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I have seen a property that interests me being sold at auction next week. This is my first rental purchase and I intend to own the property in a Ltd Co format. I have the funds available to buy the property, so paying the auction deposit isn't a financial issue, but do I need to set up the company prior to the auction in order to do this? The auction terms are 10% deposit, plus 1% fees and 56 days completion.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
You will want to talk to the auction house, ensure that it is ok for your LTD Co to execute the contract to purchase (rather than your personal name).I've never seen it be a problem but you never know.
There is an accounting & tax question here too, which I couldn't answer.
That said you can set up a company for very minimal £, it can sit dormant even if you don't purchase the property (for years) waiting for the next. An ongoing cost of filing annual nil returns.
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________
I've spoken with the auction house and they do require the deposit from the Ltd Co. I foresee a busy week.
Your main problem will be opening a LTD co bank account within a week. Nigh on impossible these days!
I have managed to open limited company accounts within 7 days of incorporation with Metro Bank however the company must show on experian before the new account can be activated
Metro is quicker than others it seems.
Though you can open a business bank account within an hour. If required with TIDE and other new online banks, like Starling.
WOuld it not make sense to have the company formed first then consult a bank for a currant account
and then talk to a mortgage broker
before you even look at property
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Yes, I agree, that was my plan. However, the auction is next week so that's probably not an option. There's always a plan B, C, D, etc. This is the same property I viewed a year ago whilst going through the eviction process on my inherited property. I finally received the funds yesterday and thought I would probably miss it again, but maybe not.
I think I'll have to buy the property in my own name, then transfer to Ltd Co upon completion. That gives me an ample 56 days to get the company set up. There's no Stamp Duty, but it will involve 2 lots of conveyancing.
Hi Gary, it does seems a commercial or mix resi-commercial property, below £ 150K..and I remeber you looking a year ago at a shop plus office above, or flat etc
I like the mix redi-commercial, I own two freehold, but the fact you buy at auction would require a deep due diligence, the commercial or mix, for a number of reason are much less straight than residential. (I had experience of poorly written right to walk in a lease, a parcel of land with title split etc etc)
Have a Solicitor to see the set of documents...check with Auction House if you can register your LTD (you open in a day online a Ltd), if you as director can pay the deposit in the name of the Ltd (coming from your account), it may work.