Should I Transfer My Buy to Let (BTL) Property to my Limited Company?

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Buying as an SPV

Advantages & Disadvantages

Should I transfer properties that I already own to an SPV?

Buy to Let Mortgage Advice in Sheffield

We often hear from customer enquiring if it’s it possible to exchange ownership of your property from your name(s), into the name of your limited company?

Buying as an SPV:

First of all, it is essential to know how a mortgage lender will approach purchases from Limited Companies. There are not many lenders that will accept Ltd Company applications through anything other than an SPV (Special Purpose Vehicle) Company.

An example of this is a company set up expressly to invest in properties like this. When registering your company, your registration will include a SIC (Standard Industrial Classification) Code that maps out the types of business in which the company will participate. Mortgage lenders usually would not accept applications from general trading companies that can trade in other areas.

For example, if you have a plumbing and heating company, you will need to set up an entirely separate company to own the properties in your Buy to Let portfolio instead of buying them through your plumbing company. The SIC codes typically accepted are 68100, 68201, 68209, 68320, though this varies depending on the lender.

To find out more information about SIC Codes, consult the Government here.

Advantages & Disadvantages

There are both advantages and disadvantages to purchasing a Buy to Let in Sheffield under an Ltd Company. For example, you will find that not all mortgage lenders will consider applications from SPV’s. Instead, they prefer to limit their lending to lone applicants or couples applying in their name(s). As such, individuals will find themselves with a broader range of products than those using SPV’s.

When it comes to the lenders who would lend to an SPV, the mortgage rates would also typically be much higher than the rates offered to individual applicants. A positive take away though, is that the way rental income is taxed has been changed in recent years, meaning that many people prefer the advantages generated by SPV ownership (relating to how payment is taken and how that income is taxed) as they more than makeup for any extra interest charges or lack of product choice.

The first thing we always recommend customers look at when evaluating your options of buying your portfolio under an SPV is speaking with a specialist tax advisor for advice. They will assess factors such as external income sources and the rate of personal income tax you pay, seeing how they will affect your overall tax status. This will help decide whether or not individual or SPV ownership is the way forward for you.

Should I transfer properties that I already own to an SPV?

As discussed, the main factor in your decision will be your tax position. This becomes a little more complex when you decide whether or not you want to transfer properties you already own from individual ownership to company ownership.

The problem here is that it isn’t just a simple transfer. This type of transaction is a change of legal ownership. Your Ltd Company is a separate corporate identity so that the transaction will be counted as a purchase from you as the individual to the SPV. Stamp duty charges, legal costs and new mortgage and valuation charges will be in full effect.

It’s important to remember that Limited Companies come with running expenses and legal obligations. That said, these may be offset by the possibility of tax-deductible costs or long-term tax benefits.

If a landlord is looking to increase their property portfolio, it would probably work better to keep the current property under their name and only use the SPV to buy any other properties. That way, you avoid any switching costs and unwanted legal fees for something you already own. That being said, each case is different, and you may find that the benefit of a switch far outweighs any of the downsides that come with it. It’s all depending on the circumstance.

As we’ve covered, this is a particular territory. If you are considering taking this route, please get in touch with an experienced and knowledgeable Buy to Let Mortgage Advisor in Sheffield. 

Here at Sheffieldmoneyman, we have many Buy to Let experts on hand who provide top quality mortgage advice in Sheffield, backed up by introductions to appropriately experienced accountants and solicitors as and when you need them.

To speak with a Mortgage Advisor in Sheffield, please Get in Touch and we will see how we can help.

Date Last Edited: September 15, 2023