How to set up a limited company for property investment

You’ve decided that a limited company is the right choice for your property business. What’s next? Below, we’ve outlined the steps involved to set up a new SPV for property investment.

Incorporating your limited company

Before you can start building your property portfolio, you’ll need to incorporate a limited company. For property investors, this involves registering a limited company with Companies House and registering for taxes with HMRC.

Here at Provestor, we will manage the incorporation of your property investment company for you. Other practical considerations should be taken into account, such as opening new bank accounts in the company’s name and ensuring you have the right insurance in place.

Portfolio start-up services

If you're entering the property investment market for the first time, we're here to help. We'll provide you with options for structuring your property portfolio, and we'll turn your plans into action. If needed, our team can incorporate a property investment company, and register it with Companies House and HMRC.

Find out more about how we help start-ups

A step-by-step guide to registering your company with Companies House

Company name

Often, this is the hardest part of starting your company - deciding on a name. Many Provestor customers use their name or, if incorporating with a partner, a combination of both names. Many often include the word ‘property’ in the company name.

Once you have a name idea, the next stage is to check that your chosen name is available. This is an essential part of selecting an appropriate company name, as Companies House and the Intellectual Property Office will reject names that are already in use or are too similar to existing registered names.

  • Companies House provides a WebCheck service to search against names in use.

  • The IPO has a similar tool to check against all registered trademarks in the UK.

Registered address

This can either be your home address or a registered office address via a paid for service or provided by your accountant. At this stage, consider your feelings around privacy. Remember that your company's registered office details will be freely available in the public domain: they appear on all official correspondence; they must be present on all letters, invoices and contracts; plus they are available on all company entries held with Companies House and other bodies.

If you decide you do want additional privacy or if you cannot register your company at home, a registered office service is invaluable. This is a service most accountants offer for a nominal fee which covers managing your statutory obligations such as maintaining registers and notifying Companies House of any changes. At Provestor, a registered office service is included our Growth Advisor package.

Director(s)

You will need to name at least one company director when setting up your company.

While being a director is a great feeling and experience, it does carry responsibilities. Directors are responsible for meeting legal requirements and keeping the annual accounts up to date. Whilst it’s likely you’ll ask an accountant to support you with much of this, you still need to ensure that you have adequate oversight as you are the one legally responsible. When borrowing money through a limited company, a lender will typically take a “personal guarantee” from each company director. This means, should the company not be able to pay its debts, the directors will personally pay them. For example, should your company fall behind on mortgage repayments, the bank will ask the directors to make repayments personally.

Shareholder(s)

You need to appoint at least one shareholder, who can also be a director.

A shareholder is someone who owns shares in a company. This usually means they have voting rights and influence over the running of the company. Shareholders are paid dividends based on the number of shares they hold. It’s a crucial part of ensuring your business is running as tax-efficiently as possible, so you need to set up a distribution of company shares that works for you. It’s common for spouses, and even children, to be shareholders and receive a share of the company’s profits.

Types of share structure for property companies

Ordinary shares

  • Ordinary shares are the most common type of shares used and represent proportional ownership of a company. Each share gives its owner one vote per share.

Alphabet shares

  • Alphabet shares allow a company to assign shares with different classes (identifiable by a letter), for example to pay different dividends or to give certain shareholders decision-making powers.

Identify people with significant control of the company

When incorporating your company, Companies House requires details about people who own or control your company. A person with significant control is anyone with:

  • more than 25% of the shares

  • more than 25% of the voting rights

  • the right to appoint or remove the majority of the board of directors

Check the SIC code

There are two potential standard industrial classification (SIC) codes when incorporating a property company:

  • If you are buying and letting (aka, buy-to-let, portfolio investment), use the SIC code 68100

  • If you are buying and selling (aka, flipping or trading property), use the SIC code 68209

It’s important to select the right SIC code for your business activities, particularly if you are planning to apply for a buy-to-let mortgage.

Memorandum and articles of association

When registering your company online, a memorandum of association is automatically created - this is a legal statement signed by all initial shareholders agreeing to form the company.

‘Articles of association’ are rules about how the company will be run which are agreed by the shareholders, directors and company secretary. You can either write your own or use standard articles, which tend to be ok for very basic portfolios. We recommend using a specialist to get this right - particularly for more complex portfolios or those looking to grow quickly - which is why we include this as standard in our Growth Advisor package.

After you’ve set up your company

Record keeping

It’s important to keep a record of the following:

  • Minutes of the first board meeting

  • Certificate of incorporation

  • Share certificates

At Provestor, we handle all of this for you so it doesn’t get lost among the mountain of paperwork that comes with property ownership. We upload all of your company documents and meeting minutes to the document store in our software, for you to access whenever you need it.

Set up a business bank account

The process for setting up a business company bank account may vary slightly between banks but the general requirements are:

  • Complete a ‘Company Bank Account’ application form

  • Present your company’s ‘Certificate of Incorporation’ and ‘Memorandum of Articles and Association’

  • Present Proof of Identity

  • Present ‘Director’ and ‘Company Secretary

Provestor is one of a handful of accountancy services authorised and regulated by the Financial Conduct Authority (FCA) to connect directly to banks to download transaction data. We've passed the FCA's stringent requirements to securely connect to banks and store your data.

Register for taxes with HMRC

Once you’ve started trading (bought your first property) you’ll need to register your company for taxes with HMRC.

Start your property portfolio with confidence

We specialise in the start-up and management of property businesses - including buy-to-let, holiday lets and trading companies. As HMRC and Companies House authorised agents, we can manage the whole tax registration process, and we can even help you open a business bank account. You'll save time (and hassle), meaning you can focus on making a successful offer on your first property.

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