If you’re a landlord or planning to buy your first rental property, you’ve probably asked this question: Should I buy property in my own name or through a limited company?

In our latest Business Success Conversation, Michael and Edith break down the key differences that landlords need to understand, from tax implications to legal consequences.

So What’s the Difference?

There are three main ways to own property for rental:

• Personally (as an individual)
• Through a Limited Company
• As part of a Partnership

Each has its own rules, but the big factor is tax, mortgage interest relief.

The Mortgage Interest Trap

Here’s where many landlords get caught out.

• If you own property personally, mortgage interest doesn’t count as a deductible expense, it only qualifies for basic rate tax relief.
• If you’re a higher-rate taxpayer, this means you can only reclaim 20% of the interest, even though you might be taxed at 40%.
• But if the property is held in a limited company, mortgage interest is a deductible business expense, reducing Corporation Tax.

It sounds like a no-brainer, but it's not that simple.

The Legal Considerations

If you move a property into a limited company:

• The property no longer belongs to you personally, it belongs to the company.
• That company is a separate legal entity.
• You might need to remortgage, pay for surveys and valuations, and pay Stamp Duty and Capital Gains Tax on the transfer.

Many landlords jump into this structure to reduce tax without understanding the hidden costs, and end up worse off.

Director’s Loan Accounts: A Hidden Pitfall

Even once a property is owned by a company, some landlords fall into another trap: treating the company account like a personal wallet.

Paying for holidays, school fees or personal expenses from the company bank account can leave you with an overdrawn Director’s Loan Account, which may lead to:

• Unexpected tax bills
• Limited or no dividends to cover the debt
• Stress and confusion at year-end

If you’re not tracking this on your balance sheet or cloud software, you won’t see it coming.

What About HMOs?

Homes of Multiple Occupancy (HMOs) follow similar tax rules to residential rentals, but they carry more legal obligations.

From a financial perspective:

• You’ll need to track profitability by property
• Use cloud software with property-specific tracking tools
• Understand your licensing and legal responsibilities

Always Speak to Your Accountant First

We can’t stress this enough:

'Just because something looks good for tax doesn’t mean it’s right for your business.'

We’ve seen too many landlords make costly decisions because they didn’t seek advice first.

Get the Business You Want

Whether you’re new to property or already managing a portfolio, we’ll help you understand the true costs, risks, and opportunities of each structure.

📍 Thinking about buying your next property?
📞 Speak to us before you do.