First Time Buyer - LTD Company Conflict

Mikeytomo

Hello all,

I have attempted a search on this issue but the closest post I found was not really specific enough to my circumstances.

I live at home with my parents and an opportunity has came available for me to become a 33% shareholder within a LTD company that would like to purchase a house for student BTL. I am currently also saving for a house using the Lifetime ISA and would like to retain my first time buyer bonus for my own personal home that I wish to buy in the next 2-3 years.

Now, as the First Time Buyer Criteria states

'I do not own, and never have owned any interest in land, whether in the United Kingdom or elsewhere, which:

A) is:

(i) in England or Wales:

(a) freehold;

(b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or

(c) commonhold;'

Am I still eligibile for my first time buyer bonus if I become a director in the LTD company as I personally do not own the BTL property, the LTD company will? Is there any other things that could cause any issues going forward before I commit to the LTD company?

Thanks in advance for your replies.

davidmcn

I can't see a problem. The company owns the property, not you.

theartfullodger

I think if the Ltd company did own a property you would

own an interest in land...

so no you wouldn't qualify. But suggest you check with the authorities...


However, if I am right then almost anyone with a non-state pension would also not qualify as almost all pension schemes have assets in land/property.


But, IANAL.

ReadingTim

Assuming you're a 33% owner of the company then your situation is a model example of having 'an interest in land/a property', even though you don't directly own it (either legally or beneficially). The answer is therefore no.

If you were just a director/employee of the company, you'd probably be ok, but I doubt you'd be a director without being a shareholder, given this is a small private limited company.

Mikeytomo

ReadingTim wrote: »

even though you don't directly own it (either legally or beneficially).

'I do not own, and never have owned' does this statement no longer stand true as I personally do not own, the company is the one who will own the property? Or does a 33% share in a company class as owning 33% of all assets within said company, meaning I have a 33% share in the property?


My impression of a Ltd company was similar to that of the following quote from bytestart.co.uk/limited-company-advantages.html :


2. Distinct Entity

A limited company is a completely separate entity from its owners. Everything from the company bank account, to ownership of assets and involvement in tenders and contracts is purely company business and separate from the interests of the company’s shareholders.

kingstreet

theartfullodger wrote: »

if I am right then almost anyone with a non-state pension would also not qualify as almost all pension schemes have assets in land/property

Not possible to invest in residential property and any/all scheme assets are held under irrevocable trust.

davidmcn

ReadingTim wrote: »

Assuming you're a 33% owner of the company then your situation is a model example of having 'an interest in land/a property', even though you don't directly own it (either legally or beneficially).

Do you have a cite for this? As far as I can see it's the company who has the interest in land, the OP merely has an interest in the company. They're certainly treated as distinct for e.g. SDLT purposes (which is why different rates apply to limited companies), but I don't know what the rules are for LISAs.

davidmcn

kingstreet wrote: »

Not possible to invest in residential property and any/all scheme assets are held under irrevocable trust.

The statement in the OP isn't restricted to residential property.

silvercar

davidmcn wrote: »

Do you have a cite for this? As far as I can see it's the company who has the interest in land, the OP merely has an interest in the company. They're certainly treated as distinct for e.g. SDLT purposes (which is why different rates apply to limited companies), but I don't know what the rules are for LISAs.

Totally agree.

steampowered

MSE's FAQ on LISAs unambiguously states that you will not be considered a first time buyer:

"If you owned a company or had a trust that owned residential property that you are (or were) able to live in, you're also not considered a first-time buyer."

https://www.moneysavingexpert.com/savings/lifetime-isas/#buyingaproperty

I'm not entirely sure what this is based on, but I assume there are detailed rules.

The fact that people buy properties through companies would have been well known by the people who wrote the LISA rules. I haven't read the LISA rules but would not be remotely surprised if the rules capture properties held through companies.

Mikeytomo

I'm not entirely sure what this is based on, but I assume there are detailed rules.

The rules are in the OP, that's the wording in the declaration that is signed by the first time buyer to declare they are in fact a first time buyer.

I have sought legal advice through a property law solicitor who has said the following:

'it won’t be classed as owning an interest as it’s the company but it’s best to check with your ISA provider'

Will contact my provider tomorrow and update for future searches on here.