard buy-to-let properties such as single-family homes and flats are widely accepted. However, some lenders may restrict lending on HMOs, new builds, or flats above commercial premises. Properties must meet minimum valuation thresholds, often £75,000 or more.
Credit Score:
A good credit history is essential. While there’s no universal minimum score, lenders typically expect no recent defaults, CCJs, or bankruptcies. Directors’ personal credit profiles are closely scrutinised, even if the mortgage is in the company’s name.
Age and Employment:
Most lenders require directors to be aged 21 to 85 at the end of the mortgage term. Both employed and self-employed applicants are considered, but self-employed directors may need to provide additional documentation.
Portfolio Landlords:
If you own four or more mortgaged buy-to-let properties, you’re classified as a portfolio landlord. Lenders will assess your entire portfolio’s performance, including rental income, LTV ratios, and overall gearing.
Limited Company vs Personal Name:
Applying through a limited company offers tax benefits but involves more complex underwriting. Personal name applications are generally quicker and may offer lower rates, but are subject to Section 24 tax implications.
Compliance:
Landlords must ensure compliance with right-to-rent checks, EPC minimum ratings (currently E or above), and local licensing schemes, particularly for HMOs.
Costs and Affordability
Understanding the full cost of a limited company buy to let mortgage accountant letter new company is vital for planning.
Fees:
– Arrangement fees: 1% to 2% of the loan amount
– Valuation fees: £250 to £1,000+ depending on property size
– Legal fees: £750 to £2,000 (higher for limited company structures)
– Broker fees: Vary, often £495 to £1,500
Interest Rates:
Fixed rates (5.25% to 6.25%) offer predictability, while variable or tracker rates may start lower but fluctuate with the Bank of England base rate. Limited company rates are typically 0.25% to 0.5% higher than personal BTL mortgage rates.
Rental Income:
Lenders use projected rental income to assess affordability. Some may require a letting agent’s letter or a RICS rental valuation.
Tax Implications:
Unlike personal landlords, limited companies can deduct mortgage interest as a business expense. This makes incorporation attractive post-Section 24. However, corporation tax (currently 25% for profits above £50,000) and dividend tax must be factored in.
Insurance:
Buildings insurance is mandatory. Landlord insurance covering loss of rent and liability is strongly recommended.
Stress Testing:
Lenders apply stress tests at notional rates (e.g., 5.5% or higher) to ensure the rental income can cover future rate rises.
The Application Process
Applying for a limited company buy to let mortgage accountant letter new company involves several key steps:
1. Research and Preparation:
Consult a specialist mortgage broker to identify suitable lenders. Confirm your company is set up correctly with appropriate SIC codes.
2. Documentation:
You’ll need:
– Proof of ID and address
– Company incorporation certificate
– Memorandum and Articles of Association
– Accountant’s letter verifying financial projections
– Business bank statements (if available)
– Personal income evidence for directors
– Property details and projected rental income
3. Mortgage Illustration and DIP:
Receive a mortgage illustration and submit a Decision in Principle (DIP) to check initial eligibility.
4. Valuation and Survey:
The lender arranges a valuation to confirm the property’s market value and expected rental income.
5. Underwriting and Legal Work:
Lenders assess your application, including credit checks and company structure. Solicitors handle legal due diligence and draw up the mortgage deed.
6. Completion:
Once approved, funds are released and the mortgage completes. The property is then let out under an Assured Shorthold Tenancy (AST).
Working with a broker can streamline the process and improve your chances of success. Common reasons for rejection include insufficient rental income, poor credit, or incorrect company setup.
Benefits, Risks and Alternatives
Benefits:
– Full mortgage interest relief for limited companies
– Potentially lower tax liabilities
– Easier to grow a property portfolio
– Separation of personal and business finances
Risks:
– Higher interest rates and fees
– More complex application and legal process
– Corporation tax on profits and dividend tax when extracting income
– Regulatory changes may impact future viability
Alternatives:
– Bridging loans for short-term finance needs
– Commercial mortgages for mixed-use or multi-unit properties
– Development finance for refurbishment or new builds
Remortgage vs Product Transfer:
Remortgaging allows you to switch lenders for better rates or release equity. Product transfers are quicker but may not offer the best deal. Evaluate both options carefully as your fixed term ends.
Frequently Asked Questions
What deposit do I need for a buy-to-let mortgage?
Most lenders require a minimum deposit of 25% for a limited company buy-to-let mortgage. However, some may ask for 30% or more, especially for new companies or non-standard properties. A higher deposit can help secure better interest rates and improve your application’s strength.
Can I get a limited company buy to let mortgage accountant letter new company through a limited company?
Yes, many lenders now offer buy-to-let mortgages to newly formed limited companies. However, they typically require an accountant’s letter to confirm the company’s financial viability, especially if it has no trading history. The directors’ personal financial standing is also assessed.
What rental coverage do lenders require?
Lenders usually require the rental income to cover 125% to 145% of the monthly mortgage interest, stress-tested at a notional rate (often 5.5%). For limited companies, some lenders apply a slightly lower stress rate due to the absence of Section 24 tax restrictions.
How does Section 24 tax affect buy-to-let mortgages?
Section 24 removes the ability for individual landlords to deduct mortgage interest from rental income before calculating tax. This can significantly increase tax liability. Limited companies are exempt from Section 24, making them a popular option for higher-rate taxpayers.
Can I live in a property with limited company buy to let mortgage accountant letter new company?
No, properties purchased with a buy-to-let mortgage must be let out to tenants. Living in the property yourself would breach the mortgage terms and could lead to repossession.