What Is an SPV and Why Landlords Use One

An SPV, or special purpose vehicle, is a limited company set up to do one thing: hold and let property. Nothing else runs through it. No trading, no consultancy work, no unrelated income.

Landlords use an SPV rather than an ordinary trading company because lenders prefer it that way. A company with a single, clearly defined purpose is easier for a lender to assess than one where the property sits alongside other business activities. Most limited company buy to let lending in the UK now goes through SPVs for this reason, and some lenders will only lend to one.

Setting one up is straightforward on paper. Getting the details right so a lender will actually accept it is where landlords most often trip up, and the SIC code you register is usually the first thing that goes wrong.

Choosing the Right SIC Code When You Incorporate

Every company registered at Companies House needs at least one Standard Industrial Classification (SIC) code, describing what the business does. For a buy to let SPV, this single choice affects how many lenders will consider you.

68209, other letting and operating of own or leased real estate, is the code most lenders expect to see. If your company exists purely to buy and let property, this should be your main code, and for many landlords it's the only one needed.

Two other codes come up occasionally. 68201, renting and operating of housing association real estate, is a niche code for registered providers and rarely applies to a private landlord. 68320, management of real estate on a fee or contract basis, is really a letting agent's code, though some lenders will accept it alongside 68209 for a self-managing landlord.

The code to be careful with is 68100, buying and selling of own real estate. This signals property trading or development rather than buy to let, and registering it as your only code, or alongside 68209, can put some lenders off or push you toward a commercial rather than a buy to let product. If your SPV is a straightforward letting vehicle, leave it off.

What Companies House Registration Involves

Beyond the SIC code, a lender will look at how the company itself is structured.

Incorporate as a standalone private limited company. Lenders are far more comfortable with a simple structure, one company, its own directors and shareholders, than with an SPV owned by a holding company or another corporate entity. A standalone structure keeps your options open across more lenders.

Keep the company's activity limited to property. The name, the SIC code and the articles of association should all point to the same thing, holding and letting residential property. Mixing in other business activity is one of the most common reasons a lender declines an SPV.

Get the register of persons with significant control right. Anyone with more than 25% of the shares or voting rights needs to be recorded accurately. Lenders check this against what you declare on the mortgage application, and a mismatch causes delays.

You do not need trading history for this to work. Most specialist lenders are entirely comfortable financing a company incorporated the same week, since an SPV with no other activity has no accounts to assess in the first place.

What Lenders Want to See From Directors and Shareholders

The company might be borrowing, but lenders still look through it to the people behind it.

Personal guarantees. Nearly every SPV mortgage requires a personal guarantee from the directors, and usually from any shareholder holding a significant stake. This means that if the company cannot meet its mortgage payments, the guarantors are personally liable, which is worth understanding clearly before you apply rather than after.

Credit history. Each director and guarantor is credit checked as an individual, in the same way you would be for a personal mortgage. A poor credit history for a director can affect the application even though the company itself has no track record.

Income requirements. These vary a lot by lender. Some ask for no minimum personal income at all, others set a threshold, commonly in the region of £25,000, for at least one director. It is worth checking this early, since it can rule certain lenders in or out before you get anywhere near a property.

How Lenders Assess the Mortgage Itself

Once the company and its directors clear those checks, the mortgage is assessed much like any other buy to let, with a few company-specific adjustments.

Deposit. A 25% deposit is typical, giving 75% loan to value, though some lenders will go up to 80% at a higher rate.

Rental cover. Lenders apply an interest coverage ratio, commonly around 125% for limited company borrowing, meaning the expected rent needs to cover the mortgage interest with a decent margin built in. This is usually higher than the coverage required for a basic-rate individual landlord, one of the trade-offs against the tax treatment a limited company offers.

Fees and rates. Rates and arrangement fees for limited company products still tend to run a little higher than equivalent personal buy to let deals, reflecting the smaller pool of lenders willing to offer them, though the gap has narrowed as more lenders have entered this market.

A Different Kind of Mortgage Contract

It's worth being clear that a limited company buy to let mortgage is treated differently to a residential mortgage in law. Because the company, not an individual, is borrowing for a business purpose, these are business buy to let mortgages rather than regulated mortgage contracts. That doesn't make them any less safe when arranged properly, but it does mean the consumer protections built around regulated residential lending don't apply in the same way, which is exactly why getting advice on the structure before you incorporate matters.

Getting the Structure Right Before You Apply

The pattern that causes problems is almost always the same: the company gets set up first, sometimes by an accountant focused on the tax side, and the mortgage gets arranged around whatever structure already exists. Sorting out the SIC code, shareholding and directors with a buy to let mortgage in mind from the outset avoids having to unpick it later, or finding your choice of lender has narrowed before you've even applied.

Rates and criteria for limited company buy to let move often, and which lenders suit your structure depends on the detail of how your SPV is set up. Aspect Mortgages is whole-of-market, so we can match your SPV to lenders that fit it rather than working backwards from a single lender's rulebook. You can check current live mortgage rates or get in touch to talk through setting up your SPV correctly from the start.