Buying the Company Instead of the Property
When you think about acquiring investment property, the obvious route is to buy the building itself. But there is another option that can sometimes be more efficient; buying the shares of the limited company that already owns the property.
This is known as a share purchase of property companies, and it can offer big advantages, particularly around stamp duty.
Why Consider a Share Purchase?
In a traditional purchase, stamp duty land tax (SDLT) is calculated on the price of the property itself. For larger or multiple properties, this can be a significant cost.
When you go down the route of a share purchase of property companies, you’re buying shares rather than the bricks and mortar. That means no SDLT is payable on the property transaction, potentially saving tens of thousands of pounds.
A Real-Life Example
Imagine a limited company owns a portfolio of residential flats worth £2 million. If you bought the properties directly, SDLT could easily run into six figures.
Instead, if you purchase the shares of the company, you effectively acquire the properties with no SDLT on the property value itself. The only tax payable may be stamp duty on the shares (at just 0.5%).
Want to explore other smart ways of structuring your purchase? Our Bridging Finance guide explains how flexible short-term funding can support property investors.
Things to Consider
While a share purchase of property companies can save on stamp duty, it also comes with tax, legal, and lending complexities. A share purchase can be a smart move, but it comes with additional layers of complexity:
- Due diligence: You are buying the whole company, not just its assets, so you take on all its liabilities too.
- Tax implications: Corporation tax, capital gains tax, and inheritance tax considerations all need professional advice.
- Legal process: Share purchase agreements and warranties are essential to protect you.
- Lender appetite: Not every lender is comfortable financing a share purchase; deals need structuring carefully. If you’re considering more traditional lending routes, check out our Buy-to-Let Mortgage options.
How GPS Financial Can Help
Every transaction is unique. Some lenders actively support share purchase of property companies finance, while others avoid it altogether. At GPS Financial, we know which lenders to approach and how to present your deal so it gets approved quickly and on the right terms.
Complex is our specialty. From unusual structures to high-value portfolios, we cut through the complexity and guide you step by step. Alongside your legal and tax advisers, we ensure the strategy really works for you. For more information on funding bigger projects, visit our Development Loans page.
FAQs About Share Purchases
Does a share purchase always reduce SDLT?
Yes, compared to buying the property outright, SDLT savings can be significant. Instead, you pay 0.5% stamp duty on the shares.
Are there risks in buying the company?
Yes. You inherit all the company’s history, liabilities, and obligations. Due diligence is vital.
Can I finance a share purchase with a mortgage?
Some lenders allow it, but not all. Specialist advice is needed to structure the deal.
Is this strategy only for big investors?
It is most common with larger property portfolios, but it can apply to single high-value properties too.
💡 Want quick figures before you commit? Try our Bridging Loan Calculator for an instant estimate in seconds.
Ready to Explore This Strategy?
If you are considering buying a property company rather than the property itself, you don’t need to figure it all out alone. Speak to our expert team today on 029 2267 7707 or visit www.gpsfinancial.co.uk to see how we can help.