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The Client’s Situation
My client approached me looking to buy a Special Purpose Vehicle (SPV) company through a Share Purchase Agreement (SPA). The company owned a single investment property (HMO with a separate basement flat on one freehold title) and my client wanted to buy the company rather than the property itself. This approach meant they could benefit from the stamp duty savings that come with purchasing shares in a company instead of paying full Stamp Duty Land Tax (SDLT) on a property purchase.
What is a Share Purchase Agreement (SPA)?
A Share Purchase Agreement is a transaction where an investor buys the shares of an SPV Limited Company that owns properties rather than purchasing the properties themselves. In this case, the investor effectively acquires ownership of the company.
For Property Investors, the main benefit of structuring a purchase this way is the following:
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Significant Stamp Duty Savings: As Stamp Duty Land Tax (SDLT) is not charged on the underlying property but on the transfer of company shares, investors can often achieve substantial savings.
How it works:
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Rate: Stamp Duty on shares is charged at 0.5% of the total consideration (purchase price) for the shares.
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Threshold: There’s no nil-rate threshold – the 0.5% applies from the first pound.
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The Challenge
At present, there aren’t many specialist lenders willing to accept share purchase agreements so options are naturally limited. Finding a lender that could also lend on a more complex property type – in this case, an HMO with a basement flat was also something that needed consideration.
We needed a lender who understood both the share purchase structure and the property type, which meant a tailored approach was essential.
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Our Solution
Using our network of specialist lenders, we managed to secure a competitive 2-year fixed rate from a lender experienced in SPV share purchases.
After the two year fixed period has ended, my client will be able to refinance onto a regular mortgage, as by then it will be a standard refinance rather than a share purchase, which could mean even lower rates in the not so distant future.
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The Result
The transaction successfully completed via a Share Purchase Agreement, enabling the client to save £62,675 in Stamp Duty Land Tax (SDLT) compared to purchasing the property itself.
By structuring the deal in this way and securing the right lending partner, we helped the client achieve a substantial tax saving and a smooth completion on a complex acquisition.
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Client Feedback
“Megan was very efficient and helpful in a share purchase for me.”
How can Advocate Finance help?
We have the expertise and access to lenders who specialise in Share Purchases. We can provide tailored advice for your individual needs.
We provide a FREE assessment on all our services.
Please contact me directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.
