Special Purpose Vehicles (SPVs) are increasingly popular among property investors in the UK seeking tax efficiency, risk management, and portfolio flexibility. An SPV allows investors to ring-fence individual property assets and streamline financial structuring. However, setting up and managing an SPV requires careful legal, financial, and regulatory planning. In this guide, we explain how SPVs work for property investment, the steps to set one up in the UK, and how Fraser Bond can assist investors in building robust, strategic property structures.
An SPV is a limited company created for a specific, narrowly defined purpose—in this case, holding property investments. Unlike broader trading companies, an SPV typically:
Has no other trading activity beyond property ownership and management.
Is often used to buy, hold, and sometimes sell individual or multiple properties.
Provides legal and financial separation from the investor’s other assets or activities.
SPVs are widely used by both individual investors and institutional real estate players in the UK.
Mortgage Interest Relief: Through an SPV, mortgage interest remains a fully deductible business expense, unlike the restricted relief available to individual landlords.
Corporation Tax Rates: Rental profits are subject to corporation tax (currently 25%), generally lower than higher-rate personal income tax.
Tip: Retaining profits inside the company for reinvestment can lead to faster portfolio expansion.
Many specialist lenders prefer lending to SPVs, offering bespoke buy-to-let mortgage products with flexible underwriting tailored to investment companies.
Benefit: SPVs often enjoy access to higher loan-to-value (LTV) ratios and competitive interest rates.
An SPV separates property assets from personal liabilities or other businesses, providing protection in the event of litigation, debt claims, or financial downturns.
Shares in the SPV can be easily transferred, gifted, or sold without the need for direct property sales, simplifying inheritance tax planning and partnership exits.
Most SPVs are Private Limited Companies (Ltd), registered with Companies House specifically for property activities.
When incorporating:
Choose a company name.
Provide a UK registered office address.
Appoint directors and shareholders (can be the same individual or multiple parties).
Allocate share capital.
Select the correct SIC codes (Standard Industrial Classification):
68100: Buying and selling of own real estate
68209: Other letting and operating of own or leased real estate
68320: Management of real estate on a fee or contract basis (if applicable)
Tip: Choosing the correct SIC codes is crucial to ensure mortgage eligibility and lender acceptance.
A dedicated business account is necessary for handling rental income, property-related expenses, and mortgage repayments.
Fraser Bond can introduce investors to specialist brokers offering SPV mortgages that consider rental projections and business plans rather than personal income alone.
Annual accounts filing with Companies House
Corporation Tax returns with HMRC
Maintaining clear, audited financial records
Professional support is highly recommended to ensure efficient compliance and reporting.
Setup and Running Costs: Initial formation, annual filings, accounting, and audit costs must be factored into investment returns.
Double Taxation Risk: Extracting profits (e.g., as dividends) could trigger additional personal tax charges.
Stamp Duty Land Tax (SDLT): Buying property through an SPV does not avoid SDLT, including the 3% additional dwelling surcharge and 2% non-resident surcharge where applicable.
Exit Planning: Consider Capital Gains Tax and strategic sale structuring for assets held within SPVs.
Strategy: Setting up an SPV is most beneficial for medium to large portfolios, structured family investments, or multi-property strategies.
Fraser Bond provides end-to-end support for investors setting up and managing SPVs for property investment, including:
Advising on SPV structuring and suitability
Introducing trusted partners for company formation and tax planning
Sourcing investment-grade properties suitable for SPV ownership
Arranging SPV-specific buy-to-let mortgage financing
Supporting portfolio growth, compliance, and exit strategies
We ensure that every SPV is designed to enhance tax efficiency, financing flexibility, and asset protection for our clients.
Setting up an SPV for property investment offers strategic benefits, including tax efficiency, enhanced borrowing power, and improved asset protection. However, expert guidance is critical to ensure the structure is properly established and aligned with your long-term investment goals.
Fraser Bond’s expertise and professional network make us the ideal partner to help you build and manage your property investment SPV successfully. Contact us today to start structuring your next investment.
