Can property be let via LTD if bought privately?

Renting a property via LTD

Didn't find your answer?

My client just bought the property ( as individual) with his wife ( their second house) and he is asking me if he can rent it via his LTD ( that also deals with renting accomodation and his wife is also a director there). I can see an issue with this being an individual rather than company asset, but is there a way of transferring it to LTD or rent it via LTD? Anything else he should be aware of considering this?

Replies (35)

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By ireallyshouldknowthisbut
03rd Apr 2024 14:29

If you have a let property and dabbling in limited companies you probably want an accountant.

If you are an accountant then I think you need to go back to basics of legal title, connected parties, that sort of thing.
If you are a junior and the boss is away for Easter, park up and deal with when they get back.

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Replying to ireallyshouldknowthisbut:
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By Peyton
03rd Apr 2024 14:35

Thank you, that was very helpful.

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By Paul Crowley
03rd Apr 2024 14:41

You would to get admin in place but find out what your client is wanting to do and why would he want to conflate. Why would he want to buy outside of company and immediately want to change direction?
Is there a mortgage?
I think the idea is not good, as people tend to forget reality when things are made complicated.

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Replying to Paul Crowley:
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By Peyton
03rd Apr 2024 15:10

Thank you. I work with CIC company that helps migrant communities, we do some basic accounting for them, this one is more complex, so I'm just trying to help out. These are people who struggle with English ( among other things) so I can't always refer them to experts, they cannot afford them or they can't understand them. Looking at this particular family, I can see they act rather chaotic, the company is freshly set up so there was no accounts ready to be assessed at the time of taking out a mortgage on this house. I imagine, that's why they took out the mortgage in their names instead of company's name. And now they looking into ways of renting it via LTD. If there is no way if doing this- that's all I need to know, I'll tell them that. If there is a way, I'd like to research it for them, so they have an idea, what's involved.

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Replying to Peyton:
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By Paul Crowley
03rd Apr 2024 15:18

If they can afford to buy two houses and have the capacity to borrow on a mortgage then they should budget in the cost of good advice.
I do not believe the language is an issue. Mobile aps can fix that. Do they genuinely not know anyone that speaks English?

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Replying to Peyton:
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By Paul Crowley
03rd Apr 2024 15:44

If you keep doing stuff for free, then they will never get expert advice. Are you really helping them?

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Replying to Peyton:
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By Tax is always taxing
03rd Apr 2024 16:32

I'm confused how they can not afford or access advice... but yet are acquiring properties for rent and securing mortgages. The 2 don't really tie in.

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Replying to Peyton:
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By HL86
03rd Apr 2024 21:58

You might find the terms of their mortgage prohibit this type of letting to a connected party

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the sea otter
By memyself-eye
03rd Apr 2024 14:56

Horse before the cart, as usual. The time for considering where ownership lies was just prior to 'just bought'

Hire an accountant.

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Replying to memyself-eye:
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By Peyton
03rd Apr 2024 15:14

I'm sorry, hiring an accountant is not always possible, see my reply to previous comment. I do realise now though from your answers I may not be in the right place.

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Replying to Peyton:
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By Paul Crowley
03rd Apr 2024 15:20

That is possible
As this site is intended for accountants to interact with each other, we assume that if you say 'my client' that you are an accountant in business.

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Replying to Peyton:
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By Leywood
03rd Apr 2024 15:34

Peyton wrote:

I'm sorry, hiring an accountant is not always possible,

That is the most ridiculous comment Ive seen on here all week and let me tell you there have been some ridiculous comments this week.

These are the type that need more help from Accountants than many of the others who wander through our office doors. You are doing them a disservice by not pointing them to the right advice.

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Replying to Leywood:
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By Paul Crowley
03rd Apr 2024 15:38

+1
Property errors tend to be big errors.

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Replying to Leywood:
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By Peyton
03rd Apr 2024 15:54

I was describing communities we work with, not this particular client when I said they can't afford it. For this particular family it's more the case of understanding, not only English as a language, but also understanding of taxation and various policies in the UK. So they cannot just pick up the phone and call an accountant with their inquiries. It works best when they come to us, we explain some basic concepts (often by comparing them to how it works different from what they know in their own countries) - of course as much as we can. If it is outside of our expertise ( as it is in this case) we research it for them, so we can introduce them to potential issues they need to consider. We then can point them in the right direction, simple as that. Now, I was made aware this forum is only for expert accountants, so I can only apologise for ending up in the wrong place, but I do appreciate all trying to help.

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Replying to Peyton:
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By Tax is always taxing
03rd Apr 2024 16:34

Surely you just contact and build up a network of foreign speaking accountants rather than try to give advice you are not qualified to give

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Replying to Peyton:
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By Leywood
03rd Apr 2024 17:07

''If it is outside of our expertise ( as it is in this case) we research it for them, so we can introduce them to potential issues they need to consider.''

Sorry but that is fraught with danger, given that tax regulation takes years for advisors to learn. The right tax advisor or accountant, once they get their hands on the pertinent information, probably has to then unravel a big pile of mis-understanding and mess, some of which it will be too late to resolve, meaning these poor folk pay more in tax than they should.

Please do yourselves a favour and set up links with the right professionals, ones who have the right qualifications and knowledge. You can also consider multi lingual practices. There are plenty about.

I do hope your CIC has PII in place for offering tax advice for when the inevitable happens at some point.

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Replying to Peyton:
the sea otter
By memyself-eye
03rd Apr 2024 18:47

Wrong place?
I bet the captain of the Titanic thought the same, moments after the ship struck an iceberg!
ps: I only answered once - singular.

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By Bobbo
03rd Apr 2024 15:00

1) Yes, your client (whomever that may be, this individual, their wife, both) could sell the property to the company or grant a lease of some period to the company. The company could then rent it out to third parties.

There are of course tax implications to this.

2) Yes, so many things.

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By Leywood
03rd Apr 2024 15:02

Wrong question. As per.

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VAT
By Jason Croke
03rd Apr 2024 15:24

Just as an aside, appreciate OP is posting as a CIC that offers basic accounting for immigrants, which is fine and laudable, but the question strays very much into the realm of tax planning.....is the CIC suitably insured to be giving tax planning advice?

It's a big step between "doing a bit of basic accounting" and "advising client how they can structure their transactions post event in order to (presumably) make it more tax efficient".

I think OP needs to know their limits (not necessarily of their knowledge) but in terms of exposing their employer to a law suit...because immigrants might not speak English or be able to afford to pay for tax advice... except when you give them bad advice and they end up out of pocket and pay more tax than they need to, suddenly then language and resources are no longer an issue....just be careful OP, there is the desire to help and then there is the exposure to risk you just don't need.

As others have posted, if they can afford 2 houses they can afford to get this right and not put upon a CIC trying to do its best for the migrant community.

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Replying to Jason Croke:
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By Peyton
03rd Apr 2024 15:35

Thank you for your comment, makes a lot of sense and I appreciate your time to write it.

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Replying to Jason Croke:
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By David Ex
03rd Apr 2024 15:39

Jason Croke wrote:

Just as an aside, appreciate OP is posting as a CIC that offers basic accounting for immigrants, which is fine and laudable, but the question strays very much into the realm of tax planning.....is the CIC suitably insured to be giving tax planning advice?

Well said. Presumably the “client” managed to find (and pay for) a solicitor to deal with the property acquisitions. The idea that they can’t find an accountant seems frankly incredible. How are the company and personal tax obligations being dealt with in the absence of professional advice and with a limited command of English?

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Replying to David Ex:
the sea otter
By memyself-eye
03rd Apr 2024 18:48

Quite.

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Ivor Windybottom
By Ivor Windybottom
03rd Apr 2024 15:34

Take care with this as there are numerous risks of getting it wrong and making an expensive mistake!

In short the company cannot rent the property without some form of ownership (lease, freehold, etc.), but this transfer/change could trigger all sorts of tax consequences.

Alternatively the company could potentially could act as a managing agent and charge, say, 10%-15% for doing that (assuming no other agent is in place).

Finally, "Ltd" is preferred over "LTD" as an abbreviation for Limited.

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Replying to Ivor Windybottom:
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By Jason Croke
03rd Apr 2024 15:59

Ivor Windybottom wrote:

Finally, "Ltd" is preferred over "LTD" as an abbreviation for Limited.

Indeed, but can someone have a word with Companies House as they only seem to do capitals (also HMRC who still live in the world where people had to fill in forms in capitals in black ink and to this day still think like this).

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By Peyton
03rd Apr 2024 17:02

Thank you everyone responding to my query,I have found what I needed among your answers (and then some digging!) and I know what to tell them. What I can take out of this is, your attempts on advising me how to deal with migrants are very much like me trying to advise them on the above, I can understand your frustration! Again, just to make it clear, I was not planning on doing this for them, I was just trying to get an idea what the process involves, so I can explain it to them and get them some help this way or another. So much confusion! All the best to you.

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Replying to Peyton:
By ireallyshouldknowthisbut
03rd Apr 2024 19:41

Hi Peyton, I think you must be a very well meaning individual to be working in the enviroment you are...........however........poor advice is often worse than no advice in this sort of an area. its really very simple - if they dont have the funds for an accountant the absoulte worst thing they can do is get involved in a limited company. Any theortical tax advaantages (and I cant see any in this set up) will vanish in a fug of compliance problems.
Your original post read like either a tax payer, or a 'bookkeeper pretending to be an accountant' type question which is often posted on here, and its only going ot end in tears if they try and sort this out themselves. Most of us post on here as peer support and to help people out and the abrasive attitude is actually well meaning.

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Replying to ireallyshouldknowthisbut:
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By Paul Crowley
03rd Apr 2024 20:07

Agree
Inside a company is really only for higher rated tax payers looking to kick a tax liability down the road and worry about it later.
The cost is extra compliance costs now.
A middleman that has meddled and got what appears to be conflicting information would probably make matters worse.

I really try to get mortgage brokers to email me directly with what they want. Clients often get confused if they take a call from the broker. Accounts and tax return is the same thing to them because they see them at the same time.

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RLI
By lionofludesch
03rd Apr 2024 17:10

Eh dear.

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Replying to lionofludesch:
the sea otter
By memyself-eye
03rd Apr 2024 18:50

X2
at least he/she didn't close up after the first reply!

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DougScott
By Dougscott
03rd Apr 2024 21:17

I don't know what language your clients are fluid in but I would be suprised if there were no accountants speaking that language in this country. Alternatively there is no reason an interpreter cannot be found. I have worked with refugees from Myanmar, Syria, Africa, Afghanistan, Ukraine, Hong Kong, etc and we never had much trouble finding interpreters,

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By Matrix
03rd Apr 2024 21:25

With all due respect, is this the kind of client your donors wanted to help when they advanced funding? I won’t repeat all the above points which have been very well made but are there not more deserving cases out there for your presumably limited funding and time?

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Replying to Matrix:
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By kaff
04th Apr 2024 21:31

Must say, that was my first thought too. These are clients who've got the wherewithal to move to the UK, buy property with the intention of becoming landlords, register a limited company and then belatedly clock that there may be beneficial ownership issues with that, and yet they turn for help to a CIC presumably established to help borderline destitute asylum seekers.

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Replying to kaff:
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By Matrix
04th Apr 2024 22:34

Agreed. It all looks a bit KidsCo to me.

Having difficulty getting a mortgage for a new company or creating complicated tax affairs without an adviser are not unique to non-native English speakers.

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Replying to Matrix:
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By Paul Crowley
04th Apr 2024 21:55

+1

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