BuyToLet mortgage for a Company

planteria

i am looking at moving back into BuyToLet.

i would ideally do so via my company, with the assets owned by the company, and with a mortgage charged to the company. i have known people to suggest that this is not ideal, and i understand that some lenders will not lend to a company, and so there are fewer options.

but...how much of a problem is this? are there still plenty of lenders willing to lend to a company, against houses?

holly_hobby

Yes, if not a ltd company it would be straight commercial finance - at svr & decent loading, with a business plan, 30%+ deposit and for professional landlords.

BTLs are for Ltd Cos only, and the market has all but dried up for this type of business.

Why do you believe having your let units mortgaged under a standalone company would be beneficial ? Default reasons ?

Holly

planteria

well, there are funds within the company, and i like the idea of commissions, and other payments that come in, being able to contribute to property expenses. and then i can continue to take a salary and dividends..rather than me taking money out & then buying property in my own name.

holly_hobby

Speak to your accountant and corporate financial adviser, as to whether this really is the best route for buying property (which I doubt) - given that you don't have to hold property within a company wrapper to benefit from rental receipts charged at YOUR highest rate (rather than corporation tax), and the ability to offset permitted deductions, although there are other tax benefits if held under a ltd co.

You must also consider that there is no CGT or PRR allowance on property held by the company, and as it is an asset of the company not the individual/directors, and therefore is exposed to creditors of the company, AND upon any winding up, the property as a company asset will need to be PURCHASED from the company as part of the winding up procedures, by either you/fellow directors/or a 3rd party - to which buying at undervalue will cause issues re creditors/os tax liabilities etc - and if you don't have the finances, and/or are unable to obtain a personal BTL mge (or resi if you're going to live in it), then it will have to be sold to another without any other option.

Its much too complex to go into here, and I again suggest you speak to your company tax and financial advisers.

Hope this helps

Holly

planteria

Thank you Holly. I will do.
The company I refer to doens't really tend to owe anyone any money. It gathers commissions and retainer payments, and out of that, i take a salary and dividend payments.
The company owning the houses, as a concept, doesn't concern me. But yes, i need to consider the consequences.

silvercar

I also looked at this. One big advantage was a cash rich company making the purchase, saves on the income tax liability compared to taking the money out of the company as salary/ dividend and then purchasing the property.

Downside is that the property (hopefully growing in value in the long term) is retained in the company. So the size of equity needing to be transferred from the company grows over time.