SPV BTL Mortgage Using Inter Company Loan: A Complete Guide for UK Landlords

If you are a United Kingdom landlord, a portfolio landlord, or a self-employed business owner exploring a Special Purpose Vehicle buy to let mortgage using inter company loan, this guide explains how it can improve tax efficiency and help expand your collection of buy to let properties. With changing United Kingdom tax rules like Section 24 restrictions and government policy changes, setting up a Special Purpose Vehicle limited company allows funding for buy to let mortgages through inter company loans from your trading limited company. We will cover benefits, setup, lending criteria, and options from specialist lenders to help in the United Kingdom property market. This includes related financial services like green mortgages and bridging finance.

What Is A Special Purpose Vehicle Buy To Let Mortgage?

A Special Purpose Vehicle buy to let mortgage is a loan taken out by a Special Purpose Vehicle limited company specifically for buying, letting, and managing buy to let properties or buy to let property assets. These limited company mortgages are ideal for landlords seeking limited liability protection and capital raisingRaising funds against the equity in a property. through specialist buy to let lenders.

Understanding Special Purpose Vehicles In United Kingdom Property Investment

Special Purpose Vehicles are limited company structures registered in the United Kingdom. They often use Standard Industrial Classification codes like 68100 for buying and selling of own real estate,  68209 for other letting and operating of own or leased real estate including renting and operating of Housing Association real estate, or 68320 for management of real estate on a fee or contract basis. They are set up as a Property Special Purpose Vehicle only for property related activities in the buy to let sector. This makes them suitable for Multi Unit Freehold Blocks or other investment types. Person of Significant Control details must be filed with Companies House through the incorporation route.

Key Differences Between Special Purpose Vehicle And Personal Buy To Let Mortgages

Personal buy to let mortgages are in an individual’s name. Rental income is taxed as personal income, possibly at higher rates up to 45% without full mortgage interest tax relief. In contrast, limited company buy to let mortgages are in the company’s name. Profits are taxed at corporation tax rates, currently 19%  to 25% depending on profits. Special Purpose Vehicle setups also allow full offset of mortgage interest against profits, following Her Majesty’s Revenue and Customs rules.

How Does A Special Purpose Vehicle Buy To Let Mortgage Using Inter Company Loan Work?

A Special Purpose Vehicle buy to let mortgage using inter company loan involves transferring funds from a connected Trading Limited Company to the Special Purpose Vehicle as a loan. This serves as the deposit for buy to let mortgage deals. This is popular for United Kingdom portfolio landlords with retained profits, especially amid market trends like easing mortgage rates in two thousand twenty five.

Role Of Inter Company Loans As Deposits

Inter Company Loan Options, including directors loans, allow moving money between United Kingdom registered companies without immediate tax implications. This requires a formal agreement with an interest rate at least matching Her Majesty’s Revenue and Customs official rate. Mortgage lenders require the donor company to have traded for at least twelve months and matching directors or shareholders. Consult a mortgage broker or property tax accountant for compliance.

Eligible Company Structures And Standard Industrial Classification Codes

Eligible Special Purpose Vehicles must be non trading and use approved Standard Industrial Classification codes, regulated by the Financial Conduct Authority. Layered companies are typically not accepted.

Example: Transferring Funds From A Trading Company To Your Special Purpose Vehicle

Suppose you have £100k  in retained profits in your information technology consulting company in the North West. You set up a Special Purpose Vehicle, create a loan agreement, and transfer funds as a deposit for a £400k buy to let property. The Special Purpose Vehicle takes a buy to let mortgage for the balance. Rental income covers the monthly mortgage payment and Interest Cover Ratio requirements.

Benefits Of Special Purpose Vehicle Buy To Let Mortgages For United Kingdom Landlords

Special Purpose Vehicle structures offer advantages for more landlords, including self employed business owners, especially after the coronavirus disease two thousand nineteen pandemic recovery.

Tax Advantages And Relief On Rental Income

With a Special Purpose Vehicle, you get 100 percent  mortgage interest tax relief against corporation tax, unlike the 20 percent credit for personal landlords. Profits are taxed at 19 percent for small profits under £50k, or 25 percent for higher, with marginal relief in between. Dividends use the £500 tax free allowance as of 2025. Consider Inheritance Tax, Stamp DutyA tax paid by the buyer when purchasing a property. Land Tax, and Capital Gains Tax when transferring properties. Transfers trigger Capital Gains Tax and Stamp Duty Land Tax. Tax professionals can advise on reducing these.

Greater Flexibility For Portfolio Expansion

Special Purpose Vehicles allow borrowing more due to company limits. This aids portfolio landlords in building larger buy to let properties without personal risk. There is no limit on background properties with some mortgage lenders. In 2025, with buy to let lending down 7 percent but remortgages growing, this flexibility is important.

Protection From Personal Liability

The Special Purpose Vehicle provides limited liability protection. However, directors often give a Deed of Guarantee or personal guarantees.

Eligibility And Criteria For Special Purpose Vehicle Buy To Let Mortgages In The United Kingdom

Mortgage lenders assess the Special Purpose Vehicle, directors, and lending criteria like mortgage rate and mortgage products.

Lender Requirements Such As Loan To Value Limits And Credit Checks

Maximum loan to valueThe ratio of the mortgage amount to the value of the propert... is 75 to 80 percent. Rental income must cover 1025 to 145 percent of interest payments via Interest Cover Ratio. Credit checks on directors and company accounts are required, including for Adverse Credit Mortgages. Use Online Mortgage Search tools for Mortgage Illustrations.

Common Challenges For First Time Buyer Landlords

First time landlords or First Time BuyerA borrower purchasing their first property. in buy to let are accepted but face stricter checks. Some require experience. Home Buyer Mortgage or Home Owner RemortgageRefinancing an existing mortgage with a new mortgage. options may differ.

Case Study: Successful Special Purpose Vehicle Mortgage Application With Inter Company Loan

An information technology contractor used £120000 from his trading company via inter company loan for a buy to let purchase in a new Special Purpose Vehicle. The lender approved after accountant confirmation.

How To Apply For A Special Purpose Vehicle Buy To Let Mortgage Using Inter Company Loan

Applying involves a mortgage broker for access to specialist lenders like The Mortgage Works, following the Mortgage Lenders Handbook.

Step By Step Application Process

1:  Set up the Special Purpose Vehicle via Companies House.

2:. Prepare loan agreement and accounts.

3:. Submit via broker.

4:. Undergo valuation and legal checks.

Documents Needed Such As Company Accounts And Loan Agreements

Include certificate of incorporation, bank statementsA record of a borrower's financial transactions often requir..., property schedule, and inter company loan details.

Top United Kingdom Lenders Offering Special Purpose Vehicle Options

Lenders include The Mortgage Works up to one point £5 million, Paragon, and Kent Reliance for limited company mortgages.

Potential Drawbacks And Risks

Special Purpose Vehicle mortgages have downsides in the changing market.

Higher Setup Costs And Fees

Interest rates are 0.5  to 1 percent higher than personal buy to let, plus setup and accounting fees.

Impact Of United Kingdom Regulations On Special Purpose Vehicle Structures

Additional Stamp Duty Land Tax on purchases, now up to 17 percent for corporate bodies on residential properties. Personal guarantees expose directors. Government policy after 2025  budgets may affect.

Related Mortgage Products For United Kingdom Landlords

Green Mortgages And Energy Performance Certificate Saver

Green Mortgages offer lower rates for properties with A or B Energy Performance Certificate ratings. They are available for buy to let from lenders like Barclays and NatWest. The Energy Performance Certificate Saver from Foundation Home Loans provides cashbackA sum of money paid by the lender to the borrower as an ince... and advice to improve efficiency.

Holiday Let Mortgage

For holiday lets, criteria include availability for 210 days and letting for 105 days annually. They require 25-30 percent deposit and minimum incomeThe minimum income required for a borrower to be eligible fo... £25000.

Bridging Finance And Development Finance

Bridging loans for Special Purpose Vehicles offer short term funding 3 to 18 months up to 80 percent loan to value for purchases or Auction Finance. They are useful for bridging loans before long term buy to let.

Home Mover Mortgage And Other Options

For moving, Home Mover Mortgage or Development Finance can complement Special Purpose Vehicle setups.

Frequently Asked Questions On Special Purpose Vehicle Buy To Let Mortgages

Can I Use An Inter Company Loan For Any Buy To Let Property?

Yes, for residential buy to let properties in Special Purpose Vehicles, but restrictions on non standard types.

What Is The Maximum Loan To Value For Special Purpose Vehicle Mortgages?

Typically 75 to 80%, up to 85% for experienced portfolio landlords. In summary, a Special Purpose Vehicle buy to let mortgage using inter-company loan is a strategic choice for United Kingdom landlords amid 2025 market trends like growing remortgages and green incentives. Consult a specialist lender, mortgage broker, or tax professionals to align with your needs.