How to Structure Your Property Business with a Smart Limited Company | Property Investing UK
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- เผยแพร่เมื่อ 21 ม.ค. 2021
- How to Structure Your Property Business with a Smart Limited Company with Mark Alexander from Property 118 & Ranjan Bhattacharya. 99% of Property Investment Companies are set-up badly... Is yours one of them? Find out in this video.
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I watch a LOT of property investment chanels, many of the presenters come across as dodgy seond hand car dealers, Ranjan comes across HONEST, and clearly vastly experienced - thank you for your honest advice and break downs, put across in laymans terms for us budding property investors Ranjan
Thank you and really appreciate your feedback
Excellent video! Could you make one on bridging finance? The basics, pros, cons and when to use it. Thanks
Thank you Ranjan, always the best property advice on the scene, sincere and authentic!
This is gold thank you
Great video. Very informative. Keep up the great content.
It's always good to listen to you guys.
And stating the obvious, it's always informative.
Can a new buyer who doesn't own residential property purchase a buy2let property by setting up a Ltd company and buying their first buy2let through it? Will the Banks give the Ltd company a mortgage?
I would say this is one of the best video you have made so far ..guang ho
Hands down the best UK property relates channel on TH-cam
Great content as always Ranjan. Thank you
Im not sure Robert Gannet
Brilliant, just Brilliant, the best 👌
Great video.. really informative.
love your videos im just starting out in my journey and some real helpful content here. thanks
Thank you. More videos aimed at those starting out are coming soon so make sure you subscribe for updates
This is a great video for the UK. There will be some difference in the United States. Otherwise, Ranjan always puts out excellent information. Keep up the great work Raj.
Thank you, Cherry Hinton Accounting,
great content
Excellent video, thanks for sharing quality knowledge 👍🏼
Would love to know your views on crowdfunding business structure including its tax implications and fca authorisation etc. Thanking in advance
It would be great to update the spreadsheet assuming the business grows in capital to say £1.5m after 2 years to see what happens to the value of the shares, C to Z.
This is a great video and really appreciate the advice. However what do you do if your a single man with no one else to stick on the directors board?
Great content.
May I ask you something, how do you secure a deal for deal sourcing. TIA
Actually, this kind of company set up for a small family company isn't rocket science and it shouldn't cost an arm and a leg to set up this kind of restructure, (you basically need a savvy solicitorwho can pen the Letter of Wishes and restructure the company accordingly), but having said that, it's a great video and very sound advice!
Haha! What a cheek! Everyone better get on their geordie language course... seems like the only place left with decent yield 😉
Hey Ranjan. Any idea where I can go to to get advice on seeing up a smart company in the right way? Or could I just do this myself? Property 118 is not taking appointments, and big standard accountants don't seem to fill me with much confidence that they know the property domain so well. Any ideas?
WHY ARE YOU SCARED IN GIVING A BALL PARK FIGURE OF THE COST OF YOUR SMART BUY TO LET LLP CASE STUDY MR AND MRS X INSTEAD OF SAYING IT IS NOT CHEAP, HOW EXPENSIVE IS IT FOR MR AND MRS X? IS IT £5K, 10K 15K 20K
I asked myself in Nov 2020 if it was even worth being a landlord/small developer nowadays. I decided to sell my small property portfolio and now no more headaches. Can see rent collection issues on the horizon. Looking back i hated all the aggro and tax regulations, endless paperwork, agents and lawyers fees etc. Whoever makes money in property deserves every single penny they make, because it is not really an easy business or at least not as it once was. Bitcoin a lot easier and more profitable than property in IMO. Great delivery by Ranjan as always.
Do you need to have a discretionary trust before you set up your investment company? or can you add this in the future
I’m here to answer questions
Ball park costs? for newly formed company, 2 primary shareholders 50/50 ish 5 others for dividends 2 for future value increase. No teusts
@@charlesfox8638 full quote via www.property118.com/buy-to-let-company-structure/
Can you do this with trading company and what are the tax implications involved pls. Trading company with £400K value
Smart company looks great from IHT angle
But won't there be an issue with getting mortgage mortgage when having kids or trust as growth shareholder
Great video! I’m still struggling with the benefit of a discretionary trust vs a bare trust or underage children simply holding the shares. Surely the discretionary trust just adds layers of complications with 10 yearly tax charges and the admin need for 10 yearly valuations?
Any thoughts?
Arent Disrcetionay Trusts taxed on their Capital Value each 10 year anniversary?
Hello 👋 I have a question 🙋♂️
We have 9 properties 8 of which are joint owned. 7 with my former business partner & his spouse & mine. 1 with myself & spouse & 1 with my brother & his spouse. I’m considering incorporating into Ltd co. Given the current spread of ownership do you think this is doable using the alphabet shares structure? & also my brother may not want to participate so could I incorporate our 50% of that one specific property?
Does snr x have to be uk citizen?
What is the difference between a smart company and a family vestment company?
Do you apply this structure to the holding company - is this an off shore based structure with the company based in Panama - just like George Osborne and David Cameron have for their companies ?
No point
Just watching this very informative video … laughing as I am a Geordie 😂
Good advice . But accounts can’t implement this even after explaining. It would be better if you guys did accounts too!
If you need a good accountant we can facilitate an introduction
Me too.
Mark Alexander Property118 TV would you please introduce me one, thank you for your sharing. Very useful content. Also, any reliable mortgage brokers to recommend?
Am I missing something here, there are 10,000 Shares at £0.01 per share x £20, gives you £2,000 total share value.
However, the example assumes there are 10,000 shares at £1.00 per share x £20 gives you £200,000 total share value.
This example doesn’t make any sense.
What about existing ltd company portfolios with 1 share and few properties. When more shares(growth) are issued can the growth of that original single share be transferred to child? What about capital gains tax? What’s the best way to restructure and issue the A B C shares
Sounds like you need a private consultation www.property118.com/buy-to-let-company-structure/
@@johnstewart1814 please see the link above
@@Property_118 lol
Hi. I want to get on property ladder. I don't have a property in my name yet, but I have £15.000 to invest also I have an investor willing to give me another £100.000 . Any advice on what to do in this scenario what and what company I should setup? My investor will like to be hands on also. Any help would be appreciated. Thanks
Great video, but the audio on the other side is a bit blurred, what if his audio is recorded on the other side and imbedded while editing?
That will be sorted
Thanks for the video. I was under the impression from mortgage brokers that mortgage lenders often won't lend to companies with more than 2 share holders, so does this fall foul of that? Also how do you use this structure if you're setting up a holding company with several limited companies underneath it - would this structure be for the holding company only?
This structure can be used for holding companies. In regards to mortgage brokers and lenders, you're obviously talking to those operating at the amatuer end of the market
Let me see if I get this right....it seems as the most important class of shares is the class M as it is this class that accumulates all the equity arising from the capital growth associated with the underlying property assets held in the portfolio. If so am I right in saying that in most cases if you want to be the main beneficiary Mr and Mrs X would be listed as the primary beneficiaries? What happens on the wind up or sale of the property portfolio? Does being listed as a beneficiary mean the equity would be distributed based on the trust's documented wishes.?
sale of the property doesn't matter. the cash will still be within the business. it's if the business is liquidated, not the assets controlled by/held within the company.
in addition, does have to be share class M as a growth share. it also doesn't have to be just one class of share. it also doesn't have to be attributed to a trust. mr x could own class a growth shares and mrs m could own class b freezer shares. it is completely versatile and not a one size fits all thing.
have a look/research share structures of other companies and see what you could adapt to fit your needs - and then seek professional advice to adjust and adapt your vision/needs to what is most efficient (tax or otherwise) and then help make that a reality.
@@kai-uz7qy thanks for your second point. Hadn't thought about allocating the growth share to just one of the shareholders ie (me). Regarding point one I was referring to the sale of the property porfolio as a whole (ie the legal entity owning the portfolio) and not the individual properties within. Sorry i hadnt made that clear.
@@jimboyuk1 ah yes, in that case the share or shares that have capital rights will get the money
Speaking to different accountants they say their concern with multiple share classes is that one day these will go the same way as employee benefit trusts and film partnerships. What are your thoughts on this?
perhaps. but that will be one day in the future and from that day forward. So best get in now!
I agree with Ranjan
Is there a ongoing cost to maintain smart company apart from usual accountant cost
No. (unless some shares held by minors and need to be held in trust)
The trust that is set up, could it be the same trust that is used that life insurance pays out to upon life’s end, or will a separate trust need to be set up by life insurance company? Same question possibly with pension trust perhaps? Thank you
No
@@Property_118 thank you
If you have this structure, do you still need a will ?
yes
Also how is the capital actually frozen of those shares? How is it proven? Just by clicking on excel that show no capital rights ? Can hmrc reject the capital freeze
There are just a handful of lawyers in the UK who know how to do this. You're not going to get that answer for free on an open forum I'm afraid
@@Property_118 I agree so what lawyers do you recommend then? As this can’t be done in practical terms? If so can you show an example of any1 doing
@@ML-gf7kf - I recommend Cotswold Barristers. They have formed several of these structures.
Hi Ranjan, what is the company was in negative due to directors loans and mortgages? Is that the best time to set it like this or when the company is in positive and worth something ?? That was clear in this video .... I.e what if the example was -£100,000 instead of £200,000
If the value of a property investment company is -£100,000 then you should seriously consider calling in the receivers. It is illegal to trade whilst insolvent.
@@Property_118 :) i dont mean that. I meant due directors loan ... I.e if I buy two properties under a new limited company then it will be negative due to fact the deposits have gone in from the director as part of a loan and mortgages from the mortgage company. Not sure if I made that clear.
@@sajhussain26 sorry no, it still makes no sense. Example, you lend £100,000 to a company which then borrows a further £100,000 from a lender to buy a £200,000 property. Value of company is not negative.
@@Property_118 apologies, I didnt make that clear... what I meant was the value is higher but the equity growth still quite low. Question was is it beneficial to do it while the equity growth is lower ?
@@sajhussain26 yes, it’s always better to do this planning before the growth exists. Waiting just compounds the inheritance tax problem for the future
Ranjan, it sounds good. But can you get landing on this company? Lenders do not like these structures. For existing company do you need to ask permission from existing lender to move to this structure?
Lenders have no problems with these structures at all. They are only interested in shareholders with more than a 20% shareholding.
funding not a problem if company structured properly
@@ranjanbhattacharya-succeed7617 hi Ranjan, many thanks for this.. super informative material. just one question: when I asked my mortgage broker about lending through a company, the interest rates quoted were typically 2% more than what I would get under my personal name, plus some very expensive fees. can you recommend a broker? thanks again!
Would be interested to know the broker
What if say there are no kids yet but these classes are created. Are you meant to own them all first ? I’m sure they will be capital gains
Sounds like you need a private consultation with one of our tax planning team
Is there a 10 year tax rule on all the capital within the trust?
Yes, but there is no market for a minority shareholding in a private company where the shares have no voting or divided rights. Therefore, until the company is liquidated, the value of the assets in the DT are negligible for the purposes of calculating the 6% ten year anniversary tax
@@Property_118 thank you
Has anyone had it 10 years and not been challenged?
Whar's the advantage of buying property in a company? Is it all just to allow you to offset financing costs against your rental income? Seems a high price to pay for thar: if you want to take money out of a company, you have to pay dividend tax, for example.
The benefits are well.document on the internet and a simple Google search will give you that answer.
@@jimboyuk1 It's not that simple. My accountants told me not to bother until I had more than 5 properties at least.
@@adielstephenson2929 Yes it is probably a matter of intention. If the plan is to not own more than a couple of properties then the additional cost associated through operating through a limited company as well as more expensive limited company mortgages will in most cases not warrant the incorporation route. If the plan however is to scale up your portfolio over the years then buying in the first instance in your name then transferring at a later date to a limited company can prove quite expensive. If the intention is to own multiple properties then ltd company is probably the way to do. As a small aside, if your income and potential income from buy to let keep your income levels below the higher rate threshold then incorporating will not really bring you much benefit from a financial perspective.
Do you have Geordie? 😂
I was going to call for some advice but I don't think you will understand my geordie accent haha.
I booked a session with Property118 back in June last year and I was quoted £12k+VAT to set up growth and freezer shares etc after spending £400 for the pleasure! You then have to pay 6% tax by the trust every 10 years. Which if you do this too soon will probably cost the same as the inheritance tax you want to save but you are in fact paying it while you are alive! Not sure that makes sense, kinda "dumb." Ideally property118 would be a lot more transparent on their costs and less billigenrent to how landlords may have already set themselves up.
@Stephen Duncombe - naturally, I am unable to discuss the specifics of your case in open forum. However, you might recall that all Property118 consultations come with a GUARANTEE of total satisfaction or a full refund. If you wish to activate that, the full £400 consultation fee you paid will be returned to you in full. Furthermore, you have completely misunderstood the 6% ten year anniversary tax charge. Unless the company is liquidated, the value of the taxable assets in the trust is the value of the growth shares. Whilst in theory this could be millions, who would buy these shares until such time as the company is liquidated? What you need to bear in mind is that there are no buyers in the market for a minority shareholding in a private company, especially where the shares have no voting or dividends rights. Therefore, 6% of zero is zero.
Smart company looks great from IHT angle
But won't there be an issue with getting mortgage mortgage when having kids or trust as growth shareholder