Guide · 10 min read
The decline reasons that recur on limited company buy-to-let: wrong SIC codes, undocumented deposits, ICR shortfalls, adverse credit on guarantors, and weak packaging.
Written by Matt Lenzie · Published 10 June 2026
Advice from
Matt Lenzie · 25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
A limited company mortgage application gets declined when the case fails one of the lender's specific criteria, and in company buy-to-let the failures are overwhelmingly structural: the wrong SIC code, trading activity in the borrowing vehicle, an undocumented deposit, a director's credit history, or rent that misses the stress test. Very few declines are mysterious, and almost none of them mean the company cannot borrow, they mean this case, packaged this way, at this lender, did not fit.
We see the post-decline cases weekly: a landlord arrives with a refusal, sometimes two, and a conviction that company lending is impossible. The diagnosis usually takes one phone call. This guide is the ranked list from our broker desk, what actually declines company applications, what the underwriter is thinking, and how each cause is pre-empted or repaired.
Because company buy-to-let criteria are precise and unevenly published. Every lender on the panel agrees on the broad shape, an SPV borrower, personal guarantees from directors, rent covering 125% of stressed interest, 75% loan to value, but they diverge on the details: which SIC codes, how much trading history is tolerable, which deposit sources, what adverse credit, which property types. A personal applicant who fits one high-street lender roughly fits the next; a company case that fails one lender's SIC list can pass the next lender without changing anything. Declines are therefore as much placement errors as borrower defects, which is the single most useful reframe for anyone holding a refusal.
The recurring causes, in roughly the order of frequency we encounter them:
Yes, and it is the most farcical decline in the business because the fix is a free Companies House filing. Lenders use the company's SIC code as the first screen for "is this a clean property SPV": the accepted codes are 68100 (buying and selling own real estate) and 68209 (letting of own or leased real estate), with 68320 (property management) acceptable to some lenders alongside them. A company registered under a consultancy, construction or retail code, or carrying a long mixed list, fails the screen at many lenders before a human reads the file.
The pre-empt: check the code before the decision in principle, and amend it at Companies House if needed (lenders generally accept an amended code; a few want it in place for a period first). The repair after a decline is identical. Our SPV SIC codes guide covers the codes and lender attitudes in detail. If you are incorporating fresh, get it right on day one, the steps are in setting up an SPV for buy-to-let.
At most lenders, yes. The underwriter wants a special purpose vehicle whose only contents are property, mortgage and director loans; invoices for consultancy work, a payroll, stock, or an old trade's debts turn the case into trading-company underwriting, which the majority of buy-to-let lenders simply do not do. The marginal cases are the painful ones: a "dormant" company with historic trading, a one-off invoice through the SPV, an intercompany balance with no paperwork.
The pre-empt is structural: keep the trade and the property in separate companies, funding the SPV by documented intercompany loan or through a holding group, the full architecture is in our SPV vs trading company guide. The repair: either place the case with the minority of lenders who accept trading borrowers (at a price), or incorporate a clean SPV and restructure, which is usually cheaper than the rate premium.
Because it surfaces late. The decision in principle checks the numbers; underwriting checks the money, and a deposit that cannot be traced from origin to company account through bank statements fails anti-money-laundering requirements regardless of how good the rest of the case is. The classic stumbles: cash savings with no statement history, funds hopping through multiple accounts, an intercompany transfer with no loan agreement behind it, an undisclosed personal loan funding the "savings", and gifts without a gift letter.
The pre-empt costs nothing: move the deposit into the company in one traceable step before application, as a documented director's loan, with the personal-side statements ready. The standards, route by route (director's loan, intercompany, gifted, equity release), are set out in our guides to the deposit for a limited company buy-to-let and director's loan deposits. After a provenance decline, the repair is re-documentation and usually a fresh lender, underwriters rarely revisit a money-laundering doubt once raised.
Completely. The company is weeks old with no credit identity of its own; the lender's real counterparties are the directors who give personal guarantees (with independent legal advice, as standard). Every director and significant shareholder, most lenders look at everyone above 20% to 25%, is credit-searched, and adverse history on any of them is adverse history on the case: missed payments, defaults, CCJs, historic arrears, and sometimes the softer flags of heavy recent credit appetite.
The pre-empt: every guarantor pulls their own credit reports before anything is submitted, and discloses everything, including the £40 catalogue default from 2022, because discovered non-disclosure declines cases that the disclosed fact would not have. The placement reality is forgiving: specialist lenders price and accept defined levels of adverse credit, usually at a small premium and sometimes a trimmed LTV, so a guarantor with history needs the right lender first time, not a hopeful application to the cheapest one. The guarantee mechanics themselves are covered in personal guarantees explained.
The two arithmetic declines, and the two most common reasons an approved case comes back with a smaller loan than requested.
The ICR shortfall. Company cases need rent covering typically 125% of the mortgage interest at a stressed rate of around 5.5% (five-year fixes are usually tested at the pay rate instead). Submit a loan the rent cannot support and the decline is mechanical. The pre-empt is sixty seconds on our buy-to-let stress test calculator; the repairs are a five-year fix, a bigger deposit, a lender with softer stress assumptions, or top-slicing with director income where criteria allow. The full mechanics are in our ICR stress test guide.
Valuation and rental downgrades. The surveyor reports two figures, capital value and market rent, and underwriting recalculates the loan on whichever is lower than the application assumed. A 5% down-valuation at the 75% LTV ceiling, or a rental opinion £100 a month under the agent's, converts an approval into a shortfall mid-purchase. The pre-empt is packaging with headroom rather than at the ceiling, and supporting ambitious figures with comparables up front; the repair is a evidence-based challenge to the valuation (they succeed occasionally, with genuine comparables) or cash to bridge the gap. Local yield patterns decide how much margin a case needs, the arithmetic differs sharply across our locations.
No, and this myth deserves a section because it stops people structuring correctly. The fear is intuitive, "surely a company incorporated last Tuesday cannot borrow £200,000", and wrong: lenders expect SPVs to be newly incorporated for the purchase, underwrite the directors rather than the company's history, and have no filed-accounts requirement for a new SPV. There is nothing to assess except the asset, the rent and the guarantors, which is exactly how the product is designed.
The related myths, equally wrong: that the company needs its own credit history (it does not), that it needs two years of accounts (that is trading-company and self-employed-income thinking), that the directors need to be experienced landlords (first-time landlords have a slightly narrower panel, not a closed one), or that a company bank account must season for months before the deposit moves (it must be traceable, not aged). What a new company does need is everything above done properly: the right SIC code, a silent balance sheet, a documented deposit, presentable guarantors. Age is not on the list. The criteria detail sits on our limited company buy-to-let mortgages page.
In order, and without re-applying anywhere yet:
A decline costs time and a search; it should not cost the purchase. Send us the case and the refusal, and we will tell you on a fee-free 15-minute call what actually failed, whether it is repairable, and which lenders on the panel take the repaired version, before another application goes anywhere.
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