One of Britain’s biggest private landlords is encouraging others to follow his lead by shifting property from their own name into a company structure.

In what is thought to be the country’s largest ever mortgage transaction, Alastair Kerr (pictured) has transferred ownership of his 330 rental homes in west London, saving him more than £10m in tax and mortgage interest.

Kerr had to re-mortgage his properties on a single day to take advantage of incorporation relief rules, or face a capital gains tax bill for tens of millions of pounds.

It was a move that should also save him more than £1m in mortgage interest in the next five years, according to SPF Private Clients, which arranged the transaction.

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Stamp duty saving

Stamp duty was still payable, albeit at a much lower rate thanks to the current tax break. As he completed before the 31st March deadline, he paid tax on just the amount over £500,000 for each applicable property, plus the three percentage point surcharge.

Landlords are often criticised for owning properties that could otherwise house first-time buyers, but Kerr blames mortgage lenders for their woes.

“The market is tilted against them,” he tells The Telegraph. “In London you’ll have people comfortably paying £1,500 a month in rent but then the bank will say they can only afford a mortgage with £600 repayments. It’s quite clear that people can afford more than that.”

As well as urging landlords to re-examine their business, Kerr advises them to always have a plan B and to have enough time set aside to complete a purchase.

“Some transactions can take much longer than expected. You might think it’ll all be sorted in two or three months but you should set aside six,” he adds.

Read more about tax and limited companies.

8 COMMENTS

  1. “Landlords are often criticised for owning properties that could otherwise house first-time buyers, but Kerr blames mortgage lenders for their woes.

    “The market is tilted against them,” he tells The Telegraph. “In London you’ll have people comfortably paying £1,500 a month in rent but then the bank will say they can only afford a mortgage with £600 repayments. It’s quite clear that people can afford more than that.””

    I completely agree. It’s very frustrating for tenants who want to get on the property ladder and can prove they can afford a rent which is more than a mortgage plus ongoing property repairs would be.

  2. The guy has 330 properties so not your average LL with 1 or 2 properties for letting.

    He encourages others to follow his lead, admitting that the current SD holiday played an important part in his financial decision – something about to be taken away so not much use at all linking it to a shift to LTD Co ownership status.

    Interestingly, AFTER he has re-mortgaged his properties, he slams mortgage lenders lol – wonder why he wasn’t so brave beforehand.

    Sorry, but the last thing the average LL needs is another LL with 330 properties in the media telling the World how amazing he is with his business acumen.

    WE (the majority of 1-2 property LLs) need Government to listen to our plight and not be swayed by the language coming from extremely rich multi-property LLs.

    • 100% agree!! Overall tax saving for a small Landlord, of say 2 or 3 properties is minimal, if you take into account the cost of incorporation etc. I have spoken to a couple of accountants and their general comment is when you cross the 4 properties line its worth considering. If you reason is inheritance tax, that may change.

  3. Since the sub prime fiasco banks now have to factor in possible future interest rises when deciding if a potential buyer is an acceptable risk. As rates are so low now even a small rise will be a big problem for many that can at the moment afford a mortgage.
    Any issue of landlords owning properties that first time buyers could’ve bought is such a non argument – many people choose to rent or can’t buy because of work or lower earnings & so a rental market is of course required. Some people it seems want only the wealthier people who can buy a house to have a decent life, yet those that can’t or don’t want to buy should be allowed to live in a property too & so rent.
    Massive annual population increases and divorces are the only issues here. No one wants to address the real problem though do they? So lets all blame the only people who are putting money, time & effort into properties – landlords.
    Lets face it, it’s mainly landlords that ere putting money & effort to save the planet by getting older properties to a higher EPC rating. Those who own their homes are not required to are they?

    • Quite. We are continually told that we have a ‘housing crisis’ when we actually have a population crisis. But it frightens people to address something that fundamental, so they put the blame elsewhere. However, denial won’t go on forever (there won’t be a forever, anyway!) and already more and more people are realising that exponential population increase over the entire planet is not healthy.
      I’ve lost count of the money that we have spent renovating flats in a Victorian building that were trashed by awful tenants, over the past three years, directing virtually all our usual income from self-employed housekeeping into the work, only to find that has left us with what appears to be tiny profits each year, hence the SEISS grants that were supposed to replace most of the income lost due to coronavirus restrictions which severely impacted our housekeeping work, and which are calculated on profit, not income (yet another discrimination against the self-employed) were so small as to be laughable. I’m still not sure if we can get out of this mess the right way up, but we can but try. Add the cost of EICRs and new EPCs, and whatever the government thinks up next, and we might as well just stand in the street and throw money at passersby. I am increasingly disillusioned with Britain. It has rotten weather as well.

  4. This LL is an idiot.
    It simply isn’t worth incorporating if you are already a sole trader.
    Best thing to do is deleverage to reduce S24 effects.
    Some LL up North with low value properties might consider it worthwhile to incorporate.

    That might mean selling a property.
    Best one to sell is the one that might need extensive EPC works.

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