Guide · 11 min read
How to set up a special purpose vehicle for buy-to-let: Companies House registration, SIC codes, shareholding decisions, running costs and how the SPV gets its first mortgage.
Written by Matt Lenzie · Published 10 June 2026
Advice from
Matt Lenzie · 25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
25+ year career banker (Bank of Scotland, Lloyds Banking Group). £300m+ raised for property clients.
An SPV, a special purpose vehicle, is a limited company set up to do exactly one thing: hold rental property. Setting one up for buy-to-let takes about twenty minutes on the Companies House website and costs £50. That is the easy part, and it is the part most guides spend all their time on.
The hard part is everything you should settle before you file: the SIC codes, the shareholding, who the directors are, how the deposit will get into the company, and whether the structure makes sense for your tax position at all. Get those wrong and you will discover the consequences months later, in a mortgage underwriter's decline email or your accountant's year-end bill. We arrange limited company buy-to-let mortgages all day, and a meaningful share of the problems we untangle were created on incorporation day. This guide is the checklist we wish every new property company had followed.
A buy-to-let SPV is an ordinary private limited company whose sole activity is buying, holding and letting residential property. There is no special legal category, no separate register, no licence. What makes it "special purpose" is what it does not do: no trading, no consultancy invoices, no unrelated borrowing, nothing on the books except property, rent and the mortgage.
That cleanliness is the whole point. Lenders price company lending on how easily they can understand the borrower. A company that does nothing but own property is transparent: the rent services the loan, the asset secures it, and the directors stand behind it with personal guarantees. A company that also runs a plumbing business or a consultancy is a different credit conversation entirely, which is why most lenders on our panel will only lend to a clean SPV, and why SPV vs trading company deserves its own guide.
Two tax rules drive nearly every incorporation decision we see.
The first is Section 24. Since April 2020, personal-name landlords cannot deduct mortgage interest from rental income; they receive a 20% basic-rate credit instead. For a higher-rate taxpayer with a leveraged property, that change alone can turn a cash-positive investment into a tax-negative one. Inside a limited company, Section 24 simply does not apply: mortgage interest remains a fully deductible business expense. Our Section 24 guide walks through the worked numbers.
The second is the rate of tax on profit. A company pays corporation tax at 19% on profits up to £50,000, 25% above £250,000, with marginal relief between, rather than the 40% or 45% a higher-rate individual pays on rental profit. While profits stay in the company, compounding into the next deposit, that gap is real money. The counterweight is extraction: dividends carry their own tax, so the advantage narrows if you need to draw the income out each year.
There is a third, less discussed advantage on the lending side. Lenders stress company applications at a 125% interest cover ratio rather than the 145% applied to higher-rate personal borrowers, typically at a stress rate around 5.5%. The same rent supports a larger loan inside the company. For landlords building a portfolio, that leverage difference compounds purchase after purchase.
Five decisions matter more than the company name.
SIC codes. Register the company under SIC code 68100 (buying and selling of own real estate), 68209 (letting and operating of own or leased real estate), or both. 68320 (property management) is tolerated by some lenders alongside the core codes. Anything else, and a chunk of the lender panel disappears. Our SPV SIC codes guide covers the detail.
Shareholding. Who owns the company decides who receives the dividends and who signs the personal guarantees. Splitting shares with a lower-rate spouse can be tax-efficient; some landlords use multiple share classes to direct dividends flexibly. This is squarely accountant territory, and it is far cheaper to set up correctly now than to restructure later. Note that most lenders require any shareholder above roughly 20 to 25% to give a personal guarantee, so ownership and liability travel together.
Directors. Lenders underwrite the directors: their credit history, their experience as landlords, and often a minimum personal income. A director with adverse credit affects the whole application even if they hold a minority stake.
The deposit route. Decide where the deposit is coming from and how it will enter the company, usually as a director's loan, occasionally as an intercompany loan from a trading business. Lenders will want the provenance documented either way, and an intercompany route narrows the panel.
Whether the structure is right at all. Run the comparison before you commit. Our limited company vs personal calculator models the five and ten year tax outcome both ways, and your accountant should sign off the conclusion.
The mechanical part, in order:
One reassurance we give weekly: the company does not need a trading history before applying for a mortgage. A company incorporated on Monday can have a Decision in Principle by Friday. Lenders assess the directors, the rent and the property, not the company's age.
A timing note on the bank account, because it bites: business account opening at the mainstream banks can take longer than the incorporation itself, sometimes weeks where identity checks queue. If a purchase is in view, open the account immediately after incorporation rather than waiting for an offer to be accepted, so the director's loan can land and season in the company's own name before any lender asks to see it.
An SPV mortgage works like a personal buy-to-let mortgage with three structural differences.
First, the company is the borrower and the legal owner. The mortgage offer is issued to the company, the title registers in the company name, and the rent flows into the company account.
Second, the directors give personal guarantees. The limited liability wrapper does not extend to the mortgage; lenders require directors and significant shareholders to stand behind the debt personally, with independent legal advice before signing. Read our personal guarantees guide before this surprises you at offer stage.
Third, the affordability test is friendlier. The 125% company ICR against a roughly 5.5% stress rate means the rent goes further than it would for a higher-rate personal applicant at 145%. Most lenders cap loan-to-value at 75%, a handful stretch to 80% at a price, so plan for a 25% deposit as the working assumption.
Expect rates a margin above the personal-name equivalent, typically 0.20 to 0.40%, reflecting the extra legal work in company lending. Against the tax arithmetic above, that premium is usually a price worth paying, but it should be priced consciously, not discovered late. We run every case across a panel of more than 100 lenders, including the specialist SPV names and the intermediary-only lenders you cannot approach directly, and we work cases across the UK.
Budget honestly for the running costs, because they are part of the comparison against personal ownership:
Yes, and this is where new company owners most need a cold-eyed costing. Moving a property you already own into your SPV is a disposal at market value: capital gains tax can arise on you personally, the company pays stamp duty with the full surcharge, and the mortgage must be redeemed and rewritten in the company's name, which is the leg we arrange. For landlords running a genuine property business, Section 162 incorporation relief can defer the capital gains tax, but the bar is real and the stamp duty generally remains.
The transfer can still make sense over a long hold, particularly for higher-rate taxpayers with years of Section 24 drag ahead of them. But it is a transaction with five-figure costs on most portfolios, so read our honest assessment in transferring property without stamp duty before anyone sells you a scheme, and involve your accountant from the start.
Pulling it together: take tax advice first, decide shareholding and directors second, incorporate with clean SIC codes third, open the bank account and document the director's loan fourth, and only then go looking for the property and the mortgage. Done in that order, the company is lender-ready from day one and nothing needs unwinding.
If you are at the start of that sequence, a 15-minute call costs nothing and usually saves a re-filing. We will sanity-check the structure against the lender panel before you commit to it, and quote the limited company buy-to-let mortgage alongside, so the company you set up this month is the company a lender approves next month.
For most higher-rate taxpayers buying with a mortgage, yes: full interest deductibility and corporation tax at 19 to 25% usually beat the Section 24 position in personal name, even after the slightly higher mortgage rate and accountancy costs. For basic-rate taxpayers, or buyers with little or no borrowing, the company often adds cost without adding benefit. Model both structures before you commit, and have your accountant confirm the tax side for your own circumstances.
Yes, but it is a market-value sale from you to the company, not a paperwork transfer. The disposal can trigger capital gains tax on you personally, the company pays stamp duty including the 5% surcharge (8% ADS in Scotland), and the existing mortgage must be redeemed and rewritten as a limited company buy-to-let mortgage. For a genuine property business, Section 162 incorporation relief may defer the CGT. Cost the whole move before starting it.
You cannot avoid tax, but you can change which tax applies. Inside a company, rental profit is charged to corporation tax at 19 to 25% rather than your 40% or 45% marginal income tax rate, and mortgage interest is fully deductible. The saving is only fully realised while profits stay in the company; extracting them as dividends adds a personal tax layer. Whether the structure helps depends on your tax band, leverage and time horizon, so take advice from your accountant.
Yes. Anyone can register a property SPV at Companies House in a day, online, for the £50 incorporation fee. Use property-only SIC codes (68100 or 68209), keep the company free of trading activity, and decide the shareholding before you file rather than after. The company can be brand new when it applies for a mortgage; lenders underwrite the directors and the property, not the company's trading history.
Tax treatment depends on individual circumstances and can change. Nothing here is tax advice: speak to your accountant before incorporating or transferring property.
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