If you're a landlord in East Yorkshire, with property in Beverley, Cottingham, or Hessle for example, you’ve probably heard about fellow property owners transferring their buy-to-lets into limited companies. It’s become a popular option in recent years, but is it the right move for you?
As letting agents with properties throughout East Yorkshire we see landlords woth properties in limited companies and not in them.
In this post, we’ll break down what it means to own rental property through a company, the pros and cons, and when it might (or might not) be worth it.
What Does It Mean to Own Property Through a Limited Company?
Instead of owning a rental property in your personal name, you set up a company, usually a Special Purpose Vehicle (SPV), that buys and owns the property. You, in turn, own the company.
This approach separates your rental business from your personal finances and has different tax rules, lending options, and legal responsibilities.
The Pros of Using a Limited Company
1. Corporation Tax Can Be Lower Than Income Tax
Rental profits in a limited company are taxed at the corporation tax rate (currently 25% or less depending on profits), which is lower than the 40% or 45% personal income tax rates for higher earners.
2. Full Mortgage Interest Relief
If you own property personally, you can no longer deduct mortgage interest in full from your rental income. In a limited company, that rule doesn’t apply—you can still treat mortgage interest as a business expense.
3. Profits Can Be Reinvested
You can leave profits in the company to reinvest in more property, without withdrawing the money and triggering personal tax.
4. Flexibility With Estate Planning
Passing shares in a company to family members can be simpler (and potentially more tax-efficient) than transferring property itself.
The Cons of Using a Limited Company for Rental Properties
1. Mortgage Rates Are Often Higher
Limited company buy-to-let mortgages tend to come with slightly higher interest rates and fees. Fewer lenders operate in this space, which limits your options.
2. More Admin and Costs
You’ll need to file annual accounts, keep company records, and pay for accountancy services. Running a company adds complexity that isn’t always worth it for smaller landlords.
3. Capital Gains and Stamp Duty on Transfers
If you already own a property personally and want to move it into a company, you may face a capital gains tax bill and have to pay stamp duty again. There are no reliefs just for “moving” a property to your own company.
4. Personal Tax Still Applies on Profits You Take Out
To get money out of the company, you’ll usually need to pay yourself a salary or dividend, both of which are taxed personally. So while corporation tax may be lower, the total tax paid could be higher, depending on your situation.
When Might It Make Sense?
Setting up a limited company for your rentals could make sense if:
You’re planning to build a portfolio of several properties.
You’re a higher-rate taxpayer looking for long-term tax efficiency.
You want to leave profits in the business for future investment.
You’re thinking about how to pass property wealth to family members.
When It Might Not Be Worth It
It might not be the right choice if:
You only own one or two properties.
You’re a basic-rate taxpayer and don’t plan to expand.
You prefer to keep things simple and avoid extra admin.
The upfront costs of switching outweigh any long-term savings.
What About East Yorkshire Landlords?
Property prices in East Yorkshire are relatively affordable, which can be great for yield, but also means your annual profits may not be high enough to justify the costs of a company setup.
Also, some specialist lenders may not cater to smaller towns like Bridlington, Driffield, or Hornsea, especially when using a limited company structure. It’s always worth speaking to a local mortgage broker who understands the regional market.
Final Thoughts
As with most things, there’s no one-size-fits-all answer.
Putting your rental property into a limited company can offer tax advantages and long-term flexibility but only if the numbers stack up and you're comfortable with the added admin.
Before making a decision, speak to a tax adviser or accountant who specialises in property. And if you’re thinking of growing your portfolio in East Yorkshire, we’re happy to help you explore the options and put you in touch with local experts.
Call us on 01377 250550 or email info@renteastyorkshire.co.uk
Maddie Lancaster is an ARLA qualified letting agent with over 10 years of experience in the UK rental market. Rent East Yorkshire specialises in property management services for landlords across the East Riding of Yorkshire.
Disclaimer: This information is provided for guidance only and does not constitute legal advice. Specific legal advice should be sought for particular circumstances.
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