An older landlord couple may be unable to access capital they accumulated over many years, despite owning valuable shares in a property company, a case study by Property118 suggests. The couple had sought to incorporate their property rental business with objectives including business continuity, simpler succession planning, and ensuring capital remained accessible for potential care needs.
The initial recommendation, developed through Property118 and Cotswold Barristers, aimed to achieve these goals through an integrated plan. This plan involved temporary finance to support the restructuring before incorporation, with the couple providing equivalent finance to their new company. The company would then owe this amount to the couple, preserving their access to capital.
However, following advice from another professional, the couple reportedly decided not to complete the part of the arrangement intended to preserve their access to capital. Property118 expresses concern that this decision may have left the couple owning shares in a property company without the straightforward creditor balances that would have allowed the company to repay substantial amounts to them.
Property118 highlights the distinction between owning shares in a valuable company and being owed money by it. A company is legally separate from its shareholders, and money can only be paid out through recognised legal and accounting routes, such as salary, dividends, or repayment of a genuine loan.