Guide to Buying UK Property through a Special Purpose Vehicle

This guide is for property professionals, property lawyers and investors who are considering the purchase of a Property SPV, and is based on knowledge accumulated from over 20 years’ experience of advising on these types of transaction.

The guide includes materials contributed by LCN Property to a practice note published by Lexis Nexis as part of Lexis PSL, the information service for practising lawyers in the UK. That practice note is available only to LexisPSL subscribers, but we have negotiated the ability to make it available to LCN Property’s clients and contacts free of charge.

Property SPV transactions have different risk profiles and require a different approach

Buying the shares in a property SPV can appear to be attractive because of the possible savings in transaction taxes, notably Stamp Duty Land Tax. It may also be an appropriate approach when dealing with the purchase of a portfolio of properties.

However, these transactions have a completely different risk profile when compared to a direct property purchase. This is essentially because the prospective buyer “inherits” any hidden liabilities in the SPV itself, and is far more reliant on recourse against the seller to protect against those issues. This all represents risks for the buyer – in terms of wasted costs if the transaction aborts at a late stage, and unexpected liabilities if the transaction does proceed. It also represents risks for advisers if they fail to manage those risks and the transaction appropriately.

What you can expect from this guide

The aim of this guide is very simple – it is to answer the most common questions that our clients ask when they are starting out on this kind of project.

The guide outlines is in the form of a 16-page, 3,195 word report, and outlines some of the key legal differences between property SPV transactions and direct property purchases. It also sets out some practical issues which practitioners should be aware of when advising on a transaction of this nature.

We hope that this will help you get your project off on the right foot, and completed on time and on budget.

Acknowledgements and important notice

Special thanks go to Paul Smith, a tax partner at Blick Rothenberg LLP, who very kindly provided comments on the tax content of this guide.

This guide is provided on an “as is” basis. Readers should take their own professional advice, and this document should not be relied upon as a substitute for advice. No responsibility is accepted by LCN Legal Limited or any other contributors, or any of their respective directors, partners, employees, agents or representatives for any cost, loss or liability, however caused, incurred by any person by reliance on it.

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LCN Property helps investors, asset managers, developers and property finders setup and maintain solid legal foundations for their projects.

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