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Limited Company Holiday Let Mortgages

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Limited Company Holiday Let Mortgages

Purchasing a holiday let property through a limited company can be a smart way to grow your property investment portfolio and build a holiday letting business. By holding the property in a limited company structure, you can benefit from certain tax efficiencies and liabilities being ring-fenced from your personal assets.

However, there are some important considerations to make before taking this route and applying for a limited company holiday let mortgage.

Benefits of buying a holiday let through a Limited Company

Build a holiday letting business

Buying your holiday let through a limited company allows you to treat it as an investment property within a business structure. This separates it from your personal finances and gives you more flexibility to scale up your holiday letting enterprise by acquiring additional properties under the company.

Tax planning

There can be significant tax advantages to holding properties through a limited company, particularly when it comes to inheritance tax planning. For example, profits taken as dividends from the company may be taxed at lower rates compared to personal income tax on rental profits. 

As a limited company, you can also claim certain allowances and deductible expenses against your rental income that aren’t available to individual landlords. You can claim all of your mortgage interest as a deduction.  Company structures can allow more flexible tax planning opportunities because of this.

However, tax treatment depends on your specific circumstances, so be sure to always take professional advice from an accountant.

Separate assets and liabilities

Incorporating a limited company for your holiday let investments ensures a clear separation between personal and business assets, offering a layer of protection against business-related liabilities. This is because a limited company guarantees liabilities and debts within that entity, preventing creditors from pursuing your personal assets if things go wrong. This risk reduction can provide peace of mind when investing in property.

SPVs for property investment

Special Purpose Vehicles (SPVs) are commonly used in property investment to acquire and manage properties such as holiday lets. These entities offer a streamlined approach to property management and investment, providing an effective vehicle for property ownership and operational activities. When used correctly, SPVs can have various benefits for tax, financing, and liability reasons.


Considerations before using a limited company to buy a holiday let

Compliance and incorporation

Make sure your limited company is officially registered and incorporated through Companies House. Gov.uk provides a step-by-step process for setting up a limited company. 

You must then abide by their regulations, including filing documents such as annual accounts, corporation tax returns, and confirmation statements – your accountant can advise on your responsibilities.

Mortgage cost implications

Due to the perceived higher risk and the complexity of corporate mortgage applications, holiday let mortgages for limited companies tend to be more expensive than traditional mortgages. 

Lender requirements

Each mortgage lender will have their own specific requirements for lending to limited companies, which can vary significantly from personal mortgage requirements. Criteria may include minimum income levels, expected revenue, years of trading history, company ownership structure and more. Understanding these criteria is crucial to finding a suitable mortgage product, and a reputable mortgage broker will be able to determine whether you’re eligible for a limited company holiday let mortgage.

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Giving you peace of mind while you sit back and let us do all the work for you while finding you the best deal for your financial situation.

Is a Ltd Company Holiday Let Mortgage right for me?

Property investment and running a holiday letting business can potentially generate good returns, but comes with risks that need careful consideration. To understand whether a limited company holiday let mortgage is right for you, consider the following:

Financial considerations and risk assessment

Prospective investors should thoroughly evaluate the financial aspects of owning a holiday let, including mortgage repayments, potential rental income, and the overall profitability of the investment. 

Check that you can comfortably afford the mortgage repayments, plus any property running costs and maintenance required to keep the property in rentable condition to earn a steady stream of income.

Understand the projected rental income against your mortgage and running costs. Don’t just focus on maximising occupancy – set competitive rates to earn healthy profits without being overpriced. Assess seasonality and typical booking patterns too.

Consult the professionals

Purchasing and running a holiday let is a big financial commitment. Seek advice from legal and accounting professionals to fully understand the implications and responsibilities of owning a holiday let through a limited company.

Speak to a conveyancer for advice on any legal obligations around things like taking bookings, health and safety requirements, and licensing. And don’t forget to reach out to an accountant for their input on other financial considerations such as the optimal tax structure for your circumstances.


How to get a Limited Company Holiday Let Mortgage

In-depth market research

Conducting thorough research on the holiday let market, including demand, location, and potential rental income, is essential for ensuring a profitable investment.

Look at demand levels, rental rates achieved by comparable properties, and the area’s viability for holiday letting. If you plan to manage the property yourself, also consider its location compared to where you’re based.

Regulatory compliance

Make sure you’re up to speed with any new or upcoming rules governing holiday letting, to avoid facing penalties down the line. Using a holiday letting agent can help with regulatory compliance.

Seek expert mortgage advice

Once you’ve found the right place and you’re happy with the profitability of it, you can think about financing your holiday let.

For the best chance of securing a competitive holiday let mortgage through your limited company, speak to a property finance specialist like the experts at GPS Financial. We understand this mortgage market and application process inside-out to help you make an informed and strategic investment decision.

Speaking to professional mortgage brokers before committing to a property will help you afford the holiday let and raise the necessary funds for it. They’ll be able to guide you through the process and assist you with all the paperwork and documentation necessary for a successful mortgage application.

Speak To An Expert

Giving you peace of mind while you sit back and let us do all the work for you while finding you the best deal for your financial situation.

Why choose GPS Financial for your Limited Company Holiday Let Mortgage?

Choosing GPS Financial as your mortgage broker means partnering with a team of property finance experts who are knowledgeable about the mortgage market and the specific needs of limited companies investing in holiday lets. 

We are award-winning mortgage brokers and leading property finance specialists, with access to a large pool of reliable lenders to offer competitive rates and terms, tailored to your unique investment goals.

From the initial consultation to the finalisation of your mortgage, GPS Financial is dedicated to providing expert support and guidance, making the mortgage application process as smooth and efficient as possible.

Our limited company holiday let mortgage products provide the finance you need to establish a new business venture or generate income from holiday rentals. 

Contact us to discuss your limited company holiday let mortgage requirements.


Frequently asked questions about Limited Company Holiday Let Mortgages

Can company directors use the holiday let themselves?

This is dependent on the lender.  Some have no restrictions, while others will allow use of the abode.

Are these commercial mortgages?

No, limited company holiday let mortgages are different from commercial mortgages used for business premises.

What is the maximum loan to value of a Ltd Company Holiday Let Mortgage?

The maximum LTV for limited company holiday let mortgages is typically up to 75% of the purchase price or property valuation.

Can a Limited Company Holiday Let Mortgage be interest-only?

Yes, interest-only options can be arranged for limited company holiday let mortgages.

How do I set up a limited company?

You can register a new limited company yourself online through Companies House, but we recommend seeking an accountant’s advice first.

Can I use the property on Airbnb?

Yes, running holiday lets through platforms like Airbnb is possible with the right mortgage.

Should I buy a holiday let through a ltd company or personally?

Choosing to buy a holiday let via a limited company or under your own name depends on your own circumstances and tax position. While there are many benefits to buying a holiday let through a limited company, it’s not always the best solution – especially for your first property. For most first-time investors and basic rate taxpayers, it’s often more tax-efficient to buy personally. Seek the advice of a professional to make the right decision for you.

Why GPS Financial?

Leading property finance specialists
We remove the stress and the paperwork
Match you with the right deal for you
No case too big or too small