August 6th 2025
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What is an SPV (limited company) for property investing?
A special purpose vehicle (SPV) is a limited company that’s used for a sole purpose. If you’re looking to grow your portfolio or expand your buy-to-let empire, setting up an SPV for property investment could be a wise move.
However, before you make any firm commitments or big decisions, understanding the dynamics of an SPV in addition to any potential pros or cons is essential.
Here, we’ll tell you all you need to know about SPVs for property investment so you can make an informed choice based on your specific situation.
Table of Contents
So, what is the ‘SPV meaning’, exactly? As I mentioned, it’s essentially a limited company set up for a specific purpose.
SPVs for property investment exist for the purpose of acquiring properties for buy-to-let properties, often at scale (typically owning and managing two or more properties at a time with the aim of further future growth).
One of the key differentiators between a standard limited company and an SPV is scope. You can expand or vary the nature of your business with a ‘limited company’, but with an SPV, you must trade as intended – in this case, property investment.
80% of buy-to-let properties are currently purchased though limited companies or SPVs because of the additional financial protections and flexibility these types of set up offer.
The difference between SPVs and personal buy-to-lets
Until recent years, smaller investors generally bought buy-to-let properties in their own name. But recent changes in tax legislations have changed the playing field.
Changes to Section 24 of the Finance Act 2015 has placed many landlords under financial strain, particularly investors letting out several properties. Known in the industry as ‘Tenant Tax’, this legislation takes away the landlord’s personal right to deduct related expenses including mortgage interest from their overall rental income.
Setting up a limited company or SPV means you can possibly offset 100% of your mortgage interest to mitigate profits and reduce the amount of tax paid based on your rental income.
As such, setting up an SPV for property investment is becoming increasingly popular. The process of buying a property through an SPV is similar to buying one on a personal level, but the property is owned by your company. That also means that the financial liability is separate from you as an individual.
Before you make any significant decisions as a property investor, you should weigh up the potential pros and cons of setting up an SPV. Let’s explore.
The pros of setting up an SPV for property investment
According to industry expert Property Watchdog, SPVs offer a unique opportunity for investors looking to scale with confidence:
“For real estate investors, leveraging the most innovative strategies to optimise portfolios, maximise returns and mitigate risks is a key consideration, and for those who have set up a limited company to manage their buy-to-let-business, creating a ‘Special Purpose Vehicle’ (SPV) is considered one of the best, offering a host of benefits and opportunities.”
– Property Watchdog
Setting up an SPV for property investment will allow you to acquire and hold multiple properties without the need of personal financial evaluations. As a result, you can scale your portfolio more seamlessly while keeping your company’s fiscal activities from your separate personal finances, including any separate streams of income (your salary, for instance).
By setting an SPV, you can limit their financial risk as the liability is confined to your company. In turn, this will protect your personal assets and your parent company’s (if applicable) general financial health from potential downturns or unexpected bumps in your property investment activities.
SPVs can offer notable tax efficiencies, mainly from the exemption of income tax on your retained earnings, allowing you to invest more capital into your portfolio.
The cons of setting up an SPV for property investment
While SPVs do offer tax benefits on your retained profits, they don’t provide exemptions from additional taxes like stamp duty. All properties purchased through your SPV are subject to the standard stamp duty rate, plus a 3% surcharge for limited companies.
Setting up and managing an SPV comes with a mix of legal, red tap, and administrative obligations to ensure you remain compliant with financial regulations. You’ll likely need legal and accounting support, which will add to your overall investment costs. Setting up and running an SPV also includes setup costs and ongoing management fees to consider.
FYI: If you need financial advice around setting up and managing your SPV, talk to our trusted tax partner, FCF.
There’s a reputational risk involved if your SPV engages in high-risk ventures that fall flat or fail altogether. These issues can impact your SPV or parent company’s reputation by association, affecting trust or access to future financial backing as a result.
Read: Our essential guide to the advantages and disadvantages of investing in a limited company for a deeper dive into the subject.
As I’ve already touched upon, there are some key taxation differences to consider when deciding whether to invest personally or an SPV. Here are the key points you need to know.
Personally-owned properties and taxation
In this situation, you deduct any allowable expenses from your rental income and pay income tax at your regular rate based on the difference or profit gained through your properties:
- Basic: 20%
- Higher: 40%
- Additional: 45%
You can’t claim your mortgage interest as an expense on your personally owned properties. Instead, you’ll receive a basic rate (20%) reduction from your tax liability for any mortgage interest payments and additional financing costs.
This isn’t great for higher rate tax payers as more often than not, you’ll have to pay more in tax. That said, if you’re a higher rate payer looking to expand your property portfolio, setting up a limited company or SPV is worth exploring as it could reduce your total taxation costs.
SPV-owned properties and taxation
Tax on properties acquired though limited companies or SPVs is typically more flexible than personal ownership. You can also deduct any allowable expenses from your rental income to arrive at the company profits – but there are some differences.
In this situation, you can deduct a portion of mortgage interest payments from your rental income. As such, you’ll reduce your overall profits, decreasing the amount of tax due as a result.
You’ll also pay corporation tax rather than income tax on your profits, which is currently between 19% and 25%. If you keep the profit inside the company (to save for another property, for insurance), you won’t have to pay extra tax.
If you decide to set up and establish an SPV to invest in properties, here are the essential steps you’ll need to follow to complete the process:
- Choose your SPV company’s trading name
- Appoint your SPV company directors
- Select your SPV shareholders or guarantors
- Set your official office address and confirm your company’s proposed business activities
- Acquire the appropriate standard industrial classification (SIC) codes to specify your exact business activities (in this case, property investment)
- Prepare your Memorandum and Articles of Association
- Register your SPV with Companies House and HMRC
- Seek expert advice on accounting, paperwork, and your legal obligations to remain compliant
Whether you decide to make investments personally or set up an SPV, securing your next investment through the Property Sourcing Company is a good idea.
We boast an ever-growing portfolio of top-quality properties across the UK, many of which fall around 15 to 20% below actual market value.
You won’t find these investment opportunities on your typical third-party property listing sites like Zoopla and we have a broad range of properties to suit every budget. Contact us today and we’ll find you the best property for your investment needs.
Yes, you will. Your SPV will be subject to the 3% stamp duty surcharge (which applies to most buy-to-lets). While for personally owned properties this charge only applies to the second and subsequent properties you buy, for limited companies stamp duty applies to every purchase.
While it’s not technically labelled capital gains tax, you have to pay tax on the gain when you sell a property from a limited company or SPV. Essentially, when you sell a property through an SPV, you pay corporation tax on the gain. You can’t use your capital gains tax-free allowance here; however, for higher rate taxpayers, the overall rate of tax can work out lower via an SPV.
Yes, because your SPV owns the property, and you own your company. If you have a mortgage on the property, the lender will still retain its usual rights over the property if you fall into arrears for any reason.
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