Most people are now aware of the rationale behind purchasing a Buy to Let property in an SPV or Special Purpose Vehicle. However, as I still get questions on this most days, it is worthwhile confirming what is expected from a lender’s perspective and the basics involved. The premise of this blog is not to confirm if a personal BTL or Company BTL is correct for you. It is to give the lenders expectations of what they require. Please bear in mind that this is after you have spoken with your accountant or sought tax advice. The result of this should be that a company structure is the way forward for your personal circumstances.
You should either continue the conversation with your accountant and request they set the company up on your behalf, or do this directly with companies house. I have set an SPV up directly with companies house myself. it is fairly straightforward and will take you approximately 20 minutes. It cost £20. The following instructions should help when setting up the company.
A lender expects to see a company set up in a certain way so they can deem it an “SPV”. Below is a summary of these points:-
- Registered in England & Wales
- Be A Non-Trading Company – by nature, an SPV is a vehicle to hold property or collect rents. It doesn’t have a trading element to it.
- Have a SIC Code of 68100/ 68209/ 68320 – this is the standard classification code which determines what the company does.
- Finance and Real Estate
- Have Directors Confirmed – most lenders need the directors to be over 25 years old, but some do allow 21. Some lenders are stuck at 2 directors, others 4 and a couple 6-8. The more directors, the more complex the Underwriting/Limited Company options. 4 is usually the maximum in order to include the majority of lenders.
- Have Shareholding Confirmed – the standard setup is that the shareholders match the directors. This quite often is not the case, however. It is best to run the setup past us here at Hawke. Some lenders focus underwriting on directors only and some take into account shareholders, depending on the percentage of the share.
- Have a company name confirmed.
Contact Us at Hawke
Once you are past the above steps you are ready to go and we can review mortgage options for you. Please Contact Us today and we will be happy to assist.