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SPV (Special Purpose Vehicle)
Definition
A limited company set up solely for the purpose of holding property investments, often used for tax efficiency and risk management.
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Related FAQs
A limited company HMO mortgage is for properties owned by a company rather than an individual.
Was this helpful?Rates are typically 0.5-1% higher than personal HMO mortgages due to increased risk.
Was this helpful?You'll need company accounts, director details, a business plan, and property details.
Was this helpful?Limited companies can claim mortgage interest as a business expense, potentially reducing corporation tax. They also benefit from lower tax rates on rental profits compared to personal ownership.
Was this helpful?You can set up a limited company through Companies House or use a formation agent. You'll need to choose a company name, appoint directors, and register for corporation tax.
Was this helpful?Most lenders require the limited company to have been trading for at least 12-24 months, though some specialist lenders may accept newer companies with strong business plans.
Was this helpful?Yes, you can transfer properties to a limited company, but this may trigger capital gains tax and stamp duty. You'll need to remortgage the properties in the company name.
Was this helpful?Limited company HMO mortgages typically require a minimum 25-30% deposit, though some lenders may accept 20% for experienced landlords with strong company finances.
Was this helpful?Limited company rates are typically 0.5-1.5% higher than personal HMO mortgages due to increased lender risk and administrative complexity.
Was this helpful?Criteria include minimum company trading history, strong business accounts, director experience, property suitability, and adequate rental income projections.
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Why Choose a Limited Company for Your HMO Mortgage? Benefits and Considerations
Investing in Houses in Multiple Occupation (HMOs) through a limited company structure has gained popularity among property investors, thanks to its potential tax efficiencies, limited liability, and enhanced professional credibility. This approach, however, comes with its own set of challenges, including potentially higher lending rates and the administrative complexities of running a company. Here's an exploration of why you might choose a limited company for your HMO mortgage, alongside key considerations to keep in mind.
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