Special Purpose Vehicles (SPVs)
An SPV is a limited company set up strictly for the purpose of holding property, commonly used to bypass Section 24 tax restrictions and secure favorable corporate mortgage rates.
A Special Purpose Vehicle (SPV) is simply a standard UK Limited Company that has been established for one specific reason: to buy, sell, and let property. They are defined by specific Standard Industrial Classification (SIC) codes, such as 68209 (Other letting and operating of own or leased real estate).
Lenders heavily favor SPVs over standard trading companies because they are 'clean'. An SPV doesn't carry the risk of a failing manufacturing business or retail shop; its only liabilities and assets are the properties themselves.
Tax Benefits
The primary reason investors use SPVs is to avoid the Section 24 restrictions that prevent private landlords from deducting mortgage interest from their rental income. SPVs pay Corporation Tax rather than Income Tax, and all finance costs are fully deductible as a business expense.