An SPV limited company is a Special Purpose Vehicle company set up with the specific purpose of holding and renting out property. Many buy-to-let lenders will only lend to an SPV limited company.
Buy to let lenders offering mortgages to corporate vehicles mostly prefer SPV’s to trading limited companies because they are easier and quicker to understand and underwrite, and are perceived as being lower risk.
Many landlords purchase rental property via an SPV limited company because it can be more tax efficient, especially now that changes to tax relief on finance costs for individual landlords have been phased in.
The incorporation of an SPV limited company is the same process as for any other company. The key differentiator for this type of company is the SIC codes used. A SIC code is a numbered code that describes the nature of your business and what industry it trades within. SIC’s are a Standard Industrial Classification of economic activities and consist of five digits. They are the standardised method by which Companies House requires you to describe your limited company’s nature of business.
It is particularly important that the SIC code or codes that you register your limited company under are relevant to property, especially for mortgage finance purposes.
There are 4 SIC codes relevant specifically to property for SPV’s:-
68100 Buying and selling of own real estate. This SIC Code is the one to use for ‘Flipping’
68209 Letting and operating of own or leased real estate. If you’re going to have Buy-to-Lets
and hold them, this will be the one for you.
68320 Managing of real estate on a fee or contract basis. This is especially useful when
considering a time when your portfolio might grow large enough that managing it all yourself
through an employee would be the right move, as you will also be able to manage other people’s
68310, for real estate agencies. This will also be the right code for packaging deals, as you are
buying and selling property for a third party.
Once you have chosen the most relevant code(s) then our company formation service can be used to incorporate your company. It includes all the same benefits as our normal limited company formation and you can place your order for your SPV limited company formation below. By adding the chosen code in the nature of business section of the form we can incorporate your new company using the most appropriate SIC code to incorporate your SPV.