What is a Portfolio Landlord?
A portfolio landlord is someone who owns multiple rental properties. A recent trend for portfolio landlords has been to switch properties from ownership in a personal name to special purpose vehicle (SPV) ownership. Here are some top tips for portfolio landlords interested in doing this:
1. Understand the concept of an SPV – An SPV is a separate legal entity that is created to hold assets, such as property. This can provide certain benefits for portfolio landlords, such as limiting liability for the properties and making it easier to manage and finance the properties.
2. Consult with a financial adviser – Before remortgaging properties into an SPV, it is important to speak with a financial adviser to understand the potential benefits and drawbacks, as well as to ensure that the process is done correctly.
3. Determine the best structure for the SPV – There are various types of SPVs that can be used for holding properties, such as a limited company or a trust. The best structure will depend on your specific needs and longer-term objectives.
4. Create the SPV – Once the structure has been determined, the portfolio landlord will need to create the SPV. This typically involves registering the entity with the relevant government agency and obtaining any necessary licenses or permits.
5. Get the code right – If selecting a limited company SPV, the majority of lenders will only accept four SIC codes, so it is important that you select the correct code from inception.
6. Transfer the properties to the SPV – After the SPV has been created, the portfolio of properties will need to be transferred to the SPV. This typically involves executing a transfer deed and registering the transfer with the relevant government agency.
7. Finance the transfer – Once the properties have been transferred to the SPV, the portfolio landlord can then mortgage the properties. It is highly recommended to use a mortgage adviser to source the right lender that can offer the best terms.
8. Be aware of the legal and tax implications – Mortgaging properties into an SPV can have legal and tax implications. It is important to consult with a solicitor and professional tax adviser to understand what these implications could be.
9. Keep accurate records – It is important to keep accurate records of the properties, the SPV, and any transactions related to the properties and the SPV. This is necessary for tax purposes and for any future transactions.
For support in understanding whether this is the right option for you, our specialist mortgage advisers would be happy to assist.
Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. A bridging loan is a short-term loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any debt secured on it. The Financial Conduct Authority does not regulate some forms of bridging finance. Bridging finance / loan deals may not be available and lending is subject to individual circumstances and status.
