What SIC codes do I need for the limited company?
When you apply for a limited company buy-to-let mortgage, most lenders require that your limited company be registered with an appropriate SIC (Standard Industrial Classification of Economic Activities) code for property letting. There are four SIC codes that can potentially relate to property letting:
68100 – Buying and selling of own real estate
68201 – Renting and operating of Housing Association real estate
68209 – Other letting and operating of own or leased real estate
68320 – Management of real estate on a fee or contract basis
Lenders can differ in their requirements, but typically buy-to-let lenders will expect a limited company to be registered under either;
68100 – Buying and selling of own real estate or
68209 – Other letting and operating of own or leased real estate.
Can I use my existing limited company?
To minimise risk, most buy-to-let lenders prefer a limited company that exists as a special purpose vehicle (SPV) exclusively to buy, rent and sell buy-to-let property, without the complications of any other trade or revenue streams being conducted through it. In the vast majority of cases, this means a newly incorporated limited company solely dedicated to your buy-to-let business and with an appropriate SIC code for property letting.
If you do have an existing limited company with a trading history, some lenders may be willing to accept it, but normally on the condition that no other trade or revenue streams – other than the buy-to-let business – will go through the company going forward. A very small number of lenders will accept an existing limited company with other revenue streams in addition to the buy-to-let business, but you should be aware that this has the potential to limit your mortgage options.
How many properties can I hold within a limited company?
There is no limit to the amount of properties you can hold within a limited company. In fact, operating as a limited company, as opposed to running a buy-to-let business on a personal basis, can be more advantageous for landlords with a portfolio of several properties, due to the potential tax efficiencies it affords.
Do I need to set up my limited company before I can apply for an Agreement in Principle?
Some lenders do not require a limited company to be incorporated before you apply for an Agreement in Principle. However, you will likely be better placed if this has been done.
Can I transfer my property from sole ownership to the limited company?
You can transfer buy-to-let property that you own personally to the limited company. However, this effectively means selling the property as an individual, and purchasing it via the limited company – which can leave you personally liable for capital gains tax on the sale, and the company liable for Stamp Duty on the purchase. It is therefore important to weigh the pros and cons of transferring a property before proceeding and we recommend you seek professional advice in regard to your tax affairs prior to making any decisions.