As the landscape for property investment continues to evolve, shaped by tax reform, lending policy, and regulatory oversight, professional landlords and portfolio investors are increasingly turning to Special Purpose Vehicles (SPVs) to structure and manage their property holdings.
An SPV, most commonly in the form of a limited company, provides a distinct and ringfenced legal entity through which property assets can be acquired, financed, and managed. While historically less common among private landlords, SPV structures are now central to how experienced investors build resilient, scalable portfolios.
This article explores the role of an SPV in property investment, outlines the strategic advantages it can offer, and highlights the key considerations for those evaluating a move into corporate ownership.
What Is an SPV in Property Investment?
A Special Purpose Vehicle is a limited company, typically incorporated with the sole purpose of holding investment property. The SPV does not trade in goods or services and carries no unrelated liabilities; its function is to own, manage, and, where necessary, finance property assets.
From a lender’s perspective, SPVs provide clarity, control, and predictability. Most buy-to-let and portfolio mortgage lenders now offer specific criteria for SPVs, often favouring them over personal ownership where borrowing requirements are more sophisticated.
Why Use an SPV? Strategic Advantages
Tax Efficiency
One of the most significant drivers for using an SPV is the current tax environment. In personal ownership, individual landlords are no longer able to fully offset mortgage interest against rental income. By contrast, limited companies can typically deduct full interest costs as allowable business expenses.
Additionally, corporate tax rates remain lower than higher-rate personal income tax, depending on if you choose to draw the income, which would then be subject to personal tax rates. While corporation tax has increased in recent years, the ability to retain profits within the company and manage distributions offers more flexibility for longer-term planning.
Important note: Tax implications vary based on individual circumstances. Professional tax advice is essential before any structural change.
Borrowing Potential and Portfolio Lending
SPVs are particularly well-suited to professional landlords seeking portfolio lending facilities or bespoke mortgage structures. Lenders often view corporate structures more favourably, especially where:
- Rental income is diversified across multiple units
- The landlord holds five or more properties
- Properties are spread across different asset types or locations
Lending through an SPV allows for better alignment with how lenders assess risk and income. Many institutions now offer more competitive rates and higher leverage within company-owned structures.
Ownership Separation and Liability Management
Holding property via an SPV creates a clear legal distinction between personal and investment assets. This segregation limits liability and simplifies matters such as succession planning, joint ventures, or business sales.
It also allows investors to manage risk within each entity; multiple SPVs can be established to hold separate asset groups or investment strategies, insulating one part of the portfolio from the liabilities of another.
Succession and Exit Planning
For investors considering long-term succession, an SPV enables greater control over ownership transfer. Shares in the company can be gifted or sold, rather than transferring individual properties. This opens up more structured intergenerational planning, trust arrangements, or family involvement, without requiring asset disposal or triggering Stamp Duty Land Tax unnecessarily.
Key Considerations Before Using an SPV
While the benefits of using an SPV are clear, they must be weighed against important practical and financial considerations:
Incorporation and Setup
Establishing an SPV is relatively straightforward, but it must be done correctly. The company should be incorporated with the appropriate SIC code(s). Typically for mortgage purposes, it should be 68100, 68201, 68209 and 68320. Some lenders will only consider applications from SPVs with these codes.
Choosing the right structure, single SPV vs multiple entities, depends on your portfolio ambitions, risk appetite, and plans.
Transferring Existing Properties
For landlords with an established personal portfolio, transferring property into an SPV is not simply an administrative matter. The process is treated as a market transaction and may incur:
- Capital Gains Tax on the transfer
- Stamp Duty Land Tax payable by the SPV
- Potential early repayment charges if refinancing existing loans
The decision to incorporate should therefore be modelled carefully, factoring in long-term savings versus short-term transaction costs.
Mortgage Lending and Underwriting
SPVs typically face more rigorous underwriting than personal borrowers as the company is assessed as well as the individual directors, as the directors in most cases, have to provide a personal guarantee.
Many lenders now offer dedicated SPV mortgage products, and specialist brokers play a key role in navigating lender preferences, structuring the application, and managing documentation, such as business accounts, property schedules, and projected rental income.
Ongoing Administration
An SPV is a trading company and therefore must meet ongoing corporate obligations, including:
- Annual accounts and tax filings with HMRC
- Corporation tax compliance
- Statutory returns with Companies House
- Director and shareholder management
Engaging an accountant with experience in property companies is essential to ensure compliance and maximise efficiency.
Is an SPV Right for You?
The decision to purchase via an SPV or transfer existing assets into one should align with your investment horizon, scale of ambition, and wider financial planning. For landlords with one or two properties, the simplicity of personal ownership may still outweigh the marginal tax savings. However, for those building a larger or more structured portfolio, the benefits of corporate ownership compound over time.
Common scenarios where an SPV can be highly beneficial include:
- Planned acquisition of multiple units over a defined period
- Existing or planned use of portfolio lending facilities
- Desire to retain profits within the business for reinvestment
- Long-term intergenerational wealth planning
- Separation of risk or business strategy across different asset classes
Final Thought
Using an SPV to manage property investments is not just a structural choice; it is a strategic one. It reflects a professional approach to ownership, finance, and planning. Done well, it can offer tax clarity, financing flexibility, and future readiness in a way that personal ownership often cannot.
At Henry Dannell, we support clients through every stage of this decision, from reviewing incorporation and refinancing options to structuring lending facilities that align with their corporate and personal goals. If you are considering setting up an SPV or restructuring your portfolio to operate through one, we invite you to begin with a tailored discussion.
Please note: A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Mortgage deals may not be available, and lending is subject to individual circumstances and status.