Most people are now aware of the rationale behind purchasing a Buy to Let property in a Special Purpose Vehicle. However, as I still get questions on this each day it is worthwhile confirming what is expected from a lenders 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 and this is after you have spoken with your accountant or got tax advice which has advised a company structure is the way forward for your circumstances.
What to do next… 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, it is fairly straightforward but will take you 20 mins approx. and cost £20. The below should help when setting the company up.
A lender expects to see a company set up in a certain way for them to deem it an “SPV”, below is a summary of these points:-
- Registered in England & Wales
- Non-trading company – by nature of an SPV it is a vehicle to hold property/ collect rents it doesn’t have a trading element to it
- SIC Code of 68100/ 68209/ 68320 – this is the standard classification code which determines what the company does – it is classified in
- Finance and Real Estate
- Directors confirmed – most lenders need the directors to be over 25 years old, some allow 21. Some lenders are stuck at 2 directors, others 4 and a couple 6-8 but the more directors the more complex the underwriting/ limited options, 4 is usually the max to include majority of lenders.
- Shareholding confirmed – standard setup is the shareholders match the directors but quite often this isn’t the case – best to run the setup past us as some lenders focus underwriting on directors only and some take into account shareholders depending on percentage of share.
Need to decide what name you want the company to be called.
Once you are past the above steps you are ready to go and we can review mortgage options for you.