Selling a property can be incredibly stressful, ranking among life’s top challenges. Recent research of 2,000 UK citizens reveals property transactions as one of the ten most stressful life events, alongside milestones like death, childbirth, and divorce.
The reasons are clear: administrative hassles, high fees, frustration, disruption, and lengthy processes. But there’s a better way – selling shares in your property company.
In this article, we’ll explore why selling shares in your buy-to-let company, benefits both seller and buyer.
The Buyer’s Benefit
Transparency in Financial History
When buyers opt for purchasing shares, they gain access to your company’s complete financial history, including its assets, liabilities, income, and expenditures.
This transparency offers a clear picture of the property’s historical valuation, rental income, and related expenses for repairs, maintenance, and property management services.
Such clarity reduces the risk of unexpected surprises during the process, providing buyers with greater confidence compared to a standard property sale. In an industry where 78% of investors have experienced purchases falling through and one in three UK property deals collapsing, this transparency is a valuable safeguard.
No Stamp Duty Land Tax (SDLT)
Opting for a share sale means buyers are exempt from the hefty Stamp Duty Land Tax (SDLT) liability, instead incurring a much lower rate of just 0.5%.
This significant savings can make your property a more enticing option. As a seller, you can leverage this advantage by potentially charging a slightly higher price for the shares, mutually benefiting both you and the buyer.
The Seller’s Benefits
Flexibility and Expanded Market
With a limited company, you have two options: selling the shares in your property or selling the property within the company. This opens a broader market, catering to property investors and traditional owner-occupiers alike.
Notably, four out of five investors are now utilising limited companies for buy-to-let investments, making share sales an increasingly common exit strategy. Share sales also provide greater flexibility for buyers purchasing in groups, eliminating complexities associated with varying deposit contributions.
Minimal Hassle
Selling shares in your company eliminates the need to extract funds and wind up the company, a process that often demands extra effort and incurs additional expenses like legal costs and accountant fees.
By opting for a share sale, you can promptly enjoy the proceeds from your sale while leaving the company’s management to the buyers.
Conclusion
Selling shares in your property company offers a streamlined and mutually beneficial alternative to traditional property sales. Both sellers and buyers stand to gain from the transparency, tax benefits, flexibility, and reduced hassle associated with share sales.
For a hassle-free property transaction in the UK, a skilled Property Accountant is a must. We’ll simplify tax matters, ensure financial transparency, and help you make the most of your investment.
We offer a FREE initial 15-minute discovery call! So, why not call us now?
