When setting up a Special Purpose Vehicle (SPV) for property investment in the UK, it’s easy to assume they’re all the same. But the truth is, how you use your SPV — and what it’s set up to do — makes a big difference. Whether you’re planning to build and sell or buy and rent, the structure, tax treatment and long-term use of your company will vary significantly.
In this guide, we’ll unpack the key differences between using an SPV for a development project versus a buy-to-let investment, and what you should consider when forming the company.
Buy-to-Let SPVs: Keeping It Simple
If your plan is to buy properties and rent them out, then a buy-to-let SPV is probably your best bet. These are designed for long-term ownership. You buy a house or flat, rent it out, collect income, and the company holds the property as an asset on its balance sheet.
Most investors use a specific SIC code when they set up the company — usually 68209, which refers to “Other letting and operating of own or leased real estate.” Lenders often look for this when reviewing mortgage applications. They want a clear line between the business activity and any side hustles you might have.
One huge benefit is that many buy-to-let lenders actually prefer lending to SPVs. As long as it’s been set up properly and the company doesn’t have other trading activities, you’ll usually find it easier to access limited company mortgage products.
When you set up property SPV limited company formation, make sure it’s purely for holding properties. Don’t run multiple businesses through it — it muddies the waters, both for finance and tax.
Development SPVs: Build, Sell, Exit
On the flip side, a development SPV is built for a very different kind of business model. This is about purchasing land or property, adding value through construction or refurbishment, and then selling the finished asset for profit.
The intention isn’t to hold the property — it’s to build and exit. These SPVs are often temporary, used for a single project and then wound up after the sale. Some developers will create a new SPV for each project to keep liabilities separate.
In this case, you’d likely use a different SIC code — such as 41100 (Development of building projects) or 41202 (Construction of domestic buildings). This helps HMRC and lenders understand what your company is actually doing.
From a tax perspective, development SPVs are treated as trading businesses. That can mean different VAT rules, profit taxation, and limited scope for capital gains relief. So it’s worth getting proper advice before forming the company.
Again, when you set up property SPV limited company for development, make sure it’s structured cleanly, has the correct SIC codes, and doesn’t overlap with other business activity. Lenders, accountants, and tax advisers will thank you later.
A Few Other Key Differences
Ownership Setup
Buy-to-let SPVs are often owned by long-term investors — families, partners, or a small group looking for ongoing income. Development SPVs, however, might include investors just involved for one project or joint ventures with builders or landowners.
Financing Strategy
Finance for buy-to-let is generally based on projected rental income. With development, lenders are looking for solid costings, planning permission, exit strategy, and sometimes a proven track record.
Exit Plan
Buy-to-let SPVs might hold properties for 10+ years, or even indefinitely. In contrast, development SPVs usually exist for one reason: deliver a project, sell the result, pay off any loans, and shut down the company. The profits are then distributed to shareholders.
So, Which One Do You Need?
If you’re buying a few flats to rent out long-term, go for a clean SPV structured purely for letting. Keep it tidy and focused — lenders love that.
If you’re doing a one-off or ongoing property development project, you’ll need a company structured with the right codes and tax setup. You might even want one SPV per project to isolate the financial and legal risks.
And if you’re doing both? Don’t mix them in the same company. Create separate SPVs to keep everything clean.
