Special purpose vehicle (SPV)
A special purpose vehicle (SPV) is a company set up for one specific purpose, legally separate from the people who own it, used to ring-fence a particular activity or asset and its risks. SPVs are used across finance, from large securitisations to joint ventures, but for landlords the meaning is narrower and practical. An SPV is a limited company set up solely to hold and let property, rather than to trade in anything else. The company owns the property and the landlord owns the shares in the company. It is now the standard structure for holding property through a company rather than as an individual buy-to-let.
Why landlords use an SPV
The main reason is mortgage access. Lenders find a company that does nothing but hold property much simpler to assess than one that also trades, because there are no other business activities or liabilities to weigh up. As a result, most limited company buy-to-let mortgages are only offered to SPVs, and they are often available at better rates and from more lenders than mortgages to a trading company. From working with self-managing landlords across the UK, almost every landlord who buys through a company does so through an SPV, because it is what the mortgage lenders expect.
SIC codes and setting one up
An SPV is registered at Companies House like any other company, a process that takes only a few minutes online, but lenders expect it to carry the right Standard Industrial Classification (SIC) code, which describes what the company does. The property codes are 68100 for buying and selling your own real estate, 68209 for letting and operating your own or leased real estate, and 68320 for managing real estate on a fee or contract basis. You can check these on the gov.uk SIC code list. Lenders generally want a clean SPV that has only ever used property SIC codes and has carried out no other trading, so it is worth choosing the codes carefully at the point of incorporation.
An SPV is still a limited company
It is worth being clear that an SPV is not a different legal form. It is an ordinary limited company, and the only thing that makes it an SPV is that it exists purely to hold property. That means it carries all the same obligations and costs as any company: corporation tax on its profits, annual accounts and a confirmation statement to Companies House, a corporation tax return, and the second layer of tax when profits are taken out as dividends. The SPV label affects how lenders treat the company, not how it is taxed or administered. Landlords using August who set up an SPV tell us the registration itself was quick; the bigger question was whether to incorporate at all, which is covered in our guide to forming a limited company.
Frequently asked questions
What is an SPV?
A special purpose vehicle is a company created for a single, defined purpose and kept separate from its owner's other interests. For landlords, it is a limited company set up solely to hold and let property, with the company owning the property and the landlord owning the shares.
Why do landlords use an SPV?
Mainly because lenders prefer them. A company that only holds property is easier to underwrite, so most limited company buy-to-let mortgages are restricted to SPVs and often come with better rates and more choice of lender than borrowing through a trading company.
What SIC code does a property SPV use?
The common property SIC codes are 68100 (buying and selling own real estate), 68209 (letting and operating own or leased real estate) and 68320 (managing real estate on a fee or contract basis). Lenders usually want an SPV that has only ever used property codes and has done no other trading.
