More and more clients are looking at new and different tax efficient ways to manage their buy to let portfolios, including limited company ownership. Sometimes these company structures are more complicated, including when the purchasing limited company is in fact owned by another limited company – as known in the mortgage world as a layered structure. Why are we seeing more of these enquiries? Sales Director Jeni Browne explains…
A typical layered structure is where the borrowing company which owns the buy to let is owned 100% by another company. This company is in turn then owned 100% by our client - ie the SPV is a subsidiary of another company.
When are layered structures normally used?
You would normally find a layered structure where a client runs a business through a company and they want to acquire a buy to let with some of the funds they have built up. By setting up a new subsidiary (company) it means that the client can pass the cash reserves from their existing company, down into the new SPV without incurring a tax bill.
What do lenders think about layered structure ownership?
Lenders in the buy to let world have traditionally wanted to lend to a company which is owned by people, i.e. a flat structure. However, as this type of layered structure is becoming more widely used, lenders are thankfully opening up to the idea of layered ownership, and there are more and more lenders who will accept this ownership type.
What do Lenders usually look for?
Lenders who accept layered ownership generally look for the directors to be the same for each of the companies within the structure.
How much choice is there in the market?
We currently have 7 lenders who can accept layered ownership. Rates vary from lender to lender, but there are lenders at the lower end of the pricing scale, meaning that this isn’t necessarily a more expensive option. At the time of writing, rates start at 2.99%.
Is a layered company for me?
If you are the owner of a limited company and are looking at whether a layered company may be the best option for you, we firstly recommend that you take qualified tax advice.
When you are ready to look at financing options, give me a call on my direct line 01732 471 647 to talk through the options available for your circumstances, or email me firstname.lastname@example.org. Alternatively, you can request a call back at a time to suit you or call our expert team of advisers on 0345 345 6788.
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