More landlords now buy property through a limited company. Tax changes since 2017 have made this route more attractive. To borrow through a company, you usually need a specific type of company called a Special Purpose Vehicle (SPV).

In this guide, we’ll explain what an SPV is, how buy to let mortgages through an SPV work, and the pros and cons to consider. This is general information only. Always speak to a qualified accountant and mortgage adviser before making decisions.

What is an SPV Mortgage?

SPV stands for Special Purpose Vehicle. It’s a limited company set up for one purpose: to hold property. It doesn’t trade in any other way.

An SPV mortgage is a buy to let loan taken out in the company’s name, not yours. The company owns the property. You own the company.

Most lenders who offer company buy to let mortgages require the borrower to be an SPV. They’ll not lend to a trading business that happens to hold property. The company must have the correct SIC code on file with Companies House. The most common codes are 68100 (buying and selling of own real estate) and 68209 (other letting of own property).

Who can have an SPV mortgage?

Most landlords who want to buy through a company can apply. Lenders will look at three things.

  • The directors and shareholders. Most lenders ask for a personal guarantee from the directors. They’ll check your income, credit history, and current debts.
  • The SPV itself. The company must be set up as a property holding vehicle. Lenders check the SIC code and the articles of association.
  • The property and rental income. As with any buy to let, lenders check the rental yield against their Interest Coverage Ratio (ICR).

 

Some lenders accept newly set up SPVs. Others want to see a company that’s been running for at least a year. A specialist broker can match you with the right lender.

The advantages of an SPV mortgage

1. Building a property portfolio

An SPV is a clean structure for holding multiple properties. All assets sit inside one company. This makes it easier to track income and costs across your portfolio.

It’s also simpler to bring in other investors as shareholders. This is harder to do when property is held in your personal name.

2. Improved tax position

Tax is the main reason most landlords look at an SPV. There are four areas to understand.

Corporation tax vs. income tax

Profits inside an SPV are taxed at Corporation Tax rates. The current rates are 19% on profits up to £50,000 and 25% on profits over £250,000. These are confirmed by HMRC and unchanged for 2026/27.

A higher rate taxpayer pays 40% Income Tax on personal rental profits. An additional rate taxpayer pays 45%. Corporation Tax can be lower than both. This makes the company route more attractive for higher earners who plan to keep profits inside the business.

Mortgage interest as an expense

This is where the biggest difference lies. Individual landlords cannot deduct mortgage interest from rental income. They get a 20% tax credit instead. For higher and additional rate taxpayers, this means paying more tax.

Companies aren’t affected by this rule. An SPV can deduct mortgage interest in full as a business expense. This reduces taxable profit. For many landlords, this alone makes the company structure worth it.

Capital Gains Tax

When an individual sells a buy to let property, they pay Capital Gains Tax (CGT). The rate is 18% for basic rate taxpayers and 24% for higher rate taxpayers on residential property.

When a company sells a property, it pays Corporation Tax on the gain. This may be lower. But when you later sell your shares in the SPV, CGT applies again. The tax is deferred, not avoided. Take professional advice on this.

VAT registration for commercial properties

Residential rental income is exempt from VAT. If your SPV holds commercial property, it may be possible to ‘opt to tax’ it. This lets the company reclaim VAT on costs. This is a specialist area. You’ll need advice from a qualified accountant.

3. Limiting liability

Holding property in a company creates a separation between you and the portfolio. Creditors cannot usually pursue your personal assets if the company has debts.

However, most SPV mortgages require a personal guarantee from the directors. If the company can’t pay, you’re still personally liable. The protection is less complete than many people expect.

4. Inheritance planning

Passing shares in a company to family members can be simpler than transferring property directly. It avoids some of the legal costs and delays that come with changing property ownership.

It may also help with Inheritance Tax planning. But the rules here are complex and have changed in recent years. Always take specialist advice before relying on this.

5. Additional benefits

  • Profit retention. You don’t have to take all profits out each year. Leaving money in the SPV can reduce your personal tax bill and fund future purchases.
  • Dividend choice. When you do take money out, you can take it as a salary or dividend. Dividends may be taxed at a lower rate than salary, depending on your situation.
  • Easier joint ownership. Shares in a company are simpler to split than property. This makes joint ventures, and bringing in co-investors more straightforward.

 

The downsides of SPV mortgages

The SPV route isn’t right for everyone. Here are the main drawbacks.

  • Higher rates. SPV mortgages often carry higher interest rates than personal buy to let products.
  • Fewer lenders. Not all lenders offer SPV mortgages. Your choice of products is narrower than in the personal market.
  • Running costs. A limited company must file accounts, and a Corporation Tax return each year. You’ll also need to submit a Confirmation Statement to Companies House. These costs add up.
  • Double taxation. Profits are taxed by Corporation Tax first. If you then take money out as dividends, you pay dividend tax on top. The combined rate can be higher than you expect.
  • Stamp Duty on transfer. Moving existing properties into an SPV usually triggers Stamp Duty Land Tax. This can make switching structures more expensive.
  • Personal guarantees. Most lenders still require the directors to guarantee the loan. This limits the protection the company structure offers.

 

Final thoughts

An SPV can work well for landlords who pay higher rate tax, plan to build a portfolio, and want to keep profits inside the business. But the costs and complexities are real.

The right choice depends on your tax rate, how many properties you own, and whether the savings outweigh the extra costs. A good accountant can model this for your specific situation.

For more on changes affecting landlords, read our guide on when the Renters’ Rights Act became law.

Pepper Money works with specialist brokers who understand the SPV mortgage market. You can find a broker through us today.

This article is for general information only. It is not financial or tax advice. Tax rules are complex and change over time. Always speak to a qualified accountant and mortgage adviser before making any decisions.