Benefits vs disadvantages of setting up a limited company as a landlord

Making the decision to incorporate your buy-to-let business comes with advantages and disadvantages, and the details of your specific circumstances will determine what the best option is. Here is an overview of factors to consider.

We recently discussed the pros and cons of sole-traders vs limited companies in a recent article, but there are specifics that are important to consider as a landlord.

When you incorporate a buy-to-let business, you make the company its own legal entity. This has a variety of benefits for your business and can ultimately lead to a better market presence and greater financial stability. But, it is a complex matter, and there are pitfalls to avoid.


When you incorporate your property business, you legally separate the financial risk from yourself as a landlord. This offers both greater security and the opportunity to present your business in a recognised, professional capacity.

You will also be exempt from paying National Insurance on your profits, and your mortgage interest rate (if you have one) will be tax-deductible.

Profits will be taxed at a corporation rate of 19%, and you can opt to pay yourself via several different means. This is typically a mixture of a salary, pension payments or dividends (we discuss this in the article mentioned earlier).

One final benefit of an incorporated company is that, as a professional outfit, it can provide a strong face that can be grown into a brand or a recognised organisation in your area.


One negative side of incorporating your business is that you will have significantly more administrative duties. The process of setting up your business with Companies House itself can be complex, so we would recommend speaking to an adviser before doing so.

Another factor to consider is that, when you are transferring your properties (if you had some while operating as a sole trader) you will have to pay stamp duty on each one – and, in some situations, capital gains tax as well.

This technically classes as a repurchase of the existing property – so if the value has increased, the capital gains tax you pay may be as high as 28%.

For this reason, if you have a smaller portfolio, it may not make financial sense to transfer your assets into that of a limited company.

Seek professional advice
While there are benefits and disadvantages to operating both as a sole trader and a limited company as a landlord, the decision is best made with the help of someone who truly understands your unique circumstances, such as an accountant or financial adviser.

The process of incorporating your business can be costly, so it is not worth entering into unless you are certain it is the right decision for you as a landlord.

Get in touch with us today to find out more about what you need to do to incorporate your business.

Other blog features you might like:

People-focused expertise just a click away

Ready to level up your business?

With our support, we know we can help you reach new heights.