Can You Manage a FHL Mortgage Through a Limited Company?
THE QUESTION
Can I purchase a property in my name, using a Furnished Holiday Let (FHL) mortgage and THEN run the holiday let through my limited company?
THE ANSWER
You can purchase a property in either your personal or a limited company name using a Furnished Holiday Let (FHL) mortgage, they will lend to either. Your limited company can operate it and charge a management fee, typically 10%, but it cannot take all of the rental income. Your FHL lender will want to see that the residual income, less management fee, comes directly to you personally, as the owner of the property.
The Opco - Propco concept (operating company/proprietorial company) can be used, but you would need to structure it differently to what you suggest here's how:
Your limited company (Operating Company) would need to sign a commercial lease with the PropCo (in this case you personally) e.g. 5 years, it would also be responsible for the maintenance and upkeep of the property. This will allow it to keep all of the rental income received.
But
You are unlikely to be able to use this structure with an FHL mortgage, certainly not those at the cheaper end of the market, as it breaches their T&Cs. You will need to use a commercial mortgage.
Here is a video on my YouTube Channel discussing "The smartest way to grow your property portfolio"
You can learn more here:
- Contact Kevin Wright over on his Facebook page.
- Browse the Recycle Your Cash online training library by clicking here.
- Attend a 2023 Buy-Refurb-Refinance Summit Event - BRR Summit
