How to Use a UK Ltd Company to Buy Property — SPV Structure Explained (2026)

What Is a Property SPV?

A Special Purpose Vehicle (SPV) is a company created for a single, specific purpose — in this case, to hold and manage one or more investment properties. The SPV is a standard UK Ltd company with the SIC code 68100 (buying and selling of own real estate) or 68209 (other letting and operating of own or leased real estate).

The SPV owns the property — the property is a company asset, not a personal asset. All rental income flows through the company. All expenses (mortgage interest, repairs, letting agent fees, insurance, management costs) are deductible against the company's profit. Corporation Tax (19–25%) applies to the net profit.

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Why SPVs Became Standard After 2017

Before April 2017, individual landlords could deduct 100% of mortgage interest from their rental income before calculating income tax. From April 2020 (phased in from 2017), Section 24 of the Finance Act 2015 restricted this:

Individual landlords now receive a basic rate tax credit (20%) for mortgage interest instead of a full deduction. For a higher-rate taxpayer (40%), this is devastating:

• Example — Individual landlord (higher rate taxpayer):
• Rental income: £20,000
• Mortgage interest: £12,000
• Pre-Section 24: Taxable profit = £8,000; Income tax at 40% = £3,200
• Post-Section 24: Taxable income = £20,000; Income tax at 40% = £8,000; Less 20% credit on £12,000 (£2,400) = Net tax: £5,600
• Tax DOUBLED despite no change in underlying economics

• Example — Company SPV:
• Rental income: £20,000
• Mortgage interest: £12,000 (fully deductible — Section 24 doesn't apply to companies)
• Taxable profit: £8,000
• Corporation Tax at 19% (small profits rate): £1,520
• Tax reduction of over 70% vs higher-rate individual

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SDLT Considerations

When a company buys a residential property, different SDLT rules apply:

3% SDLT surcharge: Companies buying residential property pay standard SDLT rates PLUS a 3% surcharge. There is no first-time buyer relief for companies.

15% flat rate for expensive residential properties: Companies buying single residential properties over £500,000 for private residential use pay 15% flat SDLT. This does NOT apply to buy-to-let/investment properties — it applies only to properties "intended to be used as a dwelling."

For a buy-to-let SPV buying a £300,000 property: SDLT: 0% on first £250,000 + 5% on £50,000 = £2,500 + 3% surcharge on full £300,000 = £9,000 = Total: £11,500

For an individual buying the same property (second property): Same SDLT + 3% surcharge applies. No advantage either way on SDLT for a new purchase.

Existing portfolio transfer: If you own properties personally and want to transfer them into an SPV — this triggers SDLT (on market value of each property) AND CGT (on the gain since purchase). The SDLT and CGT bill can be enormous. Incorporation Relief (Section 162 TCGA) can defer CGT if the properties constitute a "business" — HMRC's view is that passive letting rarely qualifies. Most advisors conclude: best to form the SPV for new purchases, not to transfer existing portfolios.

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Corporate Mortgages for SPVs

Mortgage options for limited company SPVs have expanded dramatically since 2018 as the market responded to landlords' demand:

Specialist BTL lenders: The Mortgage Works (TMW, part of Nationwide), Paragon Bank, Precise Mortgages, Fleet Mortgages, Keystone Property Finance. These lenders specifically have SPV mortgage products.

High street banks: Most do not lend directly to SPVs. NatWest has limited SPV products; others require relationship banking.

Key difference from personal BTL mortgages: Corporate mortgage rates are typically 0.1%–0.3% higher than equivalent personal BTL rates (as of 2026). The mortgage market for SPVs has matured significantly since 2020 — competition among specialist lenders has narrowed this premium.

Personal guarantees: Virtually all SPV mortgages require personal guarantees from the directors/shareholders. This partially defeats the limited liability protection of the SPV structure for the mortgage specifically — but not for tenant liability, public liability, or other creditor claims.

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Setting Up a Property SPV

Step 1: Incorporate a standard UK Ltd at Companies House. SIC code 68100 or 68209. Single director (you) and 100% shareholder. Cost: £12.

Step 2: Open a dedicated business bank account in the SPV's name. Starling Bank or Tide are the most accessible for property SPVs.

Step 3: Apply for a corporate BTL mortgage from a specialist lender. Have your financial information ready: personal income (lenders assess the directors' personal income as a backstop), rental yield projections, property valuation.

Step 4: Use the SPV to purchase the property — conveyancing solicitor acts for the SPV (the purchaser), not for you personally.

Step 5: Register the property with HM Land Registry in the SPV's name.

Step 6: Keep meticulous company accounts. All rental income, mortgage payments, maintenance, and expenses through the SPV bank account. Annual accounts and CT600 required.

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Extracting Profits from a Property SPV

• Options:
• Salary: If you work for the SPV (property management). Subject to income tax and NI.
• Dividends: Most common. Dividends paid from after-CT profits. Dividend tax at 8.75–39.35%.
• Director's loan: Lend money to the SPV (to fund deposit), then repay yourself over time tax-free (repaying your own loan).
• Leave profits in company: Accumulate for the next property purchase. CT is paid; future purchases funded from retained profits.

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FAQs

Is a property SPV the same as any other UK Ltd? Yes — structurally identical. The "SPV" label is informal. It's a standard UK Ltd with property as its primary asset. No special registration or designation at Companies House.

Can I have multiple properties in one SPV? Yes. Many landlords use a single SPV for their entire portfolio. Others use separate SPVs per property (for debt segregation — a defaulted mortgage on one property doesn't affect others). Multiple-property SPVs are simpler to administer; single-property SPVs provide better ring-fencing.

Does SDLT apply on the transfer of SPV shares if I sell the SPV? Share transfers (selling the shares in the SPV) attract Stamp Duty at 0.5% (not SDLT at rates up to 15%). This is a significant advantage when selling — a buyer acquiring SPV shares pays 0.5% Stamp Duty instead of full SDLT on the property purchase. But they take on all historical liabilities of the company. Negotiating a property sale via SPV share sale requires experienced property solicitors.

Do I need to register for VAT for a property SPV? Residential lettings are exempt from VAT — no VAT is charged on residential rent, and no input VAT is recoverable on property-related costs. Commercial property (offices, retail, industrial) may qualify for an Option to Tax — allowing VAT to be charged on rent and input VAT recovered.

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