![]() ![]() Although the limited liability element sounds like a no-brainer, in reality it can mean that guarantees have to be arranged for additional funding as well as the possibility of double taxation at the company (or corporation tax) level and the individual (or income tax) level. Chief among these are the twin burdens of enhanced reporting and compliance, which add to the amount of admin and cost incurred by the partners. There are some downsides to this type of arrangement, however. ![]() This offers flexibility in terms of income streams from the development. From an exit strategy perspective, the company can be sold when the development is complete by selling the shares as well as the assets. Liability is usually directly proportionate to the amount of share capital per partner, and the company itself can own assets. When you set up this type of structure, there are clear governance lines and agreed objectives for your development. It allows the development itself to be made into a limited company with the partners/investors becoming shareholders of this company. This is the most commonly used structure in the UK without question. You may hear this type of arrangement being referred to as a Special Purpose Vehicle (SPV) or a JV company. They will likely take more of a back seat and let you run the project. In this instance you’ll be partnering with someone who has more financial means/backing than you do and so will invest a bigger stake. In this instance you’d be providing the capital for a firm to do all of the work from design to handover this is a more hands off approach, which will likely limit your bottom line the most. Using an experienced property development firm. ![]() You may choose to partner up with an architect for design purposes or a builder for practical construction expertise (these are just two examples). In this type of joint venture you are entering into a partnership with someone who can add technical or practical skills and knowhow to the project to complement your financial investment (and/or other skills). A joint venture with a “skilled partner”.You spread the risk, but you also increase the amount of capital that you have to invest in your chosen development. This business partner might be a family member, a friend or a colleague from work, but whoever it is, you all invest on an equal basis and retain equal voting rights. A joint venture with a business partner. ![]()
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