Updating post from Reddit.
Hi everyone, I’m in the fortunate position to have three BTL properties, albeit held in my personal name. The current income from these is fairly low given the associated expense etc.
My plan over the next 4-5 years is to grown my portfolio by 1/2 properties a year through investment from my earnings & BRR then eventually live off the income when the time is right.
My question is, given that I already have 3 properties held in my personal name it will cost £££ to sell these to a Ltd (which I’m not discounting down the line). Would I be better off purchasing any assets going forward via a Ltd? Or continue purchasing in my own name? Aware there are costs associated with both and it is likely a case of crunching the numbers however wanted to get some other peoples thoughts.
Cheers!
You're making very little income and your plan is to double down and make even more little income?
Yes buying via a Ltd is preferable; but I also hope all your properties are EPC C or above or you're also taking on another massive future liability.
I'm not sure why anyone would become a landlord in 2025; I'm just an accidental landlord; can't wait for it to be over!
Yes you should make future purchases via Ltd. More favourable tax treatment though you will have less choice of mortgages and rates will be higher than personal. But moving existing ones into Ltd would be potentially very expensive - stamp duty, legal fees and possibly CGT liability - numbers would depend on the values of the properties but I’d say it would be many years - perhaps decades - before you began to see a net gain after transaction costs. Depends partly on your tax position - if you are 40% payer then gains would show more quickly.
I have been in BTL for nearly 30 years, but as a general point I think it’s much harder to see it being as good for new investors as it has been for me. Interest rates are now much higher relative to rents than they used to be, there is no prospect of major uplifts in property values and regulation is increasing. Anyone entering the market now needs to be in it for the long haul and to make sure they have adequate margins to cover rising interest rates and other unexpected costs.
Yes, buy future properties via the LTD.
Sell the existing Propertie to that LTD as soon as you can, the longer you wait the higher CGT will be and the SDLT is not going to get any cheaper.
You don't mention if these properties are mortaged, if they are them 100% of mortage interest can be claimable in the LTD. If they are not consider mortgaging these properties to release equity to cover the costs and potentially give you more capital to increase your portfolio.
He’s not making much money as it is. Paying the higher rate of SDLT (and any CGT) on transfer to a Ltd Co will wipeout his profit for many years to come.
Yes, it’s a quantifiable figure though and if it’s 5 years and they stat a landlord for 20 years it makes sense to do this now.
As you have three properties you may be liable for incorporation relief when transferring these properties. Speak to a good property accountant and good luck
I’ll start off saying you need to see a property specialist accountant, to come up with a plan/strategy, factoring in your future plans.
I am in exactly the same boat as you. I have three in personal name & plan to buy more & eventually give up work to live off the income. Section 24 has certainly made things harder but not impossible.
The way I’ve answered this question is, how much do you want to live off? & how much can you live off? If the answer to both of these is less than higher rates of tax then probably buy future properties in your personal name. YES!, for next several years while you’re still working you will be hit hard for tax being in the 40% bracket BUT! When you stop working & fall under the higher rate tax band, having properties in your name is cheaper. In a Ltd you have higher mortgage rates (roughly 1%), you have higher accounting cost & you still have to pay yourself. All of this an accountant will go through with you when making up a strategy.
Obviously if you need more income & need to be in the higher rate bracket then Ltd is the only way to go.
Inheritance is also something to consider & plan for.
If your married you can shift more ownership to whoever earns the least to make the most of the tax bandings
Just to highlight how much that 1% increase in mortgage costs £1m in mortgage debt in a Ltd will cost you an extra £10k a year compared to personal name.
Mate, please stop. It's incredibly unethical to buy properties just to rent them. There's a huge shortage if housing in the UK, and buying to rent is just taking advantage of that. A house is a home, not an asset.
This is a community for Landlords. You can be anti-landlord in other places like /r/HousingUK/