Got a landlord client wanting to buy a portfolio of properties held in the same SPV? There is a little-known route that could cut their stamp duty bill by more than 90%.
Instead of buying each property individually, your client buys the limited company that owns them. This way, your client will still own the underlying assets but instead pays a flat 0.5% Stamp Duty on the shares, rather than a much higher rate of SDLT on the properties themselves.
To give you an idea of how much tax this approach can save, let’s assume your client is purchasing 3 properties, each at £500,000, all of which are held within the same SPV.
Buy the properties individually and the tax bill is £120,000. Buy the shares of the SPV containing the properties instead and the tax bill is £7,500 – a saving of £112,500.
Before you recommend this approach, there are a few things to consider. Firstly, because ownership of the company changes, existing loans must be repaid. This makes the transaction three remortgages.
Lenders will also insist that both companies (the selling SPV and the purchasing SPV) have clean credit histories. Due to the nature of the transaction, legal costs also tend to be a lot higher to cover warranties and indemnities on creditors and debtors.
It’s also worth noting that while the buyer can make substantial savings on SDLT, deferred Corporation Tax and other liabilities may apply. So, tax advice is essential.
There are now 443,272 buy to let companies on the register – almost five times the number in 2016, according to Hamptons – after a record 66,587 were set up last year alone. Therefore, this strategy is only going to grow in popularity. Analysis shows that in 2025, 45% of new BTL lending was to Ltd Cos who now own some 1.5m properties.
However, as things stand, just a handful of lenders, including Keystone, will consider these types of transactions.
If you have a client buying multiple properties held within a single SPV and you don’t know where to turn next, reach out to your Keystone BDM. Your client will thank you for it.
