Are you prepared for this?

Up until year 2015, most properties were purchased under personal names. However, after year 2015 there was an increasing trend of new transactions performed through Limited Company. This has paved the way for the increase in availability of mortgage products through Limited Company although the proportion of products are still less in comparison to personal buy to let products.


During the 2015, summer budget, the changes introduced on the treatment of mortgage interest made the property transactions through Limited Company more appealing.
According to BVA BDRC Landlords panel states that 17% of all landlords hold some of the properties of their portfolio within a limited company and a rise of 44% of Landlords with 20 properties or more.


As per Hampton a buy to let investor would save £4,270 with the implementation of new changes when purchasing a property under £500,000.

 

When purchasing properties through Limited Companies, applicants will have to pay higher rate on the new purchase price. The stamp duty threshold until 31/03/2021 is as below;

 

England and Wales – Stamp Duty Threshold has been raised to £500,000. For additional property the rates are as below;

Portion of Property PriceStamp Duty Rate
£0 -£500,0003%
£500,001 – £925,0008%
£925,001 – £1,500,00013%
£1,500,000 +15%

Scotland – Stamp Duty Threshold LBTT threshold to £250,000. For additional property the rates are as below;

Portion of Property PriceStamp Duty Rate
£0 -£250,0004%
£250,001 – £325,0009%
£325,001 – £750,00014%
£750,000 +16%

Sale of Personal Buy to let to the Company

Applicants whose previous residence, has been sold within 3 years from the date of Purchase of the new property, can claim the additional stamp Duty paid on the new residential property. See below example;


Mr. X currently has a residence property worth £300,000. He purchased a new residential property on 01/07/2019 at a price of £600,000. He paid an additional 3% stamp duty on the property amounting to £18,000 (£600,000*3%).


He has the opportunity to sell the previous residence property to an SPV Company where he can be the Shareholder and claim the additional stamp duty paid back. The previous residence has a current market value of £400,000. If the property is being sold at a price of £400,000 to the company, company based on the current stamp duty threshold (Until 31/03/2021) will have to pay Stamp Duty worth of £12,000.


The refund can be claimed until a period of 01/07/2022 when the previous residence is sold.


Even though the process involves applicant selling the property for himself, due to the conflict of interest, it is essential to involve two separate solicitors to carry out the tasks.


We as WIS, consider your priorities and circumstances, Discuss the complications with the Business Development managers of the lenders when and where it is required. As we are operating whole of market WIS is always capable of providing you the most suitable deal.

So, why not contacting us to take you to the right option for you?

Most buy to let properties are not regulated by the financial conduct authority (FCA)

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.