01 Apr 2021

Case study: Buy-to-let using a Special Purpose Vehicle

Investec Mortage Intermediaries tem

The UK buy-to-let market has experienced regulatory and tax changes in recent years and buyers may want to look at the way they structure property ownership in order to be tax-efficient. Investec recently helped a Broker’s client to secure a buy-to-let opportunity through a Special Purpose Vehicle (SPV).

The borrower

A broker recently introduced a brother and sister who were looking to purchase a buy-to-let property which was a four-bedroom house in central London. He worked in the legal sector and she was an academic.

 

The challenge

The property was owned through a SPV as the sole asset and the client would be acquiring the shares of the SPV in order to purchase the property.

 

Lending to a SPV structure can be a challenging proposition for some lenders as it requires specialist knowledge of tax and legal restrictions. At Investec, we understand that high-net-worth individuals will often have specific and complex needs and we relish working with them to create the best solution.

 

The solution

To achieve their goals, the clients’ family office has created a new SPV which will purchase the shares of the existing SPV, including its equity and debt. The new SPV is to be held within a trust managed by the family office, of which the clients are the sole beneficiaries.

 

We were able to approve a loan of £1.9m, on a 10-year interest-only term. It is secured against the property, the SPVs and supported by personal guarantees from the clients. This allowed our clients to have a mortgage that both offered the lowest impact to their cash-flow and ensured they are in a position to take advantage of a SPV borrowing structure already in place.

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