Renting long term - Employed by own Limited Company

jnmann

We are looking to rent long term and need to produce 3 months payslips, bank statements etc.

We're relocating to a new area and setting up a new project. We already own a Limited Company and will be working under the same name.

I have been informed by both my accountant and one letting agent that we are not classed as self-employed, we are 'employed' by the Limited Company and we will be in temporary accommodation for 3 months, after this time we'll have 3 months worth of PAYE wage skips etc. to show affordability.

I want to be 100% sure before making the move that we won't have any issues renting due to agents believing we are self-employed, which we are not.

Appreciate any advice and if I've misunderstood anything feel free to correct me!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6680143/renting-long-term-employed-by-own-limited-company

Legally you arent self employed, you are an officer or employee of the company. That said, for referencing and credit checking etc banks often treat directors who are also a material shareholder of their employer in an almost identical way as someone who is self employed. Still have the form from when we did our mortgage application, it states its for Self Employed and Directors but which bits you filled in on the form depended on which you are.

So legally you are an employee but anyone doing referencing can consider you however they want to despite what you may legally be.

Presumably the LTD is current inactive hence you dont have payslips already?

Jemma01

Hmm the accountant is correct that they'll set you up to be paid via PAYE, and therefore you'll be employed by your company. But, I honestly would be surprised if the agent will assess you in exactly the same way as someone employed by an unrelated employer!

I'm unsure given only bank statements if they do further digging into companies to find out who's a director and request company data on too of payslips (the way mortgage companies do it). This really depends on the agent and how they assess tenants.

I wouldn't assume that having three months of payslips means you'll automatically be treated exactly like a conventional employee. We're not the same, the risk profile we carry is higher than conventional employees. Your clients might not pay you for months and you need to chase them up!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82106678#Comment_82106678

It will depend on what salary they are claiming and what the rent is… obviously if they are only paying £12,570 to themselves and the rent is £2k a month then they arent going to pass on salary alone so will have to have their dividends included to pass affordability and so the whole fact they are the owner of their employer becomes material.

If they are paying themselves £75k each then the payslips will show they can afford the rent and probably no futher investigations will be done.

jnmann

We are not currently taking a wage through the Ltd and will restart this once relocated.

We moved just before the new rules came in back in May, secured a house by paying 6 months upfront but obviously we can no longer do this which is a real pita.

We have substantial savings that show we would have no issues paying rent but these aren't taken into account either. Can't get a personal guarantor and guarantor companies/services want proof of wages as well.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82106701#Comment_82106701

A less than ideal combination of circumstances which may well hinder obtaining a new tenancy.

Since you have in the past secured housing by way of paying 6 months in advance, this remains a possibility albeit as a company let rather then personal.

A company let bypasses the rigours of the new Renters act for both tenant and landlord but assuming you find a landlord prepared to go down that road with you, it is not an optimal solution from your perspective.

Your 'dormant' company would need to have the liquidity to put up the cash for the rental which may likely mean you making an inward director's/shareholder loan. You then face the additional prospect of facing a director's benefit in kind tax charge thereon, so an income tax charge on your occupation via the company. There will also be higher legal and arrangement costs for such a contractual agreement, so all in all it is not a 'no brainer' from your perspective.

However if all else fails, you could consider it as a costly interim measure to secure housing pending your corporate venture coming back on stream at which point you then have demonstrable taxable personal income stream to secure a normal tenancy.

Alternatively there is always more costly AirBnB where you could possibly negotiate a discount for longer term letting.

jnmann

Appreciate the responses thank you. Just to confirm, Ltd. company isn't dormant we just don't take a wage at this current time. Yes, we would be introducing funds to ensure the PAYE was covered.

I have been offered and AirBNB, winter let etc. but need to be in long term rent asap.

jnmann

Quick question (possibly!) If we both went back to work on a full-time basis to obtain 3 months pay-slips, ensuring the rent calculations were met, would this be sufficient? most are asking for 3 months pay slips and bank statements but could they then turnaround and say that the employment is within a probationary period and demand 6 months?

We would then return to the business full-time.

silvercar

Why can't the letting agent use proof of savings or a letter from your accountant? I'd have thought the letting agent would try and work with you to secure the rental, after all it is one more property rented by them and they gain the fees.

jnmann

In an ideal world they would but they all carry out auto referencing which won't prove the income. The fact we have enough money to cover the rent for some time should be enough, if I was working and earning £100k a year we'd be fine….but what if I was made redundant the day after!? You'd think they'd want to see savings and proof that you aren't going to have any issues regardless of being employed etc. but they dont :-(

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82107030#Comment_82107030

You are correct, a large savings pot is irrelevant in this day and age not just for renters but also for obtaining any kind of meaningful mortgage from mainstream lenders. The concept of 'cash being king' certainly does not apply in those situations.