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Setting up subsidiary + t/fer of prop from parent

How simple is it to set up a subsidiary company and transfer a property from the parent company?

Didn't find your answer?

I have existing clients where they buy properties to rent out so this is something I havent come across.

New client buys properties to develop and then sell.

They have been approached by someone saying that they wish to rent a property instead and after speaking to their mortgage advisor, they have been advised that in order to get the best buy to let mortgages, they need to set up a 'special purchase vehicle'.

I now know this to mean setting up a new company and transferring the property into that.

Do I incorporate (100% owned by original company) and then transfer the property at market value? If so, I assume SDLT is payable?

Also, from what I have read online the SIC codes have to specifically be the following in order to comply with the mortgage lenders requirements:

68100 – Buying & sell own real estate 
68201 – Renting & operating of housing association real estate 
68209 – Other letting & operating of own or leased real estate 
68320 – Management of real estate on a fee or contract basis

I assume this is a fairly regular occurrence just something I haven't been asked before.

Thanks in advance.

Replies (6)

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By The Dullard
13th Feb 2020 14:43

Your accountant will be able to help you with this, it's a doddle for somebody that's got an understanding of the basics.

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Replying to The Dullard:
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By chicka
13th Feb 2020 15:16

I am the accountant! Its just something I've never come across before and therefore want to make sure my assumptions are correct (set up new company with existing company as parent and transfer property at market value and pay over the SDLT?).

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By The Dullard
13th Feb 2020 15:17

The paying over the SDLT bit is inaccurate, but a return will be needed.

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Replying to The Dullard:
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By chicka
13th Feb 2020 15:25

There will be some SDLT to pay though at the market value (the property is over £125k)?

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Replying to chicka:
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By The Dullard
13th Feb 2020 15:42

Not if parent transfers to subsidiary, and the group remains intact for 3 years. There is a group relief.

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By The Dullard
13th Feb 2020 14:57

It's mad that there's not some form of group relief for SDLT. Does anybody agree?

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