At Gilson Gray, we understand the complexities and challenges that come with owning and managing short term let properties. As a provider of corporate and licensing services, we recognise the benefits that can arise from incorporating a short term let property business into a company.
In this blog post, we will explore the numerous advantages of incorporation from the viewpoint of short term let property owners, and why this is worth considering.
Transfer Of Short Term Let Licences
One of the most significant benefits of incorporating your short term let business is that it allows the operator to ‘transfer’ any short term let licences. Most Council Authorities do not allow for the transfer of a licence from one operator to another, which is an impediment if you wish to sell or transfer the ownership of a short term let property. The holder of a licence/business can be changed by altering the directors or shareholders of the company.
This provides property owners with the flexibility to change ownership of their property/business and the licence to another party without the buyers having to go through the time-consuming, costly, and complex process of obtaining a new licence. This makes it easier for property owners to exit the market or transfer ownership to another party. This is beneficial for those looking to sell their properties and business in the future, or to plan for succession.
Limited Liability Protection
Incorporating a short-term let business into a corporate entity affords the property owner with limited liability protection, which is a critical aspect in today’s business world. This means that property/business owners are only responsible for the debts and obligations of the company up to the amount they have invested in it, providing a safeguard for their personal assets in the event of legal disputes. The implementation of limited liability protection is useful in mitigating the risks for short term let property owners.
Alongside limited liability protection, incorporating a short-term rental property into a corporate entity can also yield tax benefits. Companies may benefit from reduced tax rates on profits, and property owners can avail themselves of tax deductions for the expenses incurred in managing their property. Moreover, profits can be distributed to shareholders through dividends which can be more tax-efficient than wages, thereby optimizing returns on investment. We cannot provide tax advice, and would recommend speaking to an accountant or a tax advisor for further information.
Holding a short term let licence in a company can also improve the credibility of your property, which is essential in the short term rental market. Incorporating your property business demonstrates to potential renters and partners that you are a professional and well-organized property owner, which can help attract more renters and increase rental income.
Our team of experienced corporate and licensing lawyers can guide you through the process and ensure that everything is in order. Incorporating your short term let business into a company offers numerous benefits that can help business owners navigate the complexities of the short term rental market.
From the transfer of short term let licences to limited liability protection, tax advantages, and improved credibility, incorporating your property is a smart move for business owners who aim to maximize their returns and minimize their risks.
About the Author - Craig Darling is a partner and Gilson Gray, a legal firm that has the expertise and experience to help you develop a succession plan that meets your specific needs and ensures the continuity of your business. Contact them today to learn more by email to firstname.lastname@example.org