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A Special Purpose Vehicle (SPV) is a legal entity created for a specific, defined purpose. SPV's are subject to standard UK company law under Companies Act 2006.
A key first decision is whether to use a single SPV for both land holding and development, or separate corporate entities. A single SPV is simpler but separate companies can offer better risk protection and future flexibility for phased developments.
SPVs are frequently used for:
• Property investment and buy-to-let portfolios
• Property development projects
• Joint ventures
• Securitisation and structured finance
• Asset protection and risk isolation
SPV's are particularly valuable for developments with planned exits because they provide a clear and contained vehicle for the project. This makes the development more attractive to potential purchasers by:
The ability to sell either the asset or the entire SPV gives flexibility in structuring the exit to match market conditions and buyer preferences. This clean approach is particularly attractive to institutional investors and funds who often prefer simplified acquisition structures.
Property investors and landlords
Property developers
High-net-worth individuals
Corporate groups
Joint venture partners
Lenders and private investors
We work closely with accountants, tax advisers, brokers, and lenders to deliver a joined-up service.
Ring-fenced structure - for example, if you own ten properties, each in a separate SPV, a problem with one property can't affect the others.
Restricted powers - articles might state it can only borrow from specific lenders or up to certain amounts.
Subsidiary/orphan structure - either owned by your main company or set up independently through a trust structure.
Minimal employees - often just directors and a company secretary, with services contracted out.
Limited administration - basic annual filings and board meetings only.
Debt restrictions - typically can only borrow for its stated purpose
Using an SPV within a wider group structure offers advantages when :-
Multiple developments are ongoing
Group-wide funding arrangements exist
Tax planning requires flexibility between entities
Shared resources and expertise across projects is needed
Brand value/track record of parent company is important for securing contracts or funding
If you’re planning a property development, using a Special Purpose Vehicle (SPV) company, a key early decision is whether to use one SPV for both the land and the development, or to split them into two companies.
With the first option, the SPV owns the land and carries out the construction or refurbishment, which keeps things simple. With the second, one SPV holds the land while a separate SPV undertakes the development work. This split can limit risk, for example, if something goes wrong during construction, it won’t directly affect the land-holding company, and gives more flexibility for phased projects or future expansion.
SPVs are particularly valuable if you plan to sell the project. Because the SPV is a self-contained vehicle, you can sell either the property itself or the SPV that owns it.
Complex mixed-use schemes often benefit from multiple SPVs to reflect different risk profiles and potential exit strategies for each element of the development.
Multiple SPV structure example for city centre regeneration with retail, residential and leisure :-
MasterCo SPV owns overall site
ResidentialCo SPV for apartments
RetailCo SPV for shopping areas
CarParkCo SPV for parking operations
Service Charge Management Property management SPVs provide a clean vehicle for:
Ring-fencing service charge funds
Clear accounting for different cost centers
Protection of leaseholder funds
Transparent reporting to residents
When using an SPV for property ownership or development, borrowing can be more complex. Lenders often require personal guarantees, larger deposits, or additional security, as the SPV itself has no trading history or assets beyond the property.
These financing challenges are among several practical downsides to consider:
Limited Recourse Lending - lenders often provide finance secured on the SPV’s assets only. The SPV’s ring-fenced nature can make lenders more cautious.
Higher Borrowing Costs - SPV's may face higher interest rates or stricter covenants because they cannot rely on parent company assets.
Covenants & Restrictions - SPV's may have restrictions on distributions, acquisitions, or further borrowing, often imposed by lenders.
Due Diligence Requirements - lenders usually require robust governance, accounting, and reporting to ensure the SPV can service debt.
We are experienced in both property development and corporate structuring, providing practical, commercial advice that protects your interests while facilitating your development goals. Our team has extensive experience working with developers, from single project SPVs to complex group structures.
Our services include :-
advising on optimal SPV structure for your specific development.
setting up the SPV and all necessary documentation.
structuring relationships between group companies.
supporting funding arrangements and security documentation.
construction contract support and risk management.
planning exit strategies and implementation.
Do I need a solicitor to set up an SPV?
While company formation can be done online, a solicitor ensures the SPV is correctly structured, legally compliant, lender-ready, and suitable for your intended use.
Can one SPV hold multiple properties?
Yes, but this depends on your investment strategy, tax planning, and lender requirements. We provide tailored advice.
Are SPVs suitable for joint ventures?
Yes. SPVs are commonly used to clearly define ownership, risk, and profit-sharing between parties.
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