Asset purchase vs corporate property purchases: Key advantages, risks and how Freeths supports a successful transaction
In today’s commercial real estate market, many high value properties are held in special purpose vehicles (SPVs), companies established for the sole purpose of holding an asset and which may be domiciled in the UK or overseas jurisdictions. This can offer various options for structuring property transactions, including:
- A share sale: Buying the shares in the SPV that owns the property
- An asset sale: Buying the property itself (and any related rights or assets)
The appropriate structure should be agreed between the buyer and seller at the outset of a transaction and each have their own commercial, tax and legal considerations. A corporate (share) purchase can offer attractive savings, it must be viewed as two separate but parallel transactions – one of the company and one of the asset, while involving risks that would not ordinarily be relevant for an asset level transaction and which require careful negotiation and structuring.
Asset transactions usually involve lesser professional fees and may be faster to complete but remove the benefit of any prior tax planning that may have been put in place.
Freeths regularly advises investors, developers and funders on asset and corporate wrapper transactions. Below, we outline the benefits and drawbacks of both a corporate wrapper and an asset transaction and how the Freeths Real Estate team delivers the protection and clarity needed to ensure a seamless transaction.
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Why consider a corporate property purchase?
- A major attraction of acquiring shares rather than the underlying asset is the potential for favourable tax treatment. Share sales typically fall outside the scope of VAT, and depending on the structure, may offer SDLT savings
- Our tax and corporate teams work together to model available tax outcomes and ensure the structure is optimised from the outset
Because the property owning entity remains unchanged, operational arrangements can continue seamlessly, including:
- Occupational leases
- Service and maintenance contracts
- Warranties and ongoing supplier arrangements
There is no need to assign or novate contracts: the buyer steps directly into ownership of the company holding these arrangements.
A share purchase provides a “ready made” structure, which can include:
- Established banking facilities (subject to any change of control provisions)
- Statutory records
- Governance processes
Our corporate lawyers ensure the vehicle is correctly constituted, compliant, and fit for purpose, so that clients can acquire them with confidence.
As share transactions fall outside the scope of VAT, buyers avoid VAT elections, TOGC conditions, and related administrative burdens, supporting more predictable cashflow.
Advantages of an asset only structure
While corporate structured transactions offer the buyer continuity and potential tax benefits, asset sales carry several advantages that often make them the safer or more straightforward option, particularly where absolute certainty is required.
In an asset sale, the buyer acquires only the property itself, not the company behind it. This means:
- No historic corporate liabilities
- No risk of unknown tax, environmental or contractual issues within the company
- No need to review corporate governance, accounts or legacy operations
This provides a far more predictable risk profile.
Legal review is centred on:
- The title to the property
- Existing leases and occupational arrangements
- Property related contracts
- Planning and environmental matters
This makes the process more streamlined and typically less complex than reviewing an entire company.
The buyer can choose exactly which assets, rights or contracts to take on. Unwanted elements, such as certain service contracts, employees, liabilities or equipment, can be left behind with the seller.
Once the property transfers, the buyer:
- Owns the asset directly
- Does not need to update corporate structures
- Is free to manage bank accounts, governance and operations without inherited constraints
This reduces administrative burden and ongoing compliance obligations.
Lenders may prefer asset purchases because:
- Their security sits directly over the property
- Enforcement routes are more straightforward
- There is no exposure to the company’s non property liabilities
Where external finance is involved, this can result in more favourable lending terms.
Key considerations of corporate vs asset purchases
Both corporate (share) purchases and asset purchases offer valuable opportunities for buyers, each with their own strengths and considerations. A corporate purchase can preserve the business in mostly the same form as it operates prior to sale, allowing the buyer to benefit from existing relationships, contracts and continuity, while remaining mindful that they also take on the company’s historic liabilities. An asset purchase, meanwhile, gives buyers the flexibility to select the assets and contracts most aligned with their strategy and to ring‑fence legacy exposures, though it requires more work to transfer individual assets and secure any necessary third‑party consents. Both structures can be highly effective, each offers distinct advantages and understanding their respective risk profiles helps parties choose the route that best supports their commercial objectives.
How we can help
Thinking of a corporate property purchase vs asset purchase? Freeths Can Help!
Buying a property‑owning company can unlock commercial advantages, but only when the legal, tax and operational risks are properly assessed and managed.
If you are considering a corporate acquisition or would like guidance on whether a share or asset purchase is right for your strategy, our Real Estate team is ready to support you at every stage of the transaction.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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