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Getting a Buy-to-Let Mortgage Through a Special Purpose Vehicle: What You Need to Know

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If you’re looking to invest in a buy-to-let property, setting up a Special Purpose Vehicle (SPV) could be a viable option for you. But what exactly is an SPV and how can a broker help you navigate the process? In this article, we’ll explore the ins and outs of SPVs and how they can benefit your property investment portfolio.

We’ll cover topics such as eligibility requirements, lenders and rates, and other important considerations to keep in mind when setting up an SPV. Additionally, we’ll explain how to get an SPV mortgage and provide information on speaking to an expert for further guidance. By the end of this article, you’ll have a clear understanding of what an SPV is and how it can help you achieve your property investment goals.

Key Takeaways

  • Setting up an SPV can be a viable option for investing in buy-to-let properties.
  • Eligibility requirements, lenders and rates, and other important considerations should be carefully considered when setting up an SPV.
  • Speaking to an expert and understanding how to get an SPV mortgage can help you navigate the process with confidence.

If you are a property investor looking to purchase a buy-to-let investment, or a portfolio landlord with a residential property, you may be wondering about the best way to arrange your finances tax-efficiently. One option is to own properties through a special purpose vehicle (SPV), which is a limited company set up for the purpose of owning and operating investment and buy-to-let property. SPVs offer tax benefits and are popular with buy-to-let investors.

To get a mortgage with an SPV, it is recommended to speak with a specialist mortgage broker who can help you find the right lender and loan. They can also help you navigate the eligibility criteria and application process.

Special Purpose Vehicle (SPV)

A Special Purpose Vehicle (SPV) is a limited company, trust, or partnership that is specifically set up to own and operate investment and buy-to-let property. 

1. Are There Tax Benefits?

SPVs offer several ways for property investors to reduce their tax bill. One of the main tax benefits of using an SPV is that profits are subject to corporation tax. This means that landlords can potentially save a significant amount of money on their tax bill.

In addition, post-tax profits can be distributed to directors and shareholders as dividends, who can use their tax-free dividends allowance. Landlords can loan their deposit to the SPV as a director’s loan and offset profits from rent payments until the loan has been repaid. This can help to reduce the amount of tax that landlords have to pay on their rental income.

2. Joint Ownership Benefit

SPVs offer a convenient way for a group of people to share ownership of a property investment and divide the proceeds, which can help to reduce your capital gains tax or inheritance tax bill in certain situations.

Overall, using an SPV can be a tax-efficient way to invest in buy-to-let property, particularly for higher-rate taxpayers. However, it’s essential to seek professional advice before setting up an SPV to ensure that it’s the right option for your specific circumstances.

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Speak to Our Expert Broker

Maximise your chance of mortgage approval with a specialist in SPV mortgages. If you have questions or concerns about SPV mortgages, speak to us. We can help you understand the process and guide you through the application process. Consider working with a mortgage broker, accountant, or tax specialist who has experience with SPV mortgages.

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Getting an Investment Mortgage Through an SPV?

Yes, it is possible to get an investment mortgage through an SPV. However, major lenders usually do not offer this type of mortgage. You can approach a specialist lender through a broker who has experience and a strong track record for arranging SPV mortgages.

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How Can I Get an SPV Mortgage

If you want to invest in a buy-to-let property through a special purpose vehicle (SPV), you can follow these simple steps to get an SPV mortgage.

Register an SPV

Before buying a property, you need to set up an SPV and register it with Companies House. The lender will need to check the company details before offering an agreement in principle. You can register your SPV with Companies House or instruct an accountant or solicitor to do it for you. Make sure you select the correct SIC codes for your business activities as many lenders will not offer a buy-to-let mortgage to a “trading business” without the right SIC code. You may need to pay stamp duty and legal fees if you bought the property as an individual and then sold it to the SPV at market value.

Contact to a SPV Specialist Mortgage Broker 

Only a minority of lenders offer SPV mortgages, so it’s important to speak to a broker who specialises in this area to find the best deal. They can help you to maximise your profit margin and find a great deal. Contact our SPV mortgage broker for a free, no-obligation chat. 

Submit Your Application

Applying for an SPV mortgage involves additional paperwork compared to a personal mortgage, but your broker will guide you through it and ensure that all the details are correct. 

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Requirements and Eligibility

To be eligible for an SPV buy-to-let mortgage, you need to have registered your limited company as a special purpose vehicle with Companies House using the most appropriate SIC code(s). Additionally, most lenders require a deposit of 25-30% of the property value, Some lenders only offer portfolio mortgages to limited companies, which means that your company must own three or more properties. Furthermore, some lenders have a maximum limit on the number of directors in a limited company, with four being a common limit.

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Other Details

When considering using an SPV to own property, it is important to be aware of some potential drawbacks. Firstly, obtaining a mortgage from major lenders can be more difficult, although a broker can assist with this. Secondly, there are increased reporting and record-keeping requirements, including filing company accounts annually with HMRC and Companies House. Finally, taxation can be more complex, potentially requiring expert guidance to navigate. It is important to fully understand these factors before proceeding with an SPV for your property portfolio to ensure you are aware of any potential financial risks and liabilities.

To ensure that you find the best rate for your SPV mortgage, it is recommended that you speak with a buy-to-let broker who specialises in SPV mortgages. These brokers have access to every available deal, even if it’s not advertised to the general public.

Frequently Asked Questions

What are the advantages of using an SPV for a buy-to-let mortgage?

Using a Special Purpose Vehicle (SPV) for a buy-to-let mortgage has several benefits. The most significant advantage is that it provides a layer of protection for the investor’s personal assets. By using an SPV, the investor’s liability is limited to the assets of the company. SPVs can also help investors to manage their tax liabilities more effectively.

What factors do lenders consider when approving SPV mortgages?

Lenders will typically assess the creditworthiness of the SPV and its directors, as well as the rental income generated by the property. They will also consider the property’s location, condition, and potential rental yield.

How do SPV mortgage rates compare to traditional buy-to-let rates?

SPV mortgage rates are typically higher than traditional buy-to-let rates. This is because lenders view SPVs as higher risk due to their limited trading history and the fact that they are often used for more complex investment strategies.

What documentation is required to apply for an SPV mortgage?

To apply for an SPV mortgage, you will need to provide documentation such as proof of income, bank statements, and details of the property you wish to purchase. You will also need to provide details of the SPV’s directors and shareholders.

Can an SPV be used for commercial property investment?

Yes, SPVs can be used for commercial property investment as well as residential buy-to-let investment. However, commercial property investment typically requires a larger deposit and is subject to different regulations.

What are the tax implications of using an SPV for a buy-to-let property?

Using an SPV for a buy-to-let property can have tax advantages, particularly for higher-rate taxpayers. SPVs are subject to corporation tax rather than income tax, which can result in lower tax bills. However, it is important to seek professional tax advice before making any investment decisions.

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