Can I Use My Existing Trading Company to Buy a Property Through a Limited Company?

Introduction

A question frequently asked by business owners, contractors, and company directors is:

“Can I use my existing trading company to buy a property through a limited company?”

The answer is yes, this can be possible in certain circumstances, but it is not always the most suitable or straightforward option. Lender appetite, mortgage availability, tax considerations, and long-term planning all play an important role in determining whether this route is appropriate.

This article provides general information only and explains:

• Why most lenders prefer Special Purpose Vehicles (SPVs)
• When a trading company mortgage may be considered
• Alternative company structures, including layered structures
• Key advantages and disadvantages
• Why mortgage and accountancy advice should be considered together

Why Most Lenders Prefer SPVs

Most UK buy-to-let lenders prefer lending to a Special Purpose Vehicle (SPV) rather than an active trading company.

An SPV is a limited company set up solely for property-related activities, such as:

• Buying property
• Letting property
• Holding property as an investment
• Selling property where appropriate

From a lender’s perspective, SPVs offer:

• Clear separation between trading activity and property investment
• More predictable income streams
• Simpler risk assessment
• Greater consistency with buy-to-let lending models

As a result, SPVs generally have access to a wider range of lenders and mortgage products, although availability and pricing always depend on individual circumstances and lender criteria.

Using a Trading Company to Buy Property

It is possible to purchase property using an existing trading company, but many lenders apply additional scrutiny where a company has active trading income.

Typical lender considerations include:

• Variability of trading income
• Existing business liabilities
• Whether property ownership aligns with the company’s core activity
• Long-term affordability and sustainability

Because of this:

• Lender choice may be limited
• Mortgage pricing may be less competitive
• Criteria can be more restrictive

Some specialist lenders may consider trading company applications, subject to detailed assessment of the business, company accounts, and directors.

Alternative Structure: Layered Company Structure

Due to the limitations of trading company mortgages, many clients explore a layered company structure.

What is a layered company structure?

A layered company structure typically involves:

• A separate property company (often an SPV)
• The trading company introducing funds via:
  • Inter-company loans
  • Director loans
  • Capital investment into the property company

This approach allows:

• Clear separation between trading and property activities
• Improved lender acceptance
• Greater flexibility when arranging finance

From a lender’s perspective, layered company structures are well established and commonly used, but suitability depends on individual circumstances and professional advice.

Holding Company Structures

Some clients also consider a holding company structure, where:

• A holding company owns both the trading company and the property company

While this can be appropriate in certain scenarios:

• It introduces additional complexity
• Not all lenders will accept this structure
• Specialist legal and tax advice is essential

This option should only be explored with professional guidance.

Why Some Clients Still Use a Trading Company

Some clients prefer using their trading company because:

• Funds are already retained within the business
• They wish to avoid running multiple companies
• They want to limit administrative and accountancy costs

However, this should be balanced against:

• Reduced mortgage choice
• Potentially higher borrowing costs
• Greater complexity if the business structure changes in future

Additional Considerations

Business and Structural Changes

If the trading company is later sold, restructured, or experiences shareholder changes:

• Lender consent may be required
• Property ownership can complicate future transactions

External and Professional Scrutiny

In certain professions or regulated environments:

• Mixing trading and investment activity may attract additional scrutiny
• Keeping business activities separate is often preferred

These factors do not automatically make the structure unsuitable, but they should be considered carefully in advance.

SIC Codes and Companies House

Where a trading company is involved in property activity, it is important that appropriate SIC codes are recorded at Companies House.

Common property-related SIC codes include:

• 68100 – Buying and selling of own real estate
• 68209 – Other letting and operating of own or leased real estate

These may be added alongside existing trading SIC codes, where appropriate.

Looking Beyond the Mortgage

Property purchases are long-term commitments. It is important to consider:

• Long-term business objectives
• Succession planning
• Director and shareholder arrangements
• Contingency planning if a director becomes unable to work

Mortgage availability alone should not determine the structure chosen.

Personal Ownership vs Limited Company Ownership

Limited company ownership is not suitable for everyone.

In some cases, personal ownership may still be appropriate, particularly where:

• A single property is being purchased
• Rental income is modest
• Personal tax considerations are more favourable

Comparing all available options before proceeding is strongly recommended.

Case Study: Trading Company Buy-to-Let Mortgage

A client approached WIS Mortgages seeking to purchase an investment property using an existing trading company. The client was reluctant to establish an SPV due to concerns around additional administration.

Key considerations

• Limited lender availability
• High-street lenders were largely unsuitable

Our approach

• Reviewed the company’s financial position in detail
• Engaged with specialist lenders experienced in trading company lending
• Arranged funding through a specialist bank
• Coordinated planning with our accountancy team to ensure alignment with longer-term succession planning

Outcome

• A mortgage was secured on terms more competitive than typical trading company options
• The structure met lender requirements
• The solution aligned with the client’s wider business planning objectives

Individual outcomes will vary depending on circumstances and lender criteria.

Key Points Summary

• Trading company property purchases are possible but restricted
• SPVs remain the preferred structure for most lenders
• Layered company structures often provide greater flexibility
• Mortgage decisions should align with tax and succession planning
• Specialist advice can materially affect available options

⚠️ Important Information (FCA Compliance Notice)

This article is provided for general information purposes only and does not constitute personal mortgage, financial, or tax advice.

Mortgage availability, terms, and suitability depend on individual circumstances and lender criteria.

Tax treatment depends on personal and company circumstances and may change in the future.

You should always seek independent professional advice before making financial or structural decisions.

Frequently Asked Questions

Can a trading company obtain a buy-to-let mortgage?

Yes, in some cases, subject to lender criteria and specialist underwriting.

Are interest rates higher when using a trading company?

They can be, as lender choice is often more limited.

Is an SPV mandatory for limited company buy-to-let?

No, but it is commonly preferred by lenders.

Should I seek tax advice before choosing a structure?

Yes. Mortgage structure and tax planning are closely linked.

Speak to a Specialist

WIS Mortgages works closely with WIS Accountancy to ensure mortgage decisions are aligned with wider business, tax, and succession planning considerations.

For accountancy and tax guidance, visit:
https://wisaccountancy.co.uk

For mortgage enquiries or an initial discussion:
Call 020 3011 1986

Early advice can help reduce risk and ensure the structure you choose remains appropriate over the long term.