How to setup a property investment company step by step guide

If you are looking to invest in property, then investing through a limited company is likely the most tax efficient way of doing so. It is easy to do and involves just a few simple steps… To setup a company with the purpose of investing in property can be done here… https://www.gov.uk/government/publications/companies-house-fees/companies-house-fees   Below are the steps you will have to go through once on this link, so have all of the below ready to go! You will most likely be choosing to setup a Limited company.   Alternatively you can get a company to do it for you. For example we recommend a company called Getground which specialise in setting up property companies.  

1.      Choose a company name

  The chances are your property company will merely be a vehicle for holding your properties. In which case the name may not be of the most importance to you. Many of our customers just use their names to build a company from.

• Check the name is available – Click here
• Check the IPO trademark is available – Click here

IF you do plan to do some marketing of your company then a good name may be of great importance.  

2.      Register an address

  You will need to register your property to an address. In most instances if you are just buying a property and setting the company up then this is likely going to be your home address. However, it doesn’t have to be. Maybe you have an office, a second address or maybe you can ask an accounting firm for an address. As this will be publicly accessible information you may not want to put your own address, in which case you can use a registered office service for a fee. A quick search on Google and you will find plenty of these services…  

3.      Name your directors

  You will need at least one company director, so this would be yourself.  Directors are ultimately responsible for making sure all your accounts and company details are kept up to date.  

4.      Name your Shareholders

  Your Shareholders are anyone with a voting right in your company (at least one, can be yourself as director), maybe they have invested money into your property. As director you can also be a shareholder and will have voting rights along with the option to pay dividends. You will assign several shares to each shareholder, Ordinary shares - If it is just, you then you can just assign yourself all the shares with any percentage value of your choice for example 100 shares at 1% each or 1 share at 100% Alphabet Shares – These shares can be assigned different values. Some may give voting rights and others are just eligible to receive dividends. These probably won’t be needed if you are setting up your first investment company.

5.      Name people with significant control

  You will be asked to identify anyone with significant control of the business. So, this will be anyone who has either 25%+ of the shares and or 25%+ of the voting rights. Again, with your first property company this may just be yourself.  

6.      Choose SIC code

  When setting up a UK company, you need to identify the type of business though the use of a SIC code. As you are setting up a property investment company there are 2 SIC codes you will want to choose one of…  

• 68209 – Choose this if you are just buying a buy-to-let property for your portfolio to get the rental income.

 

• 68100 – Choose this if you are buying and selling/flipping properties

    You must pick the correct SIC code, if you do not then you won’t be able to apply or get mortgage for example. If you plan to do both the activities above, then you will likely need to setup two companies. One where your portfolio sits and another where you buy and refurb properties.  

7.      Read and sign your memorandum and articles of association

  These will be automatically generated with all the information you have already supplied. Just read agree and sign these.   This concludes the actual legal setup of a company and you are essentially legally able to invest in property through your company.   However, there are a few more steps to take to get yourself going…  

1.      Setup a company bank account

  Technically you don’t have to do this but if you don’t it will be an accounting nightmare for you or whoever does your accounting if you are using a bank account that you use for something esle. Just make sure all expenditure and income go through this account. You can pick any high street bank or an online bank account, many of which specialise in companies, for example TIDE.  

2.      Register with HMRC for Tax

  Once you have bought a property and start making a rental income you will need to be registered with HMRC for tax purposes. You can do this by clicking here.