Everything You Need to Know About Buying Property Through a Company

 

If you’re new to investing in property, you might be confused about the different types of property you can invest in, and the various methods of buying property for investment purposes. Buying a second home to sell and buying a second property to rent out as a buy to let investment will both have a different property investment strategy. So, it’s always worth thinking about the route you’re going to take before buying property.

One of the most popular methods when buying a second property to rent out is to use a property company to help find the perfect investment. But what are the benefits of buying a house through a company, and is doing so the right choice for you? We’ve put together a guide to buying a property through a limited company, exploring the pros and cons of this strategy and offering some tips on how to get started with investing in an apartment or buying a house through a company. If this sounds helpful to you, keep reading to learn more.

 

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What Does Buying Property Through a Company Mean?

Buying property through a company can have different meanings. One meaning is when an investor considers buying property as a company after either joining or setting up a limited company of their own. The investor will then benefit from income tax and mortgage interest benefits due to owning the property under a company name, which is why this is a common option for those looking for tax relief. The alternative meaning for buying property through a company is when a solo investor purchases property in their own name from a company that sells a range of property investment opportunities.

If you’re buying property through a company in the latter sense, this means that instead of purchasing a property personally, you utilise the connections and resources of a property company such as RWinvest for your purchase. The property you buy for your investment will have been listed and sold by a property investment company, who will assist you with each stage of the purchasing process.

In this guide to buying property through a company, we’re going to discuss the latter option and talk through the benefits of buying property through a company who lists and sells buy to let opportunities, as well as the possible downsides to this strategy.

 

What Is a Property Investment Company?

A property investment company is a company that sources new and exciting property investment opportunities. The company will collaborate with property developers to offer investors the latest properties on the market, usually with below-market rates. Property investment companies will often help investors with their venture by recommending solicitors or property management companies, making the process easier and more efficient.

 

Do All Investors Buy Property Through a Company?

No, not every person who invests in property will do so by buying property through a property investment company. Many investors choose to purchase property more independently, perhaps by buying a property in an auction, and then fully managing every step of the investment process themselves. While this is a good option for many investors, those who buy property in this way can miss out on many benefits that come from buying property through a limited company.

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The Pros and Cons of Investing Through a Limited Company

As with most investment strategies, there are both pros and cons of buying property through a company. To help you get a better idea of whether or not investing through a limited company is right for you, take a look at the following points where we cover both the benefits of buying property through a company and the downsides.

 

The Benefits of Buying Property Through a Company

Buying Property Through a Company Offers Assured Rental Yields and Below Market Rates 

When buying property for an investment, high rental yields are one of the main things that investors look for. Without a high enough yield, you won’t be able to generate the type of rental profits and high rental property income needed for a lucrative investment. Not only do property companies help to find investment property opportunities with the highest yields, but they also tend to offer assured yields for a set period of time.

Assured rental yields mean that for the period stated (usually between one to two years), the investor will receive guaranteed rental profits. At RWinvest, many of our properties come with assured rental yields, giving our clients peace of mind that they’ll be able to generate some attractive returns. While you could get high rental yields from investing in property without buying a property through a limited company, these are not usually assured, so you’ll have less security in knowing the rental returns you should receive and could be at risk of your income falling.

Investors who choose to buy property through a company that sells properties with assured yields will also normally be offered discounted rates. This is because a lot of the time, investment companies will offer their investors off-plan properties, which is a property which hasn’t yet been completed. By investing in a property with below-market rates, you’ll not only be able to choose from a wider range of options that meet your budget, but you’ll also benefit from better returns. A good example of an off-plan investment that comes with a lot of potential is the Liverpool development, Parliament Square. This property is available to purchase from £104,950 and comes with net rental yields of 7%, along with boasting a prime location with a high likelihood of capital growth.

In 2020, property investors were able to take advantage of some of the best discounts and tax savings in recent years. Since the Covid-19 pandemic began, many people became concerned about the strength of the property market during this time, and property developers offered some exciting discounts and deals to try and attract investors. During the same period, a new stamp duty land tax holiday was announced which would allow those buying a house or rental property in England to make significant tax savings. From July 2020 to March 2021, buy to let investors are able to benefit from a lower rate of stamp duty tax due to tax bracket changes. By buying property through a company who work with property developers to secure the best deals and discounts, investors can take advantage of a winning combination of stamp duty tax savings, assured rental yields, and below-market value rates.

Buying a House Through a Company Is Less Time-Consuming

Whether you’re purchasing a property to live in or as an investment, buying property can be a long and time-consuming process. Right from the initial steps of property investment, such as researching the best locations and hunting for opportunities that meet your needs and budget, a lot of time can be spent on the investing process. When buying a property through a limited company, however, the process is made a lot easier and quicker.

So why is the process of buying property through a company easier? One reason is that investing with a company takes the hassle out of your property search. One visit to the website of your chosen property investment company, and you’ll be met with a choice of fantastic opportunities, complete with details of the investment and information about the property.

Property investment companies care about sourcing only the very best deals, so when buying property as a company, they’ll usually do extensive research into the development to ensure it has a lot of potential. Take RWinvest for example – we don’t bother with investments in low performing cities or areas, and instead pay attention to market trends and offer our clients a selection of properties in areas with emerging markets like Liverpool and Manchester, where opportunities are sure to bring in some of the highest rates of rental income.

As part of this process, the company will calculate rental yields for the property, meaning you won’t have to. The property investment company will also help manage any administrative elements of buy to let, such as dealing with solicitors on your behalf and helping to find you trusted property management companies if you prefer a more hands-off investment.

Buying a Property Through an Investment Company Helps You Build Confidence

If you’re a first-time investor and you’re looking for a way to launch your rental property portfolio, buying property through a limited company is a great first step. Because these companies are experienced in the property sector and able to guide you through each step of your investment, buying property in this way is a good opportunity to build confidence and knowledge.

By gaining support and guidance from a property investment company, investors can learn more about the investment process and what’s involved, and become more familiar with the property market as a whole. Those who have invested by buying a house through a company should also be better able to identify any bad opportunities, allowing them to build a strong and lucrative buy to let portfolio. Once investors are equipped with this know-how, they can choose to either continue purchasing properties with an investment company, look elsewhere, or even start buying property as a company of their own.

Investors who choose to buy property through a company will normally be offered discounted rates.

- Amy Jackson, RWinvest

The Cons of Buying a Property Through a Limited Company

Investing Through a Limited Company Offers Less Hands-on Experience

While the fact that buying property through a company is less time consuming can be viewed as a benefit by many, those who are seeking a more hands-on investment may be put off by this. Unless you opt for a hands-on investment and don’t use the help of a property management company, investing with a property investment company can seem restrictive for those who want to gain first-hand experience as a buy to let landlord. The fact that there are so many fantastic properties available to you when choosing to invest with a company also means that you don’t need to do long searches to find your ideal property, or have to spend time calculating rental yields personally – which some investors may prefer to do.

Of course, this is only considered a ‘con’ depending on your individual circumstances and investment goals. If you’re buying property as a way to build a lucrative portfolio alongside your regular commitments, then buying property through a company is the perfect option. On the other hand, if you’re leaning more towards buying property as a company of your own/setting up a company to buy property and want to search far and wide for the best deals while managing day to day landlord tasks, then you may prefer taking a more personal route to buying property.

 

Investing Through a Limited Company May Feel Limiting for Some

Those who choose to invest through a property company may find that they have a smaller choice of property types to invest in compared to those pursuing a more independent venture. Here at RWinvest, for instance, we specialise in off-plan residential and student properties, with a focus on apartments rather than houses. This is because we recognise the potential behind well-located apartments and their ability to attract high demand and strong yields. However, certain investors such as those who would prefer to purchase an HMO (Houses of Multiple Occupancy) investment, or simply those who want to buy a cheap house which they can renovate and sell, would be less likely to buy property through a company. Buying a house through a limited company is less likely as flats tend to be more popular, especially with investment companies that focus on city-centre locations.

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Is It Better to Buy Property Through a Company When Investing in Buy to Let Property?

While it is completely down to your own goals and preferences when investing in property, there are more benefits of buying property through a company than there are downsides. Buying property through a limited company that specialise in property investment allows investors to make savings on the amount they spend on the property through below-market rates, generate assured rental yields, and build up their confidence and knowledge on the buy to let sector.

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How to Decide Whether Buying Property Through a Company is Right for You

Assess Your Needs and Goals

Do you plan on being a hands-on investor and taking control of every aspect of the investment, from finding a property and hiring a solicitor to finding tenants and staying on top of landlord duties? Or are you a first-time investor who doesn’t have a lot of expert knowledge and experience in the property industry, but wants to earn income alongside their day to day commitments? The first step you should take to decide whether or not buying property through a company is the best option for you is to think about your own property investment needs. Think about whether you would benefit from the time-saving aspects of investing in property through a company, or whether you would prefer to make a more solo investment that’s more hands-on.

Do Your Research

Research is key, and spending some time reading up on property investment companies and analysing the different companies available to you is a good step to take in deciding whether investing through a limited company is right for you. You may also want to seek professional advice from a financial advisor, or speak to those who have experience buying property through a company to get a better sense of what’s involved.

 

Think About Your Budget

Every property investor needs to set themselves an investment budget, and by doing this, it may become more obvious whether or not you should be investing through a limited company. For instance, if you have a smaller budget for your investment, but you’re still looking to make the most attractive returns possible, then buying property through a company would make sense due to the below-market rates available.

Take some time to really plan out your budget, and be sure to factor in all possible costs including stamp duty land tax (STLD), capital gains tax (CGT), and mortgage repayments. If you’re unsure of the amount of tax you might need to pay, you could seek out professional advice to get a more accurate estimation. On top of any tax bills and repayments, you should also think about any extra fees you might need to pay. If you do decide that buying property through a limited company is right for you as you want to benefit from connections to top rental management companies, remember that you’ll need to pay a small fee to the property management company you work with.

How to Get Started With Buying Property Through a Limited Company

If you do decide to buy a property through a company, you should make sure that you select the best possible company to work with. This is why it’s crucial to research both the property investment company you’re looking to buy from, and the property developer behind the development. By reading reviews, looking at online press coverage, and learning more about the company structure, you can usually find out whether or not they’re experienced enough to facilitate a strong investment.

There are so many different investment opportunities to choose from that it can become overwhelming. Luckily, when buying property through a limited company that specialises in buy to let investment, searching for your investment can become much simpler. Here at RWinvest, we display all of our latest opportunities on our website, providing information and CGI imagery for each listing. However, even if browsing for buy to let opportunities online isn’t your forte, you can always give us a call instead and a member of our sales consultancy team will offer information on our best opportunities.

Once you’ve found a property you’re interested in, whether this is through browsing listings on a website or by recommendation, the next step in buying property through a company is to arrange a more in-depth call or meeting with the investment company. Doing this allows you to ask any further questions and view the property site or a showroom if possible. Here at RWinvest, we have a showroom based in our Liverpool offices, along with a VR headset which allows ‘virtual viewings’ of many of our projects. If you’re unable to visit our offices or take a real-life tour due to Covid-19 restrictions, we also offer virtual tours and meetings for all current and future clients.

1. Research Companies

If you do decide to buy a property through a company, you should make sure that you select the best possible company to work with. This is why it’s crucial to research both the property investment company you’re looking to buy from, and the property developer behind the development. By reading reviews, looking at online press coverage, and learning more about the company structure, you can usually find out whether or not they’re experienced enough to facilitate a strong investment.

2. Find the Best Investment Opportunities

There are so many different investment opportunities to choose from that it can become overwhelming. Luckily, when buying property through a limited company that specialises in buy to let investment, searching for your investment can become much simpler. Here at RWinvest, we display all of our latest opportunities on our website, providing information and CGI imagery for each listing. However, even if browsing for buy to let opportunities online isn’t your forte, you can always give us a call instead and a member of our sales consultancy team will offer information on our best opportunities.

3. Arrange a Call/Meeting

Once you’ve found a property you’re interested in, whether this is through browsing listings on a website or by recommendation, the next step in buying property through a company is to arrange a more in-depth call or meeting with the investment company. Doing this allows you to ask any further questions and view the property site or a showroom if possible. Here at RWinvest, we have a showroom based in our Liverpool offices, along with a VR headset which allows ‘virtual viewings’ of many of our projects. If you’re unable to visit our offices or take a real-life tour due to Covid-19 restrictions, we also offer virtual tours and meetings for all current and future clients.

Are You Interested in Buying Property Through a Company? Choose RWinvest

If you’re keen to begin your investor journey and interested in buying property through a company, get in touch with RWinvest. We’re a limited company that specialises in finding investors the best buy to let opportunities on the market today. With registered office headquarters in Liverpool, Manchester, and London, we work hard to bring our clients high-quality properties in key UK cities, while identifying the best investment deals and below-market discounts available.

For anyone wondering how to get into property, we can guide you through the process of building a lucrative property portfolio with our wide range of off-plan developments. Take a look at our latest student and residential property developments to find your perfect opportunity today.

 

Disclaimer:

Our guide to buying property through a company is offered as guidance and should not be considered investment advice. For professional advice on things such as taxes, interest rates, mortgage applications and more, readers may wish to speak to experts such as a financial advisor or mortgage broker.

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