Second property purchase approach advice (transfer of property to ltd company)

  • Filter
  • Time
  • Show
Clear All
new posts

  • loanarranger
    Using the SDLT calculator the SDLT would be £15600.

    Leave a comment:

  • Gordon999
    I believe a company ( as buyer of £320K property ) will pay a lot more than £6K for sdlt .

    Leave a comment:

  • Moderator2
    From the forum rules

    7. Be civil – watch your language and do not insult or antagonise other Members.

    Leave a comment:

  • G56trader
    Originally posted by jpkeates View Post
    Yeah, that's why everyone's got a lot of money and "business" - because it's so easy!
    No. I said most people over complicate everything. Are you on here 24/7 ?

    Leave a comment:

  • jpkeates
    Originally posted by G56trader View Post
    Making alot of money and business is easy but people over complicate everything. Here is a great example
    Yeah, that's why everyone's got a lot of money and "business" - because it's so easy!

    Leave a comment:

  • G56trader
    Making alot of money and business is easy but people over complicate everything. Here is a great example.

    Leave a comment:

  • loanarranger
    Thanks for such a comprehensive posting and one which raises numerous issues.
    Regrettably transferring the property into a Limited Company will not allow you to avoid the SDLT premium.
    In terms of the actual transfer will not only result in the SDLT premium but on a personal basis the disposal by you is treated as a Sale & Purchase and carries , depending on the actual figures a potential Capital Gains Tax. All of this definitely needs a consultation with your accountants.
    On the domestic front, a lender will assess your single/ joint income on their respective affordability assessment, the only element of income which you won’t have included is the rental income , and remember assessment takes full account of personal loans, credit card liabilities, Student Loans together with domestic outgoings covering Council Tax and Buildings Insurance. The fact that you will have provided a Personal Guarantee for the Limited Company borrowings will not limit or enhance your eligibility for a new residential mortgage.
    Before you do anything premature I would recommend talking with your lender or broker to establish the level of borrowings for your residential mortgage, then establish how much you can borrow as a Company Director for the Let to Buy mortgage using the Gross Rental and NOT nett of Ground Rent and Service Charge.
    I am sure many other posters will have constructive advice to help you to go forward with your plans.

    Leave a comment:

  • Second property purchase approach advice (transfer of property to ltd company)

    Hello everyone,

    I am thinking of purchasing a second property and wanted to get your thoughts and advice on my current thinking.

    Current Situation:
    • I bought a flat worth £340k two years ago to live in as a first-time buyer.
    • I incurred ~£10k of SDLT and legal expenses that I deemed capitalised hence a total cost of £350k.
    • The initial two year fixed repayment mortgage of 1.8% is about to lapse and I am currently looking into remortgaging on a two year tracker with no early repayment charge to give me more flexibility
    • The mortgage amount left is ~£200k (LTV<60%) and 28 years
    • I estimate that the property is worth £320k and can achieve a rental value of £1350 (zoopla estimation is lower though)
    • Net rental income is £870 after service charge & ground rent of £130 and £330 of interest expense (based on 2% interest)
    • I want to let out the property I currently own and buy a second property worth £500k to live in
    • I am planning to finance the purchase by:
    1. borrowing £300k on a joint mortgage application with my partner (or perhaps solo)
    2. release equity from my existing home
    3. fund the remaining balance from own funds
    Proposed strategy:
    • I understand that with the current regulation any second property purchase is going to incur a 3% SDLT surcharge. Therefore, if I keep my current property I will have to pay £30k rather than £15k in SDLT.
    • To avoid the SDLT surcharge, the solution I came up with is to transfer my current property into a company SPV which would mean that I will not own any property at the time of the second property purchase.
    • I understand that the company will have to pay SDLT of £6k (assuming a £320k valuation) as part of this transfer.
    • I understand that I will need to arrange bridging finance and I will also need to personally guarantee the loan as a director.
    1. Is the transaction that I have outlined above feasible or have I missed any key issues? Any other logistics I need to be aware of?
    2. Would the personal director guarantee limit my ability to get a joint mortgage or the extent of borrowing?
    3. How much equity would I be able to release from my current property?
    4. Any other alternative strategy I can follow to achieve the same result?
    5. In addition to saving on SDLT of the second purchase, I understand that I will have further tax benefits such as netting of interest cost against profits and getting taxed on corporation tax rate rather than personal income tax rates (higher rate). If I decide to sell the property, I can sell the SPV rather than the actual property which would mean that the buyer would not have to pay SDLT hence making it a more attractive sale. Is this last point accurate and would it translate to an increased valuation?
    Thanks for your time and I appreciate any thoughts or advice you may have.

Latest Activity


  • Equity release
    by Bricko7
    Hi everyone.

    So I have a house with about 90,000 of equity in it, which is about 70% of the value. One option I have is to release the equity as it is rented out and I don't want to selll.

    I am half way through a 2 year fixed term on the mortgage. So if I release equity will...
    10-12-2019, 04:22 AM
  • Reply to Equity release
    by loanarranger
    Equity Release loans do not extend to Buy to Let Mortgages given that such borrowings are deemed Non Regulated by the FCA Whilst Residential Homeowner Loans are Strictly Regulated and why only Brokers with the relevant qualifications are permitted to advise and arrange such facilities with lenders.
    12-12-2019, 04:41 AM
  • Reply to Equity release
    by Gordon999
    If you are part way through an existing fixed term mortgage, you should want till nearer the end of the term before re-mortgaging.

    Equity release is only for those who have no income to pay interest on a normal mortgage loan.The interest rate charged is higher because the lender has...
    11-12-2019, 02:54 AM
  • Reply to Equity release
    by loanarranger
    Firstly are we discussing obtaining a further advance from the current lender , obtaining a second charge mortgage from a third party provider , I am a little confused; I am also assuming that the present loan is a Non Regulated mortgage as opposed to a Residential Homeowner Mortgage but where the property...
    10-12-2019, 07:59 AM
  • Reply to Borrowing against property to invest in shares etc
    by theartfullodger
    Indeed: I have experinced B0E interest rates hitting 17% (yes you read that right, under Thatcher...) and a price collapse during divorce divestment - both were ...err... painful: (the money position, not the divorce..)...
    09-12-2019, 15:52 PM
  • Borrowing against property to invest in shares etc
    by Clulass
    New here, just wondered what people in property thought about borrowing against a BTL property, to invest in shares (either plcs or start ups) - so relatively risky but big growth potential.

    Is it a totally crazy idea, or perhaps not, if you can afford the interest payments, and you accept...
    17-10-2019, 08:40 AM
  • Reply to Borrowing against property to invest in shares etc
    by doobrey
    Depends on circumstances, I guess. I was talking to brokers about extracting equity from my property for investment and I was being told no because it would be viewed as a good money-laundering strategy (i.e. buy for cash -> remortgage) and therefore they would be on the wrong side of AML rules....
    09-12-2019, 15:09 PM
  • Reply to Retrospective sub-division of a HMO and financing/refinancing strategy
    by loanarranger
    Can I make a slight correction Gordon to your last post and without wishing to sound clever;you are indeed correct regarding the possibility of the lender not allowing any flats to be extracted from the title but the possible exception is if the value of the Freehold plus the value of the remaining...
    07-12-2019, 14:13 PM
  • Retrospective sub-division of a HMO and financing/refinancing strategy
    by GaryE
    I have 5 self-contained bedsits and 1 x 1 bedroom self-contained flat all contained within a single HMO property. There is a shared kitchen and lounge and I have a HMO license and certificate of lawful development (change of use C3 to C4). My strategy is to wait 3 more years and get retrospective planning...
    04-12-2019, 15:20 PM