The explosion in the number of landlords setting up limited companies to hold buy-to-let properties in recent years has been amazing.
According to research by estate agents Hamptons, there are now more than 390,000 buy-to-let limited companies across Great Britain, with over 61,500 set up in 2024 alone – a 23% increase on what was already a record year for incorporations in 2023*.
The reasons for the supercharged number of landlords incorporating their rental businesses are well documented, chiefly the removal of mortgage interest tax relief for individual landlords which started back in 2017.
Introducing layered limited companies
But while setting up a basic limited company for property investment is simple enough – it usually starts life as a special purpose vehicle, or SPV, and maybe consists of a single director who also acts as the sole shareholder – complexities can arise with landlords who run their rental businesses via a limited company which is owned by another company. This type of ownership structure is known as a ‘layered limited company’.
There are a number of reasons why landlords may choose to do this. It might be they want to set up a company in a way that mitigates tax, they might want to allow for more efficient planning or they might want to protect long-term family wealth.
Say, for example…
Kieran and Sarah each hold a property individually in different limited companies but decide to purchase one together and set up a new SPV with both acting as directors. However, instead of holding the shares personally, Kieran has decided to hold his shares in his limited company, with Sarah opting to do the same. That’s three companies involved in holding a single property!
This layering can go further still. Kieran’s holding company could itself be owned by another family vehicle, while Sarah’s might be linked to a different entity. Suddenly, a company that appears to have two straightforward shareholders actually sits within a web of layered ownership. Each layer has a purpose, usually linked to protecting assets, maximising tax efficiency, or ensuring that the ultimate beneficiaries are safeguarded. The problem brokers can face when tasked with looking for a mortgage for their clients is finding a lender that will accept layered limited companies. Many lenders won’t consider them due to concerns about complexity, increased risk or reduced transparency.
How CHL Mortgages for Intermediaries could help
As a specialist lender with years of experience of helping landlords achieve their buy-to-let ambitions, we can support investors looking for alternative ways to structure their buy-to-let holding.
We understand layered limited company structures are designed to meet wider objectives. We know that layering is not about creating unnecessary complexity, but about designing a structure that works for the long-term interests of the investor and their family.
We accept any standard industrial classification code, otherwise known as a SIC code, so as long as a case meets our published criteria, we could provide a lending solution.
And that’s not all. ModaMortgages, which is also part of the Chetwood Bank family of brands, now accepts applications where the SPV has one linked company. So, whether you need a solution for a limited company structure with multiple layers, or one where there’s only a single linked company, there are now two ways about it!
To find out more about how we can help, get in touch with a member of our sales team who’ll be more than happy to have a chat.
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