Buy to Let as a Limited Company... Any Advice?

AmTheMan87

Hi, I have been looking at a few buy-to-let propertys near to where I stay as they are relatively "cheap" 2 and 3 bedroom flats, some need a little work, others, I wouldnt attempt.

I know a few people in the buy-to-let game but only have one or two properties and just use the profit as a steady income along with thier own job.

I have been looking into the option of starting a buy-to-let business as a ltd company, due to the protection and potential tax benefits it can provide and aim to use the funds to purchase more property as time goes on.

As I am new to starting a business and especially, the buy-to-let market, has anyone done acheived this or looked into this before that can offer some advice and especially how "funding or lending" can be provided for this.

I have am aware that there are a limited amount of lenders to the ltd compnay buy-to-let scheme as well.

Also, to begin with at least, I would still be working my current job, atleast until income surpassed my current salary.

Any help or suggestions would be appreciated.

Thrugelmir

AmTheMan87 wrote: »

I have been looking into the option of starting a buy-to-let business as a ltd company, due to the protection and potential tax benefits it can provide and aim to use the funds to purchase more property as time goes on.

What you view as the benefits of operating through a Limited Company?

As an aside you may struggle to raise funding through a Limited Company vehicle.

holly_hobby

To make the costs and hassel of operating though a BTL Ltd Company worthwhile, IMHO you really need to be a serious portfolio landlord (I would say at least 3+ profit generating properties and in it for the long haul).

Whilst you should also note, that it is not an absolute necessity to operate multi BTL ownership under a BTL Ltd Co arrangement, i.e as a quick example - Halifax will allow the applicant to hold up to 3 mortgaged BTL properties (total exposure upto £2m ) with the Lloyds Banking Group network.

Going back to Ltd Cos - whilst it is not necessary, I would also strongly suggest the use of a Chartered/Certified Accountant in both setting up the company, initial and on-going tax mitigation advice, and the completion and submission of an annual accounts. The reason why I suggest this is that the rules of accounts formation, and submissions reqd by HMRC for Ltd Cos, are both strict and complex for the average layman, and to get anything wrong may have serious implications.

There are various BTL lenders whom do provide BTL finance to Ltd Companies - they limit their exposure in consideration of the mortgaged value of your overall portfolio you have, and obv have to look at the trading details .

There are naturally some tax advantages to trading as a Ltd Co, there are also drawbacks - if you are only initially operating on a small scale, I would suggest that the disadvantages and restrictions outweight any small advantage in the early yrs.

Why not start off with 1 and use a "suck it and see" attitude - I say this time and time again, but its still a valid point to make that entering into the BTL market can be rewarding and a great fit to the individual, or an absolute financial and emotional nightmare that they can't want to run away from.

There are numerous costs and responsibilities to be met by a landlord, and especially in today's market, it is a situation not to be entered into lightly or without due diligence and thoughtful consideration.

Hope this helps

Holly

dshart

I fear the protection you seek from operating as a Ltd company may not be there as most lenders will insist of guarantees from the company director which would allow them to pursue company debt through the directors personal assets.

The lending to small ltd companies has been tightened up a lot. I run a small ltd company (not in the housing sector) but even to get an overdraft they require me to sign that I am personally liable for the company debts.

Bryang

Buy to let mortgage rates are high at the moment even with the current low base rate, monthly repayments will be high, unless you have a lump sum to invest in property.

Which part of the country are you in. Monthly rental rates are pretty low here in Yorkshire compared to some other areas...

AmTheMan87

Hi, thanks very much for all the replies.

I have spoken with others over in the past regards to this and both offer various advice on both routes. The comment in regards to "suck it and see" will probably be my most likely outcome, especially at the beginning. Again, the current market situation isn't the greatest its been so that takes some consideration as well.

Thanks again for the replies, and im from Scotland... area I live is mainly rents as many find it difficult to buy property at present.