Should I Buy and Own a Property Through a Limited Company?

We are asked this question a lot by our clients. For some people it's a great choice; for others it's more complicated. The process of setting up a company which then owns a property is relatively straightforward, but it can have some unexpected implications. Buying or selling a property through a company that owns it (the property) can be more complicated than a normal property sale, but with guidance from an experienced solicitor, any potential pitfalls can be avoided and risks minimised.

Many people are not used to how companies work and can have a number of questions around what issues they need to think about. Here are some of the things we get asked.

FAQs

Do I need a lawyer to set a company up? No, not to create a company. If, however, you want to bespoke the constitution documents (Articles of Association), or if you have multiple shareholders then you might need a shareholders agreement which a solicitor can help you prepare.

If I am buying or selling a property out of a company structure do I need a lawyer? Yes, you need either a solicitor, regulated by the Solicitors Regulatory Authority (SRA), or a licenced conveyancer. If you are proposing to buy or sell the shares of a company itself then a solicitor who specialises in company law should be involved.

Do I have to hold company meetings? No, a company doesn’t have to hold a meeting especially if it’s a sole shareholder and sole director company. But it should make a record of any decisions it takes and any authorities it grants, for example the decision to purchase or let the property and who is authorised to sign documents. These records are usually in the form of a (board) meeting minute or resolution.

Do I need a shareholders agreement? Only if there is going to be more than one shareholder. Sometimes for simple companies, any issues can be regulated by their Articles of Association. But sometimes, for more complicated arrangements, multiple shareholders might be better served with a shareholders agreement and bespoke Articles of Association.

Do I need an accountant? Not always. If the company is an investment company then there may not be any trade or accounts to deal with. However, you will still have statutory accounts to file tax returns and companies house filings, which are legal requirements and an accountant can help you with that.

Do I need to be VAT registered? A business needs to register for VAT when it has “sales” over £90,000. That said, for a company that only charges rent on residential properties, then VAT shouldn’t apply. If the company owns commercial property, the position may vary from property to property.

Do I need insurance? It's a good idea. Directors and Officers insurance can give peace of mind and valuable cover if, for any reason, the Company or its Director(s) have to defend themselves against a legal claim.

Am I personally liable as a Director? No, not usually. However, a director does have to make sure they follow the rules, including making sure the company doesn’t trade insolvent. Which if it did, could then expose a Director personally.

Is it expensive to run a company? There are costs. You need to pay the filing charges at Companies House of £50 per year.  Plus, you may have to pay an accountant to help you with your accounts. If you have made a profit, then there will be tax to pay.

How is a company taxed? Corporation Tax is charged on profits, currently around 19-25%. This can be less than an individual's tax costs on a similar amount of income, which is one reason property companies are attractive.

Are there different Stamp Duty Land Tax rates applicable? Yes, companies pay at different rates to individuals. However, above a certain amount for investment properties individuals and companies may end up paying the same or similar amounts. Also the tax on purchasing company shares is 0.5% which is much lower than the Stamp Duty Land Tax on property.

Can I offset my mortgage against rent in a Company? This is currently one of the major benefits of owning a property through a company. Companies can offset mortgage interest payments against income, which brings down profits. Individuals cannot do this (anymore).

Can I gift the shares to my children? Yes, this is possible as part of overall estate planning for a family.

Can I move other properties into the limited company? Yes, once the company is set up properties can be moved into a company structure also known as “enveloping”. There might be some tax charges for example SDLT or Capital Gains Tax. Sometimes exemptions apply, for example if a transfer of a property is between group companies in a group structure. So worth checking what the tax consequences might be before proceeding.

Why are some properties held in offshore companies? This can be for a number of reasons. For a long time, it was seen as a useful way of maintaining privacy, as a number of jurisdictions were very secretive about what information they gave out on share ownership. This advantage has been impacted by recent law changes (see below). For some owners who have properties in multiple jurisdictions or perhaps are themselves not UK tax residents then keeping the overall ownership of a property “offshore” can be an advantage.

Is an offshore company right for me? It would very much depend on your personal circumstances, both on where you live day to day, the property and on your current financial arrangements.

Are there any downsides? There are always some risks, for example if you forget to file your Companies House paperwork or your tax return, there are penalties. Not all lenders like lending to companies and prefer individual borrowers, so you may have a smaller pool of lenders for a property. Also, extracting monies from a company can be more complicated, which means that a company structure isn’t right for everyone.

Recent Law changes affecting Companies and Property Ownership - OEs and Directors Transparency

Economic Crime (Transparency and Enforcement) Act 2022 introduced the register of Overseas Entities (OEs). This legislation requires Companies who own property in the UK to register themselves and their interests. They do this by making an application to Companies House. They have to explain and confirm the identity of the person who is the Ultimate Beneficial Owner of a Company, also known as a UBO. The company is then given an OE Registration Number, which is similar to a company’s registration number, with the prefix “OE”. The register then states the name of the Company, its jurisdiction and its UBO. Failure to obtain a suitable registration number is a criminal offence. The purpose of the Act is to promote transparency so it's clear who ultimately owns a property. If the OE wants to sell its property then the buyer will require to see a valid registration number before proceeding with the purchase.

Economic Crime and Corporate Transparency Act 2023 introduced the concept of directors and persons with significant control (PSCs) verifying their identities. Since November 2025 a rolling programme of verification has started. That process should come to a completion in November 2026 by which time all directors and PSCs should have verified their identity with Companies House. This can be done directly or via an agent for example a firm of solicitors (recognised by Companies House as an approved agent). This legislation aims to make sure that all records about Companies are up to date and those that are registered as directors or PSCs are who they say they are.

Both pieces of legislation are part of a drive to reduce fraud and exposure to criminal activity. At the time of writing, there is little in the way of reported or contested cases, but there is evidence to suggest that there have been prosecutions for failure to comply with the rules.

Guidance

Overall for certain people, owning or buying a property through limited company structure may be suitable.  Much depends on an individual's personal circumstances and what they plan to do with the property after they buy it.

Please let us know if there is anything we can help you with in relation to the above.

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