Do we need Limited Liability?

Do we need Limited Liability?

0:01 AM, 17th September 2024, About 17 hours ago 4

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We have recently heard that landlords should set themselves up as a Limited Liability Partnership in case they should ever have someone claim against them, which could lead to bankruptcy and we would lose everything we have?

While we have landlord insurance and maintain our properties well, there is always the risk that if a tenant was seriously injured and claimed against us, (where the insurance company refused the claim), we could lose everything.

Are we worrying unnecessarily?

We have looked at the requirements to have a limited liability partnership which don’t seem to be too difficult to set up and run.

Any advice would be greatly appreciated.

Thank you

Highland Lass


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Mark Alexander - Founder of Property118

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9:12 AM, 17th September 2024, About 8 hours ago

Your concerns are valid because it is logical to separate your business from your private life wherever possible. This can also be done using a Limited Company, but the transition from personal ownership to a company has many more considerations, in particular CGT and Stamp Duty.

One possible downside to an LLP is that you require at least two designated members. A limited Company only requires one Director and shareholder. Also, the members of LLP remain exposed to Section 24 restrictions on finance cost relief, whereas Limited Companies do not.

If you're buying further properties, in most cases a Limited Company is the best way to go, ideally a Family Investment Company structure for maximum flexibility, tax efficiency and opportunities for legacy planning.

It is easy to set up an LLP or a Limited Company, you can do it online yourself for less than £100. However, whilst the cheap 'cookie cutter' approach is probably better than nothing, the structure will not be tailored to your circumstances. Think of your ownership structure as the foundations of your business. It pays to build on solid foundations that are sufficiently robust to withstand the potential for expansion. Rectification if/when you begin to discover problems is bound to be far more costly.

JB

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13:39 PM, 17th September 2024, About 4 hours ago

What insurance should a limited company have?

Mark Alexander - Founder of Property118

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13:44 PM, 17th September 2024, About 4 hours ago

Reply to the comment left by JB at 17/09/2024 - 13:39
Are you able to be more specific or was it intended as a general question unrelated to this discussion thread?

JB

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15:24 PM, 17th September 2024, About 2 hours ago

Reply to the comment left by Mark Alexander - Founder of Property118 at 17/09/2024 - 13:44
What additional insurance should a limited company which owns and let's property have? ie in addition to buildings insurance and liability insurance (often attached to contents insurance) for each property

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