I spoke with a lady today who said she is on the way to incorporating her property portfolio via a partnership. She said all was fine and underway but wanted to chat about it after a referral from a mortgage broker who said it looked like she needed some help.
There was a lot to unpack from the conversation and it’s not all for now but the key element is that if you pay for advice be sure to get it in writing. Now this doesn’t apply to everything every time of course but absolutely applies to big things.
This lady said she had set up an LLP over a year ago and would be submitting under the LLP this year. I asked for the name to find it on companies house. First red flag. It’s not on there. It should be if it is an LLP but isn’t. Does she even have an LLP? Time will tell.
I asked if she had worked with a solicitor and her lenders to actually put the properties in to the LLP and she said she had not as far as she is aware. She has paid £4,000 for a report on how to do the incorporation which she said might have included the legals. It won’t have I suspect. Her portfolio is £2-3m of property which would include a decent amount of legals. That’s not being done within a £4k budget that also seemingly sets out all of the steps she needs to follow as well as setting out the risks of getting it wrong.
When I told her £4,000 didn’t seem enough to have paid for the advice she needs she was confused. £4k is a lot of money! Sure! I agree! But the SDLT alone on this deal is a large six figure number that could drop in to charge if she takes a single misstep. Most firms don’t give advice on large deals for what works out at a day or two or charge max.
What does she need to do next? Well it’s not what you think. I recommended she ask for a copy of all of the original advice. After all anyone charging to help people to incorporate properties must have set out the steps. I suspect she advice will be light on a lot of areas. She might be almost starting again.
I’ve said before many times that paying for cheap advice is no good. £150 tax returns are expensive and you may as well do them yourself. The same feels true here. This £4,000 might turn out to be expensive if it’s essentially a copy and paste of a standard template.