Correct Way To Set Up LTD Company

[Rob Cranston 2]

Hi Guys,

 

I've recently established that my future investments would be better made via a limited company. I have previously set up a limited company, non property related, so have a small amount of experience in setting up and running.

 

I've got a few questions regarding, setting up, LTD mortgages and the correct SIC codes to use so hoping some of you may be able to help.

 

Firstly, I've read a lot about setting up an SPV, which from my understanding is a separate entity from a current LTD company but under the same umbrella. My current LTD company is fairly small and only has a net profit of about 20k. Can anyone shed any light on whether it would be best to set up an SPV or a completely new LTD company?

 

Secondly, from a lenders point of view, do they have a preferred way for this to be done? I’ve read a lot online that says they prefer it to be a new business with no income and use the directors earnings as a means of passing affordability. Can anyone shed some light? 

 

Lastly, the business will ideally start with a couple of BTL's then look at doing flips and refurbs in the future. As there will be two cor functions, BTL's & Flips, will there need to be two businesses or 1 business with two SIC codes?  

 

I've also scoured the SIC code list to try find the codes related to flipping and BTL's, can anyone advise what these are?

 

Any help, advise, or pointers to information on this would be amazing :-)  

 

Rob

[Mike Westwood 5]

20 hours ago, rob cranston said:

Hi Guys,

 

I've recently established that my future investments would be better made via a limited company. I have previously set up a limited company, non property related, so have a small amount of experience in setting up and running.

 

I've got a few questions regarding, setting up, LTD mortgages and the correct SIC codes to use so hoping some of you may be able to help.

 

Firstly, I've read a lot about setting up an SPV, which from my understanding is a separate entity from a current LTD company but under the same umbrella. My current LTD company is fairly small and only has a net profit of about 20k. Can anyone shed any light on whether it would be best to set up an SPV or a completely new LTD company?

 

Secondly, from a lenders point of view, do they have a preferred way for this to be done? I’ve read a lot online that says they prefer it to be a new business with no income and use the directors earnings as a means of passing affordability. Can anyone shed some light? 

 

Lastly, the business will ideally start with a couple of BTL's then look at doing flips and refurbs in the future. As there will be two cor functions, BTL's & Flips, will there need to be two businesses or 1 business with two SIC codes?  

 

I've also scoured the SIC code list to try find the codes related to flipping and BTL's, can anyone advise what these are?

 

Any help, advise, or pointers to information on this would be amazing :-)  

 

Rob

 

 

Hi Rob,

 

These are the SIC codes accepted by my lender, i had an extra one (which i cannot remember now) that i had to pay to remove or they would not continue with the offer.

 

• 68100 - Buying and selling of own real estate
• 68209 - Other letting and operating of own or leased real estate
• 68320 - Management of real estate on a fee or contract basis

[Rob Cranston 2]

Thanks Mike, is there also an SIC code for flipping? Or will the lender only allow the above codes meaning a separate business will be required for flips?

 

Thanks 

Rob

[Mike Westwood 5]

I've just checked what code it was, 68201 Renting and operating of housing association real estate.

 

I think any of mine listed would be ok but im not expert!

[T Barratt 1]

Hi Rob

 

Currently looking into this myself and my accountant advised not to mix trade (flips) and investment (BTL) as HMRC don't like it, so probably best to have 2 Ltd companies, one for each. Just started on mortgages, which I feel the need for hand holding due to all the jargon and acronyms.. but there do seem to be quite a few out there for LTD companies (and LLPs, which my accountant also mentioned)...both for single lets and HMO depending on your model. They do appear to look at the directors earnings as a whole, so not specific to the new business. I am a director of another LTD company so my understanding is that they would look at that and at my personal tax return to ensure I could cover the loan. I'm in early discussions with a couple of brokers and am happy to keep you posted on what they tell me. Rates I am being told about are around 3.2 - 3.6%? Would be interested to hear what you're being told.

 

Hope that helps. 

Thandi

[Rob Cranston 2]

Quote

 

Thanks Thandi, to be honest I haven't really been told a lot, i do my current LTD company accounts myself so do not have an accountant to advise at present.

 

I'm just trying to gather all the information to get this set up correctly the first time round.

 

Anybody know if there's any additional fees that need to be accounted for when buying through a LTD company? 

[Rob Cranston 2]

Thanks Mike, I guess they don't like the thought of renting to the Housing Associations then.