Dean Poster, Partner in Corporate, has commented in The Telegraph on the growing trend of property investors acquiring buy-to-let portfolios through limited company share purchases.
The article looks at the potential stamp duty savings, and the risks buyers should consider when taking over a company and its existing liabilities.
Dean commented: “When you’re buying a company, you’re buying the assets and all the liabilities, whether known or unknown, and that’s the issue.”
“Not only do you have the separate obligations of running a company, Companies House administration and filing accounts at the end of each year, there’s also all the contracts that the company has entered into and any litigation that may be ongoing when you take over the company, which remains liable as the corporate vehicle for that claim.”
He also discusses how warranties can help protect buyers, whilst stressing the importance of considering who is providing the warranty and their ability to meet a future claim.
“Like anything, a warranty is only as good as the person or company giving it. If the seller is a company and you need to make a claim, there’s a risk it may be insolvent. If it’s a person, there’s a risk they can’t be found or they are bankrupt. Your solicitor will look closely at the strength of the person or corporation giving that warranty.”
Read the article in full