Transferring property into an SPV Ltd company

mcplumb

I have a flat (once my primary residence) that I rent out and I currently live in a rented property. For many reasons I'm unable to dispose of the rented property (lease dispute, service charge, cladding etc). No mortgage.

Due to these issues, I'm stuck. The main issue being additional 3% SDLT on any property I want to buy and the offers received just don't make a sale worthwhile V's rental returns. 

I'm looking into transferring this property to an SPV and trying to gauge costs V's my possible £15k extra stamp duty if I don't dispose of the existing property. Costs and issues I have thought of as below. Any additional comment welcome.

Due to pricing no CGT will be payable on the sale as I'm selling at a loss whether SPV or private. Loss figures are based on current marketing and offers to date. 

The Spv will have to pay an extra 3% stamp duty. The rental is only worth 70k V's my own purchase of 500k, so significant savings

There will be costs per year for Companies house filling etc and I'm happy with those  

There will be letting agent costs transferring tenancies etc - awaiting quotes

Legal costs/conveyancing - would I need two different firms to deal with a transfer? I don't require searches, leaseholder packs and have no mortgage so not really sure.

Thanks for reading 

anselld

Seems fair enough way forward.
There should not be any Agent cost as the existing tenancy remains valid when the Landlord sells their interest to another Party.  Just serve a Section 3 notice on completion ( Conveyancer should do this anyway).  No doubt the agent will be happy to take your money if you offer but it is not necessary.
Don’t see why two conveyancers should be needed as there is no conflict of interest.

mcplumb

Great thanks for the heads up on tenancy, it seems the agent was wrong !

I just need to find a conveyancer that wants or can do it. 

I would hope that I could transfer my existing property to ltd at the same time my private purchase completes all using the same firm. The transfer involves no actual money changing hands or mortgage to hopefully fairly easy

SDLT_Geek

mcplumb said:

I have a flat (once my primary residence) that I rent out and I currently live in a rented property. For many reasons I'm unable to dispose of the rented property (lease dispute, service charge, cladding etc). No mortgage.

Due to these issues, I'm stuck. The main issue being additional 3% SDLT on any property I want to buy and the offers received just don't make a sale worthwhile V's rental returns. 

I'm looking into transferring this property to an SPV and trying to gauge costs V's my possible £15k extra stamp duty if I don't dispose of the existing property. Costs and issues I have thought of as below. Any additional comment welcome.

Due to pricing no CGT will be payable on the sale as I'm selling at a loss whether SPV or private. Loss figures are based on current marketing and offers to date. 

The Spv will have to pay an extra 3% stamp duty. The rental is only worth 70k V's my own purchase of 500k, so significant savings

There will be costs per year for Companies house filling etc and I'm happy with those  

There will be letting agent costs transferring tenancies etc - awaiting quotes

Legal costs/conveyancing - would I need two different firms to deal with a transfer? I don't require searches, leaseholder packs and have no mortgage so not really sure.

Thanks for reading 

I have two areas to suggest you think about.

1.  Cladding problems.  If you have the protection of the Building Safety Act 2022 against remediation costs being passed on to you through the service charge, you will want to be sure that the company will have the same protection.  I do not know much about this, but a "leaseholder certificate" might be part of it.

2.  There are different ways in which you can structure the transfer of a property worth £70K to your limited company.  It might be best to do it for a price of £70K with the price to be left outstanding as a loan to you.  Or there might be reasons to put the property into the company in return for shares in the company.  Or a combination of the two.  This is something an accountant can help with.

mcplumb

Thanks

The cladding issue is a bit of red herring - We don't have ACM or need an EWS survey, however all the lenders are saying we need EWS and cladding is an issue. 

The cladding and a previous high profile legal case over major works has made all the local surveyors too scared to approve lending. Pre Grenfell everyone could easily obtain lending, now basically cash buyers only. Due to the major works there have been repossessions and a lot of "we buy any flat" below market sales to cover the massive major works costs.

The intension would be to a 70k loan to the company. I'm hoping to build up a retained profits balance to fund a lease extension after 2 years. After that see what has happened to values and hope things have improved. With out these issues the property would  be 135-145k. In addition to the 70k loss in value I have paid nearly 40k for the major works, so I just cant sell it 

Hopefully there won't be any major changes in the budget that affect my plan