Company buy-to-let in Folkestone
Folkestone has attracted investors in recent years, helped by fast trains to St Pancras, the regeneration of the harbour and the Creative Quarter, and prices that are generally lower than in many commuter towns closer to London. Many of those buyers are higher-rate taxpayers, which is often where a company structure starts to make sense.
The local stock suits several company strategies. Large Victorian houses near the Leas and in central Folkestone have often been split into flats, and freehold buildings can sometimes be financed on one multi-unit freehold block mortgage. Terraced houses in east Folkestone and Cheriton suit single lets or small HMOs, subject to licensing and planning. Holiday lets near the harbour are another option, with lenders that lend to companies on holiday lets.
Further ahead, the Otterpool Park garden town, with outline permission for 8,500 homes to the west, may change the local market over time. Company landlords face the same licensing and Renters' Rights Act rules as individuals.
Personal name or limited company?
Many landlords now buy through a company because company profits are taxed differently from personal rental income, and mortgage interest can usually be treated as a cost. That does not suit everyone: drawing money out of the company is taxed, company products are a narrower market, and you still pay the 5% stamp duty surcharge on additional properties.
If you already own properties personally, moving them into a company usually counts as a sale. Take tax advice first, then let us find the right limited company buy-to-let lender for the structure you choose.
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How limited company buy-to-let lending works
Most lenders want a special purpose vehicle (SPV): a limited company set up only to hold property, usually with SIC codes such as 68100, 68209 or 68320. Some lenders also accept trading companies or more complex group structures. Directors and main shareholders are usually asked to give personal guarantees.
The rent test for company borrowers is often around 125%, which can allow a larger loan than the higher-rate personal test. Most lenders want a 25% deposit. Newly formed companies are fine with many lenders, because they look at the directors' experience and credit. Our guide to SPV, HMO and company buy-to-let lending goes into more detail.
Example: a Leas building on one freehold
This is an illustrative example, not a real case. An SPV buys a Victorian house near the Leas that contains five self-contained flats on a single freehold. Some flats need refurbishment, so the company buys with bridging finance, completes the work and lets the flats, then refinances onto a multi-unit block mortgage based on the combined rent.
Limited company buy-to-let advice in Folkestone
We work with company landlords from their first SPV purchase to large multi-property portfolios. We are directly authorised by the Financial Conduct Authority (FRN 925926) and rated 5.0 stars from 109 Google reviews. We are based in Hastings and most Folkestone clients work with us by phone or video, with documents uploaded securely; you are also welcome at our Hastings office.
Our broker fee is £599. For a purchase it is payable when your mortgage offer is issued; for a remortgage to a new lender it is charged on completion. Where there is adverse credit the fee is £999, or up to 1% of the loan. We do not charge a fee for product transfers with your existing lender, and we confirm any fee in writing before we start. Contact us or call 01424 444597 to talk it through.
Frequently asked questions
Can a limited company get a holiday let mortgage in Folkestone?
Yes, from a smaller group of lenders. They usually assess projected holiday income from a letting agent and look closely at the property and its location.
Can I buy a Folkestone HMO through a company?
Yes, if it has the right licence and planning use. Lenders will want to see the licence and tenancy details and value it on its HMO use.
Do I need to set up a new company?
Not always, but most lenders prefer a special purpose vehicle that only holds property. If you already have a trading company, a smaller group of lenders may still help. Speak to your accountant before setting one up so the shareholdings suit your plans.
Will I have to give a personal guarantee?
Almost always. Lenders usually ask each director, and often any shareholder with 20% or more, for a personal guarantee. That means you could be personally liable if the company cannot repay, so take independent legal advice.
Important: Limited company buy-to-let mortgages are not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on your mortgage. Directors are usually asked for personal guarantees, which can put personal assets at risk. The FCA does not regulate tax advice, so please take advice from an accountant before buying through a company.
Transparent Mortgage Services is a trading style of Transparent Financial Associates Limited, which is directly authorised and regulated by the Financial Conduct Authority (FRN 925926). 17 Havelock Road, Hastings, East Sussex TN34 1BP. Telephone 01424 444597.
