What is the SIC code for rental property?

Standard Industrial Classification (SIC) codes are used by UK companies to describe the nature of their business activities. If you are a landlord preparing to invest in buy to let mortgages via a limited company, you will need to understand SIC codes.

When you set up a company with Companies House, at least one SIC code must be selected to categorise what your business does.

For property investors, these codes are more than just an administrative requirement. They can influence how lenders and HMRC interpret your business model.

Why SIC codes matter for property investors

If you want to benefit from the greatest number of lender and product options, setting up a limited company with the right SIC codes is vital. Key considerations are:

• Mortgage applications: Using an appropriate SIC code when setting up a limited company for buy to let investment is important because, if you apply via a company set up with the wrong code, your application could be delayed until it is corrected.
• Restricted lender and rate options: Some lenders will accept mortgage applications from trading limited companies, where the SIC code is completely unrelated to property investment, or where a trading company is set up with both an unrelated SIC code and a property investment SIC code, but in both of these instances the lender options will be fewer. This is because there are a blend of risks where multiple business functions are operating within the same company, which could impact the mortgage. To access to the widest range of lenders and products, setting up a limited company for a specific purpose (called a “Special Purpose Vehicle” or SPV) and using an appropriate property investment SIC code is the way to go. 

In short, setting up a company specifically for property investment and using the most appropriate SIC code, could save you a significant amount of money.

Key SIC codes for property investment companies

There are several SIC codes commonly used by property investors, depending on the strategy and structure of the business.

The four most common SIC codes accepted by limited company mortgage lenders are 68100, 68209, 68201 and 68320.

68100 – Buying and selling of own real estate

This code is typically used by:

•    Property developers
•    Investors who purchase property to renovate and sell (flipping)
•    Companies trading property as a primary activity

68209 – Other letting and operating of own or leased real estate

This generally covers:

•    Buy to let portfolios
•    Holiday lets (in some cases)
•    Commercial property held for rental income

68201 – Renting and operating of housing association real estate

This is more niche and typically used by:

Registered providers
Social housing operators

68320 – Management of real estate on a fee or contract basis

This applies to:

• Letting agents
• Property management companies

Whilst this code can imply a company is a letting agency or provides property management services to third parties, in our experience it is also commonly accepted by lenders where a landlord is managing their own property.

How can the wrong SIC code affect finance?

The first step in making a mortgage application, prior to a full application that comes with a ‘hard’ credit search, is a pre-check/ decision in principle (also called an agreement in principle). At this stage, among lenders that only accept applications from limited companies established specifically for property investment, some will decline a pre-check or decision in principle if the SIC codes provided are incorrect.

Others will proceed with a decision in principle but will query the SIC code and may ask for it to be changed ahead of full application.

There are two ways this can delay your application:

Updating Companies House

Companies House updates the SIC code once your Confirmation Statement (CS01) containing the change has been filed and accepted. There are two ways of filing a CS01, and the route you take depends on the structure of your company. 

If your company:

• • is a private company limited by shares
  • has only one shareholder
  • has between 1 and 5 officers
  • has 5 People with Significant Control (PSCs) or less (a PSC is defined as someone who holds more than 25% of shares, holds more than 25% of voting rights, or has the right to appoint/remove the majority of directors.)

You can use the “Find and update company information” service by searching for the company and following the steps to make a change.

If your company is set up does not fall within these guidelines, you will need to use the government’s Webfiling service.

You can go to the government website to download the CS01 form.

The first CS01 you file each year comes with a cost, further submissions in the same year are not subject to a fee.

Guidance on filing a CS01 form can also be found on the government website here.

Lender processing delays

Once Companies House is updated, you will be subject to your lender’s processing times before this change is updated on their systems.

The upshot of delays could be that whilst you are waiting, rates change and if they go up this could have a long term impact on your monthly mortgage payments.

If your company’s activities evolve, SIC codes can be updated when filing your next confirmation statement with Companies House.

Help with getting it right first time

SIC codes are a small but important detail in structuring a property investment business. While they don’t dictate what you can or cannot do, they do shape how your company is perceived by lenders and other stakeholders.

Working with our broker team will both help avoid errors, and help you make smart decisions, as we will:

• Check how your company is set up
• Match you to a lender that suits your company
• Give you comparative rate information based on a trading company or SPV if you require it so you can compare costs
• Check documentation submitted to the lender

If you are ready to start a mortgage application, get in touch today by calling our Freephone number to the right/above, or requesting a call-back.