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Complete Guide to Setting up Rent to Rent (R2R) Limited Company


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Hello everyone,

I am new here, but have been following Rob and Rob for some time and very grateful for all their work they do for community, hopefully I’ll manage to get my own BTL soon.

I would like to form “Rent to Rent” limited company and I was wondering if someone could help with advice please.

I have found two 3 bedroom houses I can rent and sublet on room by room basis. The living rooms have already been converted into 4th bedroom, so there will be 4 people in total in each house.

To my understanding, I need to:
1. Sign commercial lease agreement between my LTD and the house owner.
2. Make sure mortgage provider is aware of this lease agreement and also that the house is being let as HMO.
3. Make sure landlord has building and landlord liability insurance.
4. Make sure landlord’s insurance won’t be invalidated due to contract I have between my LTD and the landlord.
5. Make sure landlord’s insurer will cover multiple tenants on separate ASTs.
6. Make sure house has gas and electrical safety certificates, and also ECP.
7. Make sure house meets all other requirements (fire safety, minimum room size, etc)
8. Get public liability insurance for my LTD
9. Get professional indemnity insurance for my LTD (do I really need it?)
10. No mandatory HMO licence needed (4 people in Lambeth area in London)
11. No planning permission needed (no HMO Article 4 Direction for this area)

Questions I'm looking answers for:
12. Is £100 per month a good budget to take care of payroll and everything else to do with tax? Accountant recommendations please.
13. Do I need a licence/permission for my LTD to operate as R2R?
14. Do I need to register myself as an agent? If so, is it as a “letting agent”?
15. Do I need any other licence for myself as director/employee of the company?
16. I won't be collecting deposit from the tenants, but instead will require 2 months rent payment upfront. Is this acceptable or I need to handle this money in particular way?
17. Where can I get good template for commercial lease please?
18. Shall I use company formation agent? I would like to keep my home address private.  Any recommendations?
19. What else am I missing??

Hopefully this post will be a good starting point for other people interested in R2R business.

Many thanks in advance for all the input!

PG

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  • 1 year later...
On 8/16/2020 at 3:34 PM, property_glider said:

12. Is £100 per month a good budget to take care of payroll and everything else to do with tax? Accountant recommendations please.
13. Do I need a licence/permission for my LTD to operate as R2R?
14. Do I need to register myself as an agent? If so, is it as a “letting agent”?
15. Do I need any other licence for myself as director/employee of the company?
16. I won't be collecting deposit from the tenants, but instead will require 2 months rent payment upfront. Is this acceptable or I need to handle this money in particular way?
17. Where can I get good template for commercial lease please?
18. Shall I use company formation agent? I would like to keep my home address private.  Any recommendations?
19. What else am I missing??

 

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Congrats on making the decision to do R2R. I decided to embark on R2HMO last month so it's relatively new to me to. I'll try and answer as many questions as possible. 

12. I'm not sure about account fees. They vary, London can be more expensive.  

13. When registering as a LTD you provide a SIC code to HMRC which details what type of business you are. There is no license for this.

14. You are a property management company,  not a lettings agent

15. Unaware of any license. But you should have public liability insurance and register with a redress scheme.

16. Not sure you can request 2mths rent in advance. You should collect deposit and register it with deposit scheme as you can claim some or all of it if the tenant damages the property. 

17. Speak to a property solicitor.  It is a niche market so needs to be handled correctly.

18. I used a company formation company as it included a business address that wasn't my home address.

19. Probably best to do further research. Loads on YouTube. A few books out there too. Several R2R mentors in London and people sharing their progress on Instagram.

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