Ltd Company or Personal Name for newbie buying for cash?

Ltd Company or Personal Name for newbie buying for cash?

11:24 AM, 31st October 2017, About 7 years ago 8

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I’m 23 years old, just finished under-graduate university and currently unemployed. Starting a Masters degree in property in Sept 18.

I have no income and unlikely to be fully employed until July 2019; but have capital which I want to invest in property now. Mortgages are unavailable to me due to no income.

In the next couple of years I intend to have 2-3 investment properties which I want to hold and rent.

I intend to buy my first investment property with my capital and then refinance later if able to do so.

I also have a friend keen to joint venture with and he currently has annual income of £15,000 from an existing property. He is hoping to start a job shortly so this income is likely to increase.

We have £90,000 between us to invest now.

Currently I’m not interested in making property my sole income and in 2019 I will have another income stream. However, I do intend to keep adding to a portfolio slowly.

I also part own two family properties.

Two questions:

From the above;

should I invest through a limited company or through my personal name?

Does the fact I may joint venture with my friend have any bearing on the above question?

Many thanks


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Neil Patterson

11:30 AM, 31st October 2017, About 7 years ago

Hi Henry,

Initially Section 24 mortgage interest relief restrictions will not affect you as there is no mortgage interest to offset against rental income and not currently a high rate tax payer.

However, if you get a good accountant then buying in the name of a Limited company (preferably an SPV for mortgage lenders) then you are preparing yourself for the future as transferring existing properties to a company is far more difficult and costly later on.

The Partnership aspect only helps later on if you are trying to incorporate, but not if you take that route at the start.

I would suggest you spend some time on our main tax planning tab >>

Neil Patterson

14:25 PM, 31st October 2017, About 7 years ago

The Downside of a Ltd company is that you will pay corporation tax straight away.

Therefore as you currently have no other income you will not be using your £11,500 personal tax allowance.

Paul Green

9:23 AM, 1st November 2017, About 7 years ago

If I was starting afresh today, I would form a company, as the government won’t interfere with corporate business as business, basically write policy by lobbying them constantly, so the government is leaving corporations alone so they can bring in higher profits for there shareholders and lower corporate tax for them at every budget that’s practical. Or when they can slip one in, without the masses (herd) noticing. Right now there is an attack on private landlords to foist them out, as big business sees an opportunity to rent corporate housing on a mass scale too currently 25% of the population. Home ownership is out of reach for the common man and we’re going back to Victorian times were renting was the norm and only the gentry held land....remember all cottage industries went down the pan in the industrial revolution, the same is happening now with this sector..... protect yourself now by wrapping your investment inside a Limited company or a Special purpose vehicle (SPV) as suggested by the last comment.

Martin Roberts

9:41 AM, 1st November 2017, About 7 years ago

Just a personal view, but I would avoid a partnership.

Unless you see 'eye to eye' on absolutely everything (every tiny little detail) you will fall out and need to split the business.

Good luck with you new venture.

Chris Coyle

11:48 AM, 1st November 2017, About 7 years ago

Hi Henry,
As an aside, I would be interested to hear where you intend to study the masters in property. Reason: My son is also staring as an undergraduate in 2018 but could not find a course that was specifically for property development. They were more geared towards estate management and/ or surveying. Please advise if you can. Thanks

Paul Green

14:18 PM, 1st November 2017, About 7 years ago

Yes partnerships are easily broken up over a simple disagreement, or a conflict in were the business is heading, you should draw up a partnership agreement, Detailing every last move each partner has too take in different senecios, like ill health , obtain partnership insurance , etc I would recommend avoiding at all cost.

Graham Bowcock

17:42 PM, 2nd November 2017, About 7 years ago

Dear Henry
A friend of mine wanted to invest in property in 2000 so we set up a limited company. It continues to work very well. It's very transparent and not too onerous to manage (although my friend is an accountant). This was set up way before s24 was an issue. It is straightforward to transfer ownership (i.e. shares) to other family members and the company has some gravitas, as opposed to a partnership. We do have a shareholder agreement and keep the records properly, although it's not too difficult.

There may be some tax disadvantage to being limited if you have limited personal income, but if you intend to grow your own income then this should not be a long term problem.



7:46 AM, 4th November 2017, About 7 years ago

Reply to the comment left by Neil Patterson at 31/10/2017 - 14:25Wouldn't taking your personal allowance as salary reduce the company profits by that amount and therefore reduce the amount of corporation tax payable?
Of course, NICs will need to be factored in as well.

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