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Transfering Leasehold Flat into SPV - Questions About Process


te0

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Hi.

 

I have a number of questions but the first regards solicitors

My intention it to transfer (sell) a privately held, mortgage free, leesehold flat, into a LTD company and subsequently take out a mortgage on it to fund future purchases.

Is there any reason I should use the same solicitor as the intended future mortgage provider specifies to make the initial transfer (sale) into the company?

I dont see why the two actions would be related, or how i would gaurentee that by the time of completion that mortgage supplier was still the best choice. But some of the language is confusing, and i dont want to cause a headache for myself.

 

Thanks.

-T

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Hi Te0

Before doing so, have you reviewed the tax implications of doing so?

As it will be a sale to the Ltd Co., you may trigger some capital gains and therefore be liable for capital gains tax. Also, stamp duty will be applied when the Ltd Co. purchases it with the extra 3% surcharge. 

Regarding the solicitors, not quite sure I understand. Assuming you do the transfer to the Ltd. Co in two stages (transfer then mortgage), you can probably use your preferred solicitor for stage 1 (transfer). Then once that's done, stage 2 you'll approach a mortgage broker to arrange finance and you'll most likely use a solicitor that's on the lender's panel for the Ltd Co advice, plus you may need additional solicitor advice to cover off the director's guarantee depending on the lender.  

Quite a few assumptions there, and I am not a solicitor or accountant, so as always, seek appropriate advice. 

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Thanks Derek.

 

Currently it seems even with CGT and after SDLT holiday it makes sense to do this.

What you say regarding the two, unrelated, phases makes sense and is what i was expecting. I was a little thrown by some of the language on the communication from brokers and solicitors.

 

Valid point about the directors gaurentee as well. I had forgotten that.

 

Thanks, it gives me the confidence that i can go ahead an instruct the first solicitor without worrying that i had missed some sort of legal hurdle that would made the subsequent mortgage difficult.

 

Thanks again.

 

-T

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It seems odd to do it in two conveyancing stages? The transfer (sale) and then later a mortgage.

You would typically just have one Conveyancing event, as in the Company buys the property from you with a mortgage and its put in the companies name.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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If it's done in one stage Adam, then does the Ltd Co. need to have a deposit to purchase the property, or would the lender just deduct it from the equity released funds? 

For example, if the property is £100k, does the Ltd Co. have to have £25k in the company account to use as a deposit for the mortgage, or would the lender just hold on to the £25k and release the £75k to the Ltd Co?

Personal Blog: https://abcdad.co.uk
Property Spreadsheet and Deal Analyser: https://abcdad.co.uk/property-spreadsheet
Looking to read some Property books? https://abcdad.co.uk/books/property-books
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Yes, deposit is in the equity.

You do not have to have £25k in the company account.

The limited company lenders that do this are very content with the process.

In addition the amount of equity/deposit is typically noted on the Companies Book's as a Directors Loan. So it can be paid back in a tax efficient manor.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
:ph34r: 
Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Cheers, Adam! That's helpful to know.

Te0 - feel free to ignore what I posted above. As per Adam's post, you can crack on with the Ltd Co mortgage, and use the same conveyancer to make the process smoother and hopefully save you some £. 

Personal Blog: https://abcdad.co.uk
Property Spreadsheet and Deal Analyser: https://abcdad.co.uk/property-spreadsheet
Looking to read some Property books? https://abcdad.co.uk/books/property-books
Follow on Instagram: @abc.dad

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