UK Landlord Forum / Life

I own property worth around £160k and my partner owns her worth £150k.
My mortgage is £116k and she has only £20k left. My monthly payment is £690 and her is £300, that repayments mortgage. I'm thinking to rent house together to live in and then we could set LTD company and sell those houses to company. Before selling we want to take remortgage and take equity of £100k on her house.
We have some savings to process purchasing by company. Those £100 we want to invest to purchase another two properties.
My question is, is it worth to do it?
Can we sell those property's to LTD company for £120k and £116k knowing they are worth more?
Rent from each property should be around £800-£850 a month.

Thank you for your advice.

There's a lot of debt here. Too much for my tastes... I'd prefer some assets to be paid-down before I start to play in the PRS. Your plan involves renting for yourselves and becoming Landlords... I can't jive with that. It's said that big rewards come from big risk, but I am not made that way. I would caution... er, caution.

Transferring properties into a Limited Company can of course be done, but it is not cost-free and I think it must be done at current market value as - otherwise - everyone would be doing it at £1 in an attempt to avoid any taxation concerns (SDLT). At the end of that process you are also a Director of a Company and have all the 'noise' that goes with that, including dealing with Companies House (who I have experienced are awful in all respects). I think the setup costs would be quite eye-watering for you, but that's not to say they wouldn't be better in the long-run (you'd just need more working-out).

As to your question I believe the answer is "no", but a savvy Accountant might have a different view.

I can see the thinking here, but what you're suggesting isn't really going to work. It ignores some fairly basic stuff.

Moving things into a company has some significant costs, a lot of complexity and I don't see what possible benefit its going to bring you. I'm going to guess that it just seems the thing to do, rather than any actual decision.

Once you take out that complication, everything's much simpler, because it's just maths. I also echo Hippogriff's comment that there's a lot of debt overall (but that's a matter of circumstance and attittide to risk), but I'd add that the best investment for almost everyone is their own home. It's a tax effective investment and, as you have you both found, a good way to invest generally.

If you take your plan and, rather than rent, buy yourself a home (or use one of the one's you already have and let the other one) you might find it works better. One thing to note is that some residential mortgage lenders don't count rental income as being like normal income, so that's worth looking at.

And, while it's a very complex subject that I hesitate to raise, if you're planning to marry, you might want to do it before you embark on this. Most of things you want to do are simpler or cheaper as a married couple. And if you ever split up the division of things will be mechanically simpler (if no less anger and stress generating). But definitely don't do it because of this!

Quote from: Rafael on May 16, 2024, 07:02:52 AMBefore selling we want to take remortgage and take equity of £100k on her house.

If you sell to the company then it's the company that would have to take out the mortgage because you, as an individual, wouldn't own the house. A commercial mortgage to a limited company is likely to be more costly than the residential mortgage that you're used to, and you may struggle to find a lender at all.

This made my brain hurt, I had to read it several times to get a rough idea what your plan is. The whole thing sounds so precarious, like a house of cards. I know I am risk averse, and you may be much younger and bolder. I still think the most important thing is to get your own mortgages paid off, protect the roof over your own head before you think about venturing into a market that many are eager to leave.   

Quote from: Rafael on May 16, 2024, 07:02:52 AMI own property worth around £160k and my partner owns her worth £150k.
My mortgage is £116k and she has only £20k left. My monthly payment is £690 and her is £300, that repayments mortgage. I'm thinking to rent house together to live in and then we could set LTD company and sell those houses to company. Before selling we want to take remortgage and take equity of £100k on her house.
We have some savings to process purchasing by company. Those £100 we want to invest to purchase another two properties.
My question is, is it worth to do it?
Can we sell those property's to LTD company for £120k and £116k knowing they are worth more?
Rent from each property should be around £800-£850 a month.

Thank you for your advice.

Selling your properties to a LTD company can be beneficial for tax efficiency and expanding your investment portfolio. However, be aware of potential capital gains tax and legal fees. Consulting with a financial advisor or tax professional will help you navigate the complexities and determine if it's the best strategy for your situation.