Buying property through a limited company—or Special Purpose Vehicle (SPV)—has become the go-to strategy for many landlords and investors in 2025. But while the benefits are well-publicised (tax advantages, interest deductibility, inheritance planning), the downsides are rarely talked about.

In this post, we break down the risks and hidden drawbacks that come with purchasing property via a company—so you can make informed decisions, not just trendy ones.

1. Higher Mortgage Rates and Fees

While lender appetite for limited company mortgages has grown, they still often come with:

• Higher interest rates than personal name products
• Larger arrangement fees
• Stricter loan criteria based on portfolio size or director experience
• 
  

Many investors are surprised when their borrowing costs wipe out expected tax savings. Always compare like-for-like.

2. Fewer Lenders = Less Flexibility

Not every lender offers limited company mortgages, and those that do may:

• Restrict the loan-to-value (LTV)
• Require personal guarantees from directors
• Decline properties with minor issues that a personal mortgage lender would accept

This can limit your financing options—especially in competitive or time-sensitive scenarios.

3. Ongoing Administrative Burden

Owning property through a company brings obligations that personal landlords don’t face:

• Annual accounts
• Corporation tax filings
• Director filings and confirmation statements
• Potential audit requirements as your portfolio grows

If you’re not using a qualified accountant, the risk of errors or penalties increases significantly.

4. Potential Tax Issues When Withdrawing Profits

Yes, corporation tax is lower than income tax—but taking the profits out of your company isn’t tax-free.

Expect to pay:

• Dividend tax on withdrawals (up to 39.35% depending on your tax band)
• Income tax on salaries if you pay yourself through PAYE

So unless you’re retaining profits to reinvest, the benefit may be marginal.

5. Limited Use for Main Homes or Holiday Homes

You cannot live in a property owned by your company without:

• Triggering benefit-in-kind tax charges
• Possibly breaching mortgage terms

The same applies to second homes or holiday lets you personally use. These properties are best held in your own name, not via an SPV.

6. Added Costs on Sale

If you sell a property held in a company:

• You may face double taxation: once in the company (corporation tax), and again when extracting funds personally (dividends or capital gains)
• You lose access to capital gains tax allowances that individuals benefit from

This can have a major impact on long-term returns if you plan to sell rather than hold.

7. Not Always the Best Route for First-Time Investors

If you’re just starting out and don’t have:

• Multiple properties
• A high income
• Clear plans to scale

Then a limited company might be overkill. The complexity and admin could outweigh the benefits—especially if your investing timeline changes.

8. Tougher Lending Criteria Post-2025

With regulatory changes under discussion, some lenders are reassessing:

• Company structures with multiple directors
• Overuse of inter-company loans
• Corporate borrowers lacking experience

We’ve seen cases where switching to a personal name allowed deals to go ahead that were blocked under the limited company route.

So—Should You Use a Company?

✅ Use a company if:

• You plan to build a large portfolio
• You want to retain profits within the company for reinvestment
• You have professional accounting and legal advice

🚫 Avoid a company if:

• You’re buying a single property to hold long-term
• You’ll need to access profits personally
• You’re unsure about your long-term strategy

Final Thought

Limited companies are powerful tools—but they are not a shortcut to tax savings or guaranteed lending success. The smartest investors in 2025 aren’t just following trends. They’re structuring with clarity, purpose, and expert advice.



📞 Want to know if a limited company is right for your next property purchase?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.