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Setting up a new limited company for BTL property


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Hi, 

 

Has anyone setup a limited company recently for the purpose of purchasing new BTL properties? For me the accountants I have spoken to have advise setting up an ltd to be more tax efficient but they have also advised checking with lenders on what their criteria would be in terms of how the company is structured etc. 

 

I've done some investigating with lenders too and so far have found out the following critieria would be needed:

 

1. No more than 4 directors. 

2. Use one (or all) of SIC codes 68100, 68209, 68320, 68201

3. Personal garauntees to be provided. 

 

Was wondering if this was all that is needed in reality or if there were additional structuring/layering requirements that should be met. I am looking to set the company up myself and therefore trying to do the ground work to avoid costly adjustments later down the line to correct something that lenders may not like. 

 

Keen to hear from anyone that has been through this process already and their experiences in doing so 

 

Thanks 

 

Harsh.

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  • 3 weeks later...

Hi Harsh,

 

I've posted a similar question recently under "LTD Company Structure / Exit Strategy",

and have received a link to a chartered accountancy firm who specialize in this.

 

I will be contacting them tomorrow, and will update my post with any valid info.

I'm mainly interested in structuring the Ltd to minimize IHT and CGT upon exit in "hopefully if I make it" 15 years time.

 

Many thanks,

 

Barry. 

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i have done this after first round of govt changes for landlords and have had 2 mortgages since then. My company has 2 directors so i can't comment on the 4 element but the rest is correct in terms of codes and guarantees. Its all pretty painless but lots of paperwork and checks

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@Barry t - would be good to hear how you got on. 

 

@haf1963 - thanks for confirming. 

 

I've done some more work on this and maybe one for you guys to ponder too:

 

- we are creating a company with 4 directors each of whom have equal shares. 

- to get equal shares each director will have a total of 330 shares. 

- planning for future use of spouse names that may not be working etc and therefore can receive tax free dividends we are each splitting our 330 shares into 165 class a shares and 165 class b shares which will be currently held in our names and then in the future we can re-allocate the b shares into our partners names. 

- Lenders seem to be ok with this type of structure from the feedback we have had so far...

 

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Harsh,

 

Bit of an aside but might be useful to you - I've recently set up as a Ltd co and have noticed that most of the free banking offers for business accounts limit the number of directors to 2. Not sure of your reason for structuring with 4 but worth being aware. 

 

Dan 

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