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Limited Company Investor Advice


rosemam

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Good morning

Myself and my hubby own a handful of properties we rent out but we declare through Self Assessment at the moment.

We are in the process of buying 2 more properties, however, this time we have our son also investing in these 2 properties. He doesn't want to go on to the mortgage, but he does want to invest an equal 1/3rd into each property. He mentioned that we could set up a Limited company where he could be a shareholder/director. I have no idea how this would work. I would really appreciate any advice. In particular:

1) Can we still apply for a mortgage in our names without the 3rd shareholder?

2) If so, the mortgage will be in our name, but then how do we go about registering the property under a company or are we setting the company up with the properties as the asset?

3) My husband and I will be doing all of the management (from admin to repairs) and our son mentions that we could set up another limited company and "charge" our company for our work as he is happy to pay for the management.

We will probably speak to an accountant at some point if it gets complicated, but I would like to at least have some knowledge before enquiring.

Many thanks!

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On 11/15/2020 at 1:01 PM, rosemam said:

1) Can we still apply for a mortgage in our names without the 3rd shareholder?

You would't be applying for a mortgage in your individual names as it would be the company that would apply for a mortgage. The company is a separate legal identity from you. You would need to speak to a mortgage broker but the prospective lender will conduct due diligence on the directors and potentially share holders if they own a stake in the company. 

 

On 11/15/2020 at 1:01 PM, rosemam said:

2) If so, the mortgage will be in our name, but then how do we go about registering the property under a company or are we setting the company up with the properties as the asset?

You would set up a company and then the company would buy property. You would act as directors for the company. The mortgage will not be in your name but the companies.

 

On 11/15/2020 at 1:01 PM, rosemam said:

3) My husband and I will be doing all of the management (from admin to repairs) and our son mentions that we could set up another limited company and "charge" our company for our work as he is happy to pay for the management.

You could set up a separate limited company to manage properties however you would have to take into account the increased accounting fees of running two limited companies. The property investing company could manage its own properties and you could potentially use this company to manage the properties held in your own name. This gets a little bit complicated as mixing investing activity with trading activity but could be a solution if you are just managing your own properties. 

 

David M Slater ACMA 

Accufy Accounting  - Proactive accounting for property investors 

0208 242 4926    info@accufy.uk

 

 

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If you don’t want (or need) to be involved in a limited company, then your son could establish one that either invests, lends to you as investors or joins a mixed partnership. This ensures you should be able to obtain finance as individuals (commercial mortgages are typically up to double the cost). If mortgage finance issues (s24)already affect you, then transferring your existing properties to a limited company might be beneficial although costs can be high. This could facilitate future estate planning. It does sound like you should get tax advice at some point. Good luck!

Jerome

Jerome@TaxAntics.co.uk

www.TaxAntics.co.uk
 

 

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