For landlords building or expanding a buy-to-let (BTL) portfolio, buying property through a limited company is a favoured route in order to achieve tax efficiency, professional liability separation and strategic flexibility. But should every property sit under one umbrella company or is there merit in giving each property its own corporate entity?
Some professional landlords are adopting a one-property-per-company model, structuring their portfolios so that each investment stands alone. While this may sound excessive, the reasoning behind it can be persuasive.
Understanding Company Property Ownership
Buying a property through a limited company means that the property is legally owned by a separate corporate entity rather than by you personally. The company holds the property as its asset, receives the rental income, and is responsible for mortgage payments and other expenses, and corporation tax. This structure allows landlords to separate personal and business income, access different tax treatments and potentially operate a portfolio more strategically. However, it also introduces additional administrative duties, such as filing annual company house returns, accounts and corporation tax returns.
Why Consider Holding One Property Per Company?
1. Risk isolation
The primary benefit of holding each property within its own company is to isolate financial risk. If one property experiences difficulties, such as rental arrears, loss of value, or costly repairs, its impact is contained within that company. Creditors and lenders cannot make claims against assets held by other companies in your portfolio. This means that a single underperforming asset cannot trigger a chain reaction across your holdings.
2. Tax efficiency and clear accounting
Operating one company per property can simplify accounting and tax. Each business has its own income, and mortgage and other expenses, and tax liability, reducing the risk of cross-allocation errors. Corporation tax on rental profits is generally lower than higher-rate personal income tax, and companies can deduct allowable expenses such as letting fees, repairs and mortgage interest before tax is calculated.
3. Simplified exit strategy
When the time comes to sell, having each property in its own company can make transactions smoother. Instead of transferring the property itself, a buyer can acquire the company’s shares, which can save them from paying Stamp Duty Land Tax (SDLT). This not only makes your property potentially more attractive to investors but may also speed up the sale process.
4. Stronger financial control
Running one property per company allows landlords to see the true performance of each investment. If one asset is producing strong returns while another is underperforming, you can make clearer decisions about it.
5. Easier inheritance and succession planning
Landlords seeking long-term wealth protection sometimes find that individual company structures can make inheritance planning easier. Shares can be transferred to beneficiaries or placed in trust more efficiently, creating a cleaner separation of ownership for each property.
Potential Drawbacks of Holding One Property per Company
1. Administrative burden
Each company must file separate annual returns, accounts and corporation tax returns. For landlords with several properties, the administrative demands can multiply quickly, increasing reliance on professional accountants and driving up costs.
2. Limited protection in practice
While risk isolation is a key advantage, most lenders still require personal guarantees for limited-company buy-to-let mortgages. If there is a mortgage payment default, the lender can pursue the guarantor.
3. Impact on financing and growth
Lenders often assess directors’ wider portfolios when evaluating mortgage applications. Managing multiple companies can make credit applications slower and more complex.
When Does It Make the Most Sense?
The one-property-per-company structure is particularly advantageous for:
High-risk properties:
Those requiring major refurbishments or located in uncertain markets. Risk is contained without threatening other assets.
High-income landlords:
Those who benefit from the lower corporation tax rate versus the higher personal income tax.
Portfolio sellers:
Landlords planning to exit gradually can sell shares in one company at a time, streamlining capital gains and paperwork.
However, for smaller portfolios or landlords requiring simplicity, consolidation under one company may still be more practical.
Transferring Existing Properties into a Company
If you already own a property personally and want to move it into a limited company structure, careful planning is essential. The transfer is legally treated as a sale, even if the property is sold to your own company, triggering tax liabilities:
1. Stamp Duty Land Tax (SDLT)
When transferring a property to your company, SDLT is calculated on its full market value. This applies even if you transfer the property at a nominal price. If it is classed as an additional residential property, which is common for landlord portfolios, a 5% surcharge applies. For properties over £500,000, companies may pay a flat 17% SDLT rate. Given the sums involved, professional tax advice is vital before proceeding.
2. Capital Gains Tax (CGT)
Because you and your company are “connected persons,” HMRC views the transfer as a disposal at market value. You will owe CGT on the increase in value from purchase to transfer (less allowable deductions, such as purchase and improvement costs).
3. Legal and conveyancing fees
Ideally, a solicitor should be appointed to handle the transfer, as with any property sale. Legal fees can typically be £1,000 - £1,500, depending on complexity.
4. Mortgage implications
Existing mortgages on the property cannot simply be “transferred” to a company. You will usually need a new limited-company mortgage, which often comes with higher rates and arrangement fees.
5. Administrative responsibilities
Running a company means filing company house returns, accounts and corporation tax returns annually. These obligations are part of the ongoing cost of a limited company buying property.
The Advantages of Incorporating Despite the Costs
Despite the costs, transferring to or buying property through a limited company can still prove financially beneficial over time.
Lower corporate tax rates:
Profits within a company are taxed at 19-25%, typically lower than the higher-rate personal tax.
Full mortgage-interest relief:
Unlike higher rate taxpayer individuals, who are limited to a 20% credit under Section 24, companies can deduct the full mortgage interest as a business expense, lowering taxable profits.
Limited liability:
Shareholders aren’t personally liable for company debts, offering a safeguard for personal assets (although company directors will typically be required to provide personal guarantees in respect of buy-to-let mortgages).
For many professional landlords, these long-term benefits outweigh the short-term costs of transferring properties or maintaining multiple companies.
Conclusion
Buying property through a limited company and holding each property within its own company will not suit every situation, but for professional investors it can deliver strategic, tax and risk-management advantages that outweigh the complexities. Ultimately, the decision depends on your portfolio size, income and growth ambitions. Careful planning and expert advice can help you strike the right balance between efficiency, protection and profitability.
FAQs
Q. What does buying property through a limited company mean?
A. It means purchasing property under a business entity rather than in your own name. The company owns the asset, pays tax on profits and you can draw income as dividends or salary.
Q. Why might I hold one property per company?
A. To isolate financial risk, simplify future sales and manage each investment’s finances separately. It may also help with inheritance tax planning.
Q. Is using a limited company to buy property more tax-efficient?
A. For higher-rate taxpayers, yes. Corporation tax is usually lower than personal income tax, and mortgage interest remains fully deductible.
Q. Are there any extra costs associated with multiple companies?
A. Yes. Each entity requires separate filings, accounting and tax submissions. This can increase annual costs significantly.
Q. Can I move my existing buy-to-let into a company?
A. Yes, but it is treated as a sale, which can trigger Stamp Duty Land Tax and Capital Gains Tax. Professional advice is essential before proceeding.
Q. Does one property per company eliminate personal liability?
A. Not completely. Most lenders require personal guarantees, meaning you remain responsible if the company defaults.
Q. What happens to my mortgages if I incorporate?
A. You will need new limited-company mortgages. These often have higher interest rates and fees, but they also gain from the tax and limited liability benefits of a corporate structure.
Q. Can I sell a company instead of the property?
A. Yes. Selling shares in the company can be simpler for the buyer and may help them avoid SDLT, making your investment more attractive.
Q. How do I decide if this structure is right for me?
A. Evaluate your income, number of properties and long-term investment goals. Consult a tax adviser to model alternative ownership scenarios.
Additional Sources:
https://www.nrla.org.uk/news/what-are-the-benefits-of-holding-one-property-per-company
https://www.ukpropertyaccountants.co.uk/pros-and-cons-of-a-one-property-one-company-structure/
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