Same LTD for purchasing own properties as well as managing others

[arbee]

Hi All,

I plan to setup a limited company to buy, sell, let out my own properties. 

However I would also like to take on management of properties for others. Any income received for that I will keep within the company and use it to make further purchases in the same limited company.

Would HMRC be happy with this type of arrangement? 

Is there a limit to what the limited company can do in terms of other activities related to real estate? For example if I then decide to use the same company to sell a property on behalf of a client, where do I stand on this?

If it's not frowned upon by HRMC then this would be great, as I don't plan or removing anything from the company and will re-invest any income. 

Would be good to hear thoughts on this.

Thanks.

[david slater]

You should keep investing and trading (property management) separate as otherwise you may limited your ability to get finance for your investing activity. Some investors use their SPV to manage some of their own personally held properties but managing properties for others is different as this is likely to become a significant part of the companies activities as it implies you will be scaling up this part of the business. Also you increase your risk exposure if all your investing assets are held in the same company as the trading activity. For example if you are sued as a letting agent and might have to sell a property or all the properties to pay the penalty. Lettings is a heavily regulated area so not impossible that this could happen. 

Trading companies receive more beneficial tax treatment than investing companies when you come to sell your shares or wind up the company in the future, which you don't want to miss out on as you might if investing is the main activity. 

 

 

[arbee]

7 minutes ago, david slater said:

You should keep investing and trading (property management) separate as otherwise you may limited your ability to get finance for your investing activity. Some investors use their SPV to manage some of their own personally held properties but managing properties for others is different as this is likely to become a significant part of the companies activities as it implies you will be scaling up this part of the business. Also you increase your risk exposure if all your investing assets are held in the same company as the trading activity. For example if you are sued as a letting agent and might have to sell a property or all the properties to pay the penalty. Lettings is a heavily regulated area so not impossible that this could happen. 

Trading companies receive more beneficial tax treatment than investing companies when you come to sell your shares or wind up the company in the future, which you don't want to miss out on as you might if investing is the main activity. 

 

 

Great, thanks David. Brilliant advise and exactly the kind of well constructed and thought out reply I was looking for.