SPV, Lending and Structure – The Setup Decisions to Make Before You Source Deals

Why structure first saves money later

When I meet new investors, the most common mistake I see is chasing deals before they have decided how they are going to own, finance and manage the asset. Structure looks dull next to glossy photos and yield charts, but it is the difference between a smooth transaction and a six week scramble. It affects your lending options, tax position, risk management and even your negotiation power. As an editor who reviews real investor journeys every week, I have learned that the calmest portfolios are built by people who settle the structure first. If you want a one stop route that aligns structure, sourcing and management from day one, talk to a team that handles the full journey with a fully managed property investment service and use this guide as your pre purchase checklist.

A quick story – the deal we nearly lost to paperwork

Two summers ago, a Manchester based engineer called me from a car park in Hillsborough. He had just agreed a price on a tidy three bed that would rent all day long. His broker, however, had a different opinion about the phrase “ready to proceed.” The buyer was purchasing in his personal name, yet the plan was to hold a small portfolio. The lender the agent expected him to use preferred an SPV limited company. The conveyancer had already started searches against the individual. We had valuation dates, an impatient vendor and a structure mismatch. It took three rushed weeks to unwind and reset the application into a clean SPV. The deal survived, but only because every party leaned in. It is the perfect example of why you decide on structure before you start viewing. The right decision is not about what is fashionable. It is about what fits your goals, your risk appetite and the lending products you actually want to use.

SPV vs personal ownership – what each really means

Personal ownership is simple to start. You buy in your own name, you file the income within your self assessment, and you can access a broad range of buy to let products if the property is let on a standard AST. For many years this was the default route. Then policy changed. Mortgage interest relief was restricted for individuals, while limited companies could still treat interest as a business expense. As a result, company structures became more popular. Multiple market commentators have shown that the majority of new buy to let purchases are now made through limited companies, with industry analysis putting the figure at around three quarters of new acquisitions in recent years. That does not make an SPV automatically right for you, but it does explain why so many lenders have evolved competitive products specifically for company borrowers. An SPV is a limited company created to hold property, often with a SIC code focused on letting or property investment. Lenders like SPVs because the accounts are clean – the company does one thing. Directors usually give personal guarantees. Tax outcomes differ from personal ownership, so you need advice from your accountant, but from a lending perspective SPVs are no longer a niche. They are mainstream tools for professionalising a portfolio.

What lenders actually look for when you borrow via an SPV

The common belief that company borrowing is slower is mostly outdated. Lenders now run SPV applications through well oiled underwriting paths. They will look for director experience, personal income, the company’s purpose, projected rental coverage and stress tests on the interest rate. Many ask for the company memorandum and articles, proof of shareholding, and evidence of deposit source. On long lease social housing, the panel gets narrower. Some lenders favour standard ASTs because they understand the risk model and the relet assumptions. Others welcome long leases if covenant quality and repair obligations are clear. The nuance here is vital – your structure choice interacts with your strategy choice. If you expect to mix social housing and standard buy to let, you need a broker who knows which lenders sit where on that spectrum and who can explain the lease mechanics in the credit paper.

Loan to value, stress testing and rate reality in 2026

Expect sensible loan to value limits. Many SPV buy to let products sit in the 65 to 75 per cent LTV range for single lets, with rate and fee trade offs above and below that band. HMOs and holiday lets have different criteria. Lenders also test affordability using interest cover ratios. When rates rose in 2023, stress tests tightened, and although pricing has eased since the peak, most underwriters still want comfortable coverage. This is not a bad thing. It is a built in discipline that nudges investors to buy where rents genuinely support the debt. One statistic worth holding in mind – the English Housing Survey reports that the private rented sector accounts for roughly 19 per cent of households in England, a share that has been resilient over the past decade. That depth of demand helps the model, but it does not excuse weak underwriting. Buy at numbers that work without heroic assumptions.

How structure shapes your risk management

An SPV is more than a tax wrapper. It is a way to ring fence risk. In practice, lenders will still ask for personal guarantees from directors, so the protection is not absolute. But the separation of business and personal affairs improves clarity. It also makes it easier to onboard professional services. Your accountant can file company accounts. Your property manager can report to the company. Your portfolio reviews can focus on business performance without blurring into household budgeting. If you scale, you can add subsidiaries for different strategies without mixing cash flows. None of this is essential for a single property, but if your plan is to buy two, three or more within the next few years, structure starts to earn its keep.

What about joint ventures – friends, family and fairness

If you are buying with others, an SPV with a shareholders’ agreement usually beats handwritten promises. The agreement can set out who provides what capital, how decisions are made, and how profits and exits are handled. It can also clarify who gets compensated for active roles like project management. Joint ventures can be wonderful accelerators and horrible headaches. Paperwork makes the former more likely and the latter less likely. If your JV intends to use long lease social housing, build provider requirements into your agreement from the start – standards, timelines, and who signs on the dotted line.

ASTs vs long leases – how strategy meets structure at the bank

On standard single lets, most SPV lenders are comfortable when the tenancy is an AST of six or twelve months. They will look at historic comparables, the EPC, the property condition and the valuer’s rental opinion. On social housing, the lease becomes the heart of the risk. The term, indexation mechanism, repairing obligations and break clauses all drive lender appetite. Some underwriters prefer full repairing leases because the landlord’s maintenance exposure is limited. Others prefer internal repairing structures because they want clarity on external fabric responsibility. There is no universal right answer here. The key is to choose the lender that matches the lease you actually have, not the one you wish you had. A partner who has placed similar leases before will know which credit teams ask what and how to present the case.

Bank accounts, bookkeeping and being lender ready

Open a dedicated business account for your SPV. Record every cost. Keep invoices. If you are new to this, hire a bookkeeper for a few hours a month. One of the simplest reasons investors get slower offers is missing documentation. Underwriters love neat files. They do not need glossy brochures. They need clarity. If your SPV is new, prepare a short director CV, a one page investment summary and a simple statement of funds. If you already own property, keep your ASTs, rent statements and management reports in a folder that you can share quickly. Professional presentation shortens the distance between application and offer.

Choosing your conveyancer – experience beats price

Conveyancing is not a commodity, especially when the deal is in a company and the tenancy or lease has nuances. Choose a firm that regularly acts on SPV purchases, understands lender requirements and replies quickly to additional enquiries. If you are buying with a social housing lease, your solicitor should read it line by line, not scan for keywords. I have watched good solicitors save investors from expensive obligations hidden in schedules. I have also watched cheap conveyancers miss items that took months to fix after completion. The right lawyer is part of your structure. Budget accordingly.

Insurance and covenants – the hidden pieces of the puzzle

You will need appropriate buildings insurance in the company name, with lender interest noted. If you plan to refurb, check contractor cover and site risks. If you are signing a long lease to a provider, confirm that your policy and theirs work together without gaps. On the legal side, read title covenants. Some estates or converted buildings limit use or alterations. These issues are not everyday show stoppers, but they can slow you down if discovered late. Structure is about reducing unknowns. Push unknowns to zero where you can.

A single bullet list – your lender ready pack

Here is the concise pack I ask investors to assemble before they even book a viewing:

• SPV incorporated with correct SIC code, directors and shareholders documented
• Business bank account open and initial funds visible
• Accountant engaged and bookkeeping process agreed
• Broker selected with a product shortlist aligned to your strategy
• Document kit prepared – ID, proof of address, proof of deposit, income evidence, director CV
• Template due diligence checklist for each property – comparables, EPC, works, rent, yield
• Conveyancer appointed who handles SPV and lease nuance routinely
• Insurance broker briefed on both refurb and let phases
• Management plan agreed – AST or provider placement, reporting cadence, fee clarity
• Exit thoughts noted – hold, refinance, or sell within a defined horizon

Refurb finance, bridging and the case for simplicity

If you are taking on works, you may consider bridging finance. Bridging can be brilliant when used with discipline, allowing you to purchase quickly, add value and then refinance onto a term product. It can also erode returns if timelines slip or refinance products change mid project. The best candidates for bridging are deals where the scope of works is crystal clear, the contractor is reliable and the end valuation can be evidenced with close comparables. Many investors will do their first project without bridging to learn the rhythm, then use it selectively. Simplicity is not boring. It is what consistent portfolios look like.

Stress testing – your numbers deserve a rainy day

Professional lenders run stress tests. So should you. Model your deal at a lower rent, a higher rate and a longer works timeline. If the project still meets your minimum return with those stricter assumptions, you have a robust structure. The Bank of England’s rate path changes year to year. Your own discipline should not. A portfolio that survives the rainy day is a portfolio you will still own when the weather turns fine again.

Personal guarantees and what they mean in real life

When you borrow via an SPV, lenders usually ask directors for personal guarantees. It is normal. It aligns incentives and gives the lender recourse if something goes wrong. Understand the limit of liability and whether the lender requires any security beyond the property. Some investors buy a personal guarantee insurance policy for peace of mind. It is not essential for everyone, but it is an option to discuss. What matters is that you sign with your eyes open and that your risk is proportionate to your plan.

Documentation for long lease social housing – the extra layer

If your strategy includes guaranteed rental income via a provider, your documentation set grows. Expect to supply the signed lease, any side agreements, evidence of provider status and insurance details. Lenders will ask for clarity on who handles internal and external repairs, how indexation works and what happens at break points. They may also ask for copies of compliance certificates – gas, electrical and any fire safety items relevant to the building. A partner with a social housing track record will package these items in a way that answers questions before they are asked.

How management and structure work together

Your choice of managing agent interacts with your company structure. Ask the agent to contract with your SPV. Request monthly statements that align to your bookkeeping. Agree on service levels for repairs and voids. The best agents behave like asset managers, not message forwarders. They protect your time and your net yield. If you want to be as hands off as possible, choose a team that offers sourcing, refurb oversight, placement and ongoing reporting in one place. Investors who adopt that model often remark on the same benefit – they get their evenings back.

Using an end to end provider – the orchestration advantage

I often say that structure without orchestration is just stationery. You have the folder, but nothing is inside. An end to end partner brings the whole thing to life. They will align your SPV and lending route with the deals they actually source. They will prepare lender ready packs, set up management pipelines and police the refurb scope so budgets stay on track. If you prefer a direct route from decision to keys, you can explore a hands free route to owning rental property and see how the pieces connect from day one.

Numbers that help you set expectations

A few data points can anchor your plan. The English Housing Survey indicates that around a fifth of households rent privately, underlining the structural demand that supports buy to let. Company structures have become the norm for new acquisitions according to repeated market studies from major agencies, reflecting both lending evolution and tax changes over the last decade. Meanwhile, HM Land Registry data shows clear regional differences in price growth, which is one reason many investors continue to focus on value rich regions such as Yorkshire and the wider North. None of these figures tell you what to buy tomorrow. They do, however, explain why a professionally structured, sensibly financed portfolio still makes sense for thousands of investors.

Common pitfalls and how to avoid them

Rushing the company setup the same week you plan to exchange. Applying to the wrong lender for a property with a non standard lease. Forgetting to budget for EPC upgrades when your valuer is going to notice them anyway. Mixing personal and company funds and then trying to untangle the accounts at year end. All of these are avoidable with a fortnight of calm preparation. Give yourself that runway. Your future self will thank you.

A final story – the investor who made structure her unfair advantage

Last year I interviewed a nurse from Wakefield who wanted her investments to feel like her day job – organised, caring and professional. She set up her SPV before she even booked a viewing. She hired a broker who understood both ASTs and social housing leases. She chose a managing agent who reported like clockwork. Her first purchase was a simple family let. Her second was a long lease with a reputable provider. Neither deal made headlines. Both made rent on time. Twelve months later she told me she finally felt like an investor rather than a hopeful buyer. Structure did not make her rich overnight. It made her confident enough to keep going.

Bringing it all together – decide once, benefit for years

You do not need a hundred decisions to build a portfolio. You need a handful of good ones made in the right order. Choose your structure. Align your lending route. Build a lender ready pack. Then go shopping. If you want that sequence handled with the fewest moving parts and the most accountability, you can book a conversation with the team and map your next twelve months with someone who will still be answering your emails in month thirteen. Decide well at the start and your structure will quietly compound your results while you get on with your life.