Can the director of a family owned property holding company, live in a property owned by said company?

[Trooper149]

Hi all

So in short, my brother, Dad and I are looking to set up a family owned property holding company with myself as the director. As the title suggests, if I as a the director provides a personal gaurantee for a buy to live mortgage on a property, purchased through the Ltd company, would I be permitted to live in said property?

Dont want to go to far into the details, but it is just the case we want to create a property holding company, that each one of us can use to separate our personal assets from ourselves, and officially put together as a portfolio, but still minorly benefit from said assets. I myself travel alot and so while I dont live in my house often, I still personally require an address to receive post as well as a place to live during down time (usually a few weeks per year as I'm always on the move). Some might query "why bother with a ltd company", well besides always being away, my job is quite high risk, so a ltd company helps in separating my ownership of the property, though I still get to manage it through being director of the ltd company. Other benefits, is through letting rooms out to tenants via a ltd, we get the obvious tax benefits. Also by having the property owned via a ltd, it gives the shareholders certain rights. One right, we were going to right into the shareholder agreement, is "where a room in a property is vacant, family shareholders and stakeholders maintain the right to personally utilise the resources of said property in assuring the efficient running and management of assets of the company". My brother and Dad also travel alot around the country, and as shareholders with this right, they would be able to "dip" in to properties owned by the company as they travel.

Anyway, if there is any perspective or clarity anyone can offer on this, it would be most appreciated. Not sure if perhaps there is a specific model of Ltd company that can facilitate this, or an official process, but I want a structure that facilitates the following:
-places personal gaurantee of any mortgages taken out by the company on me (the director)
-allows shareholders and director (me) to benefit from the tangible resources of the property holding business i.e. registered address facility, rooms, etc
-allows rooms of properties purchased with a mortgage to be rented out
-separates my personal ownership of the company assets, but I maintain personal liability for them (in the form of debts), and also maintain strong control and management over said assets as director

Look forward to some replies
T

 

[Gyumri]

There nothing to stop a company owning property and allowing its directors or employees or whoever to live in it.

I would avoid giving personal guarantees for the company's borrowings and you haven't said how the shares will be allocated.

That's a matter for you and your family. Bear in mind that things need to be clear about the ownership of the company.

 

[WaveJumper]

I can understand why you are doing this however also bear in mind higher interest rates, definitely higher legal fees and of course accountant fees all need to be factored in.
And don’t forget to seek proper legal advice when writing up your shareholders agreement.

 

[Frank the Insurance guy]

In principal I do not see any reason why you cannot use or live in any of the properties owned by your ltd company.

As a director of the company you have certain duties including acting in the best interest of the company - if you were not living in the property I assume you would be charging rent? If you are living there you should also be paying rent (or if rent-free, this may be considered a Benefit in Kind - speak to your accountant).

 

[The Resolver]

As Gyumri says, a shareholder/director can, if agreed, live in company owned property. However, as Wavejumper says ,rules need to be set and agreed and included in a Shareholders Agreement (along with lots of other items to avoid the sort of problems regularly written about on UKBF - see my page here.) as well as (for completeness) a company Resolution.

First matter, however, to ensure if, as you sggest, you are to be the only director, is to not adopt the usual default Model Articles without having them adapted to allow for the fact that the company has only one Director. Following a recent court case, if you did not take this step all your decisions as Director, eg to approve shareholders having use of properties, would be invalid in law..

As Frank says , there are tax issues such as the person using a company house being taxed on a BiK. Also if you do not have another house, by puttting it in the nme of the company, you lose the Capital Gains Tax Relief when you sell at a profit. You refer to the objective being to avoid a risk, which I read to refer to a loss of life risk. Whilst your estate will not , therfore, include one house, it will include your shares in the company that owns all three houses.

Call me if you want to discuss in more detail

 

[The Byre]

There are two properties on our one-mile-long lane that are owned by Ltds and occasionally lived in by their true (non-dom) owners. They pay rent to the UK-based Ltd. and the Ltd. is owned by an off-shore holding company to avoid HMRC scrutiny and of course stamp duty in the case of a sale of the holding company. The largest of the two (370 acres) has a chain of companies in Gurnsey, the Bahamas and ending in Kuwait.

The UK Ltds are VAT registered, so repairs and ground equipment like tractors, mowers and diggers can have the VAT reimbursed. Rent is VAT free and seems to just about cover the running costs of these estates.

 

[tony84]

If the property is mortgaged using a Buy to let mortgage, then no you are not allowed to live in the property. It is still ultimately a BTL mortgage with just a tax layer in the middle.

If it is mortgage free, you are a director of the business and have a legal responsibility to do what is best for the business... Only you can decide what is best and whether anyone will be bothered if you are not doing what is best.