Turkish Family Companies and London Property Investment

"I have a company in Turkey. Can I buy London property in its name?"

Short answer: not directly — but with the right structure, yes.

This guide explains how Turkish family businesses typically structure London property investments.

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Why a Turkish Company Is Not Used Directly

Registering UK property in a Turkish entity is theoretically possible. In practice it creates serious friction:

1. AML burden: The English solicitor must verify the Turkish company's ownership, income, and entire flow of funds — slow and costly
2. Mortgage access: UK lenders rarely lend to foreign companies, or only at punitive rates
3. Tax complexity: Dual reporting obligations in Turkey and the UK
4. Exit difficulty: The buyer pool narrows when you sell

Solution: Incorporate a separate UK company — an SPV (Special Purpose Vehicle).

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UK SPV Structure

An SPV is a UK limited company established solely for a property investment.

Setup Process

• Online incorporation via Companies House in 24–48 hours
• Cost: £12–£50 (government fee)
• Agent or accountant service: £100–£300 if outsourced
• Director: can be a Turkish investor; UK residence is not required

Required Documents

• Director's passport
• Registered address in England (virtual office addresses are accepted)
• UBO (Ultimate Beneficial Owner) declaration

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Family Company Model: Turkey + UK Combination

A common structure for Turkish family businesses:

Turkish Family Company (Turkey)
         ↓
   UK SPV Ltd
         ↓
   London Property

In this structure:

• The Turkish company lends to or invests in the UK SPV
• The property is held in the SPV's name
• Rental income flows through the SPV; Corporation Tax is paid
• Profits are distributed to the Turkish company or directly to shareholders

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Planning Shares for Children

A widely used IHT (Inheritance Tax) strategy:

1. Allocate SPV shares to children from incorporation
2. Register children as shareholders gradually
3. After the seven-year rule, share transfers can fall outside IHT
4. Transfer company shares rather than the property itself — avoiding SDLT (Stamp Duty Land Tax)

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Shareholder Loan Structure

When one or more partners inject cash into the SPV, the injection is recorded as a shareholder loan (director's loan / shareholder loan).

Benefits:

• The lender can demand repayment at nil or market interest
• Loan repayment can precede dividends — often more tax-efficient
• External funding into the company is cleanly documented

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Annual Company Obligations

While the UK SPV remains active:

| Obligation | Frequency | Estimated Cost | |---|---|---| | Confirmation statement | Annual | £13 (government fee) | | Annual accounts | Annual | £500–£2,000 (accountant) | | Corporation Tax return | Annual | Included with accountant | | PAYE / payroll | If employees | Via accountant | | Companies House updates | As required | £13 government fee |

Total annual administration for a simple SPV: approximately £1,000–£3,000.

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Points to Watch

1. Substance rules: You may need to show the SPV is not a hollow shell — especially for treaty purposes
2. Transfer pricing: Financing between the Turkish company and SPV must be at arm's length
3. Double taxation: Credit for UK tax in Turkey must be coordinated with your Turkish tax adviser
4. AML transparency: UBO and shareholder information must be registered and current in both jurisdictions

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Summary: Why This Structure Works

| Objective | Turkish Company Direct | UK SPV | |---|---|---| | Mortgage access | ❌ Difficult | ✅ Possible | | AML simplicity | ❌ Complex | ✅ Standard | | IHT planning | ❌ Limited | ✅ Flexible | | Share transfer / succession | ❌ Difficult | ✅ Straightforward | | Tax optimisation | ⚠️ Limited | ✅ Strong |

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Family company structures and SPV setup:
+44 7990 38 1102 | investinlondon.com.tr