Purchasing properties in a Ltd Company is not always the best route to take. You will need to consider your personal tax implications, the cost of having the company accounts filed, accountancy fees, as well as a collection of other costs that would be applicable.
We are not able to give you taxation advice, but it is something that you will need to look at while considering your options.
Typically, if you can purchase a property as a Buy to Let then you should be able to purchase as a Ltd Company BTL. This means that there are options of purchasing in a company name for mortgage types including:
Holiday Lets
Multi-unit Freehold
HMO’s
It is usually more difficult to purchase a property in a ‘trading firm’ than it is through an SPV. An SPV is a particular type of company set up for one thing – and in our industry that is property investment. Every SPV company needs to have a SIC code allocated to it. For most lenders, the SIC codes required for BTL purchases are as follows:
68100 – Buying and selling of own real estate
68209 – Other letting and operating of own or leased real estate
68320 – Management of real estate
68201 – Renting and operating of Housing Association real estate
Without the correct SIC code allocated to your company a lender will not allow a mortgage application to proceed, so it is extremely important to make sure you get this correct at the time of setting up the SPV company. We cannot start an application unless the SPV has been set up on Companies House. It is relatively straight forward and involves an online application.
Set up your SPV HEREIt is possible to purchase a property in an actively trading firm. It is slightly more complicated than an SPV, and it does reduce your options. For some clients this can be a financially efficient route to getting into property investment.
You should seek formal taxation advice regarding the implications of going down this route before you proceed.
One of the main questions we get asked is how to get a deposit into the Ltd Company to make the purchase.
There are different ways of doing this, but by far the most common is by using a Directors Loan. This is commonly seen as a tax efficient way of providing the deposit. There are other options, one of which is an intercompany loan. This is an option if you have one company that is building the funds for a deposit, and you wish to move that money from one company into the other. There are stringent rules on this though and not all lenders offer this option.