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Category: limited company mortgage guides

An SPV (Special Purpose Vehicle) is a separate legal entity (limited company) created for a specific purpose, often in property or finance. You can set it up yourself, or ask an accountant to do so.

If an accountant sets up your SPV, check the paperwork they send you and watch out for a few common mistakes we see.

Mistakes on the set up of an SPV can hold up your application for a limited company buy to let mortgage.

 

Video guide transcript: Common mistakes made when setting up a limited company SPV

"Some of the common mistakes we’ve found, when accountants set up SPVs for their clients.

“The main one is having the wrong SIC code.”

A SIC code (Standard Industrial Classification code) is a four-digit number that describes what a business does.

In the UK, Companies House uses SIC codes to categorise a company's main type of economic activity. Every limited company must choose at least one SIC code when filing its confirmation statement. 

It helps lenders, insurers, and HMRC understand the nature of the business. A company can have multiple SIC codes, if it operates in more than one area. 

Buy to let mortgage lenders prefer property they lend on to sit within an SPV dedicated to property investment. This is to mitigate risk. If there is another company operating from within the SPV property is held in, there is a vulnerability that if the other company failed it may impact the finance secured against the property.

"To be an SPV[to invest in property], the main SIC codes you want to go with are 68100 and 68290. If you have either of these two, you’re pretty much good to go with most, if not all [limited company buy to let] lenders that will be happy with these [applications]. 

"We'll always double check that [the SIC code you have used] for you, so don't worry. Just make sure you've got one of those SIC codes. 

"Another one is to make sure the accountant doesn't add themselves to the company, whether that's as a shareholder or as a director. It's not very common mistake, but it's still one that goes on and it can cause delays if that happens. 

"And finally, having the wrong address [on your Companies House record]. 

"So, always double check that everything like this is set up correctly, first time and your mortgage application will go through smoothly”