• David Tarry MBA

Special Purpose Vehicle (SPV)

Sounds like something from the FBI or maybe NASA, doesn't it!?!

It really isn't though (well, if it is, it's a coincidence), and what it IS, is the technical term for a Limited Company that's been set up for a specific reason.

From a mortgage finance perspective, a Special Purpose Vehicle (SPV) is set up to be a tax-efficient way of landlords holding a portfolio of buy-to-let properties. The term SPV is a mortgage industry term for a limited company specifically set up to buy and rent properties.

According to a recent survey*, 48% of all buy to let investors intend to purchase their next BTL property within a LTD company because of the tax advantages, so maybe it’s something worth thinking about.

How & why would anyone do this? Well, in recent times there've been a host of taxation changes that means for some people, the tax treatment of buy to let properties is much less when the investments are owned by a Limited Company than by an individual - and setting up a new Company is really simple nowadays - using an online service, it can be done within a few minutes and the initial cost is c£20.

There are plenty of reasons why investors are turning to this method, and if you'd like to know more about how this works in practice, please just get in touch and I can point you in the right direction.

* Source: BVA BDRC Landlord Panel research Q3 2020.