How to Set Up a Limited Company to Buy Property

Buying property through a limited company has become increasingly popular among landlords and investors in recent years. Whether your goal is to build a long-term rental portfolio, develop and flip houses, or follow strategies like buy, renovate, refurbish, refinance and rent (commonly known as BRRRR), setting up the right structure from the start is essential.

While using a limited company to buy property can offer tax advantages and more control over your investments, it also brings added costs, legal obligations and financial responsibilities. This guide explains how to set up a limited company for property investment, what strategies are still viable in 2025 and how to decide if it is right for you.

Why use a limited company for property?

The main reason investors choose to use a company structure is for tax planning. When you buy property personally, rental income is added to your income tax band. Mortgage interest relief is also restricted for individual landlords. In contrast, a limited company pays Corporation Tax on its profits, which is currently 25 percent for most property companies.

Within a company, you can also fully deduct finance costs such as mortgage interest, reinvest profits without personal tax and distribute income using salary, dividends or pensions. This flexibility appeals especially to higher-rate taxpayers and those planning to build larger portfolios.

How to set up a limited company for property investment

If you are buying property through a company for the first time, follow these steps to set things up correctly.

First, register your company on the GOV.UK website using the standard formation service. You will need to choose a name, provide a registered office address, and appoint at least one director and shareholder. For property investment purposes, use a specific Standard Industrial Classification (SIC) code such as 68209, which refers to letting and operating of own or leased real estate.

Many investors create what is known as a Special Purpose Vehicle (SPV). This is simply a company set up solely for holding property. Lenders prefer SPVs over general trading companies because they are cleaner, easier to assess for lending purposes and focused on one type of activity.

Once your company is formed, register for Corporation Tax with HMRC and open a dedicated business bank account. If you plan to employ people or pay yourself a salary, you will also need to register for PAYE. VAT is rarely relevant for residential property income, but if you are dealing with commercial units or property development, it is worth checking the VAT position carefully.

Funding property purchases through your company

Financing property through a limited company is not the same as getting a personal buy-to-let mortgage. You will need to work with specialist lenders or mortgage brokers who offer limited company buy-to-let or commercial mortgages. These products often come with higher interest rates and fees, and the deposit requirements are usually stricter.

Most lenders require the company to be an SPV with clear ownership. They may also assess the financial strength of the directors, including personal guarantees, especially if the company is newly formed and has no trading history.

It is possible to invest using your own funds loaned to the company. For example, if you have savings or proceeds from a property sale, you can inject them as a director’s loan. This allows the company to use the funds for deposits or renovations and repay you later without triggering dividend or salary tax.

Is the BRRRR strategy still possible in 2025?

The BRRRR method, Buy, Renovate, Refurbish, Refinance and Rent, gained huge popularity on social media over the past few years. The concept is simple. You purchase a property below market value, add value through renovation, refinance it at the higher post-refurbishment valuation, and pull out much of your initial investment. The property is then let out, generating rental income while your capital is recycled into the next deal.

This strategy still exists in 2025, but it is harder to execute due to several factors.

First, property prices in many areas have remained strong, making it more difficult to find deals with enough discount to make refinancing worthwhile. Second, lenders have become more cautious and now require stronger evidence of post-works value, rental income and exit plans before offering refinancing. Third, rising interest rates and tighter stress tests have limited the amount that can be borrowed against rental income.

That said, the core principle of adding value to a property to boost equity remains valid. Investors following BRRRR in today’s market often look for properties with serious cosmetic issues, unmodernised layouts or opportunities for extensions or HMOs. The margin for error is smaller, but with proper planning and expert advice, the method can still be used, just with more due diligence and more realistic timelines.

Other property strategies through a limited company

While BRRRR is popular, there are other investment models that also work well within a company structure.

For example, long-term buy-to-let portfolios allow you to build stable, tax-efficient income and benefit from capital appreciation. HMOs (houses in multiple occupation) can offer higher returns but come with more regulation. Serviced accommodation and holiday lets may generate strong cashflow but require different tax and VAT treatment. Property development through a limited company can also be lucrative, though it involves greater financial risk and planning requirements.

Each strategy carries different tax and lending implications, so it is important to match your company setup to your chosen investment model.

Is it worth setting up a company for one property?

This depends on your goals. If you are a basic rate taxpayer and plan to buy only one rental property, the extra admin and costs may not be worth it. You will have to submit annual accounts, pay accounting fees and handle compliance duties like confirmation statements.

However, if you plan to build a portfolio or your personal tax rate is high, using a company can provide long-term tax savings and more flexibility around how profits are used or distributed. It also simplifies joint ownership and inheritance planning in many cases.

Final thoughts

Setting up a limited company to buy property is not just about reducing tax. It is a decision that affects your lending options, legal responsibilities and how you grow your investment over time. With proper planning, it can provide structure, flexibility and a route to scaling your property business.

The BRRRR method may no longer be the quick win it once seemed on Instagram, but the core idea of using value-added equity to reinvest remains solid. It just needs more realism, careful number-crunching and the right finance partners.

Before setting up your company, speak to a property accountant and mortgage broker who understand company structures. That way, you can build a solid foundation for your investment journey and avoid costly mistakes later on.