Purchasing Real Estate held in a Corporate Wrapper/SPV

One of the main drivers behind these arrangements is the potential for Stamp Duty Land Tax (SDLT) savings. However, while SDLT advantages can be significant, they must be weighed against the wider legal and financial considerations involved.

What is a Corporate Wrapper or SPV?

A corporate wrapper refers to a structure where property is owned by a company rather than directly by individuals. Often, this company is set up as a Special Purpose Vehicle (SPV) — a separate legal entity created solely to hold a specific property or portfolio.

Instead of purchasing the property itself (an asset purchase), a buyer may acquire shares in the SPV that owns the property (a share purchase). The property remains in the company’s name; only the ownership of the company changes.

This distinction is important because it affects tax treatment, liability, and the scope of due diligence required.

SDLT benefits of buying a SPV

One of the key attractions of acquiring property through a corporate wrapper are the potential SDLT (‘Stamp Duty Land Tax’) savings.

In a direct property purchase, where the buyer acquires the property’s legal title, SDLT is generally payable based on the value of the property, which can represent a substantial upfront cost, particularly for high-value commercial properties.

By contrast, when a buyer acquires shares in an SPV that owns property SDLT is usually not payable because there is no direct transfer of land. Instead, stamp duty applies to the share purchase, often at a lower rate, which can result in significant savings for the buyer

However, SDLT rules are complex, and anti-avoidance legislation may apply. Buyers should always seek specialist advice from their tax advisers and consider the latest guidance from HM Revenue & Customs before proceeding.

Enhanced legal due diligence

In addition to the normal property purchase due diligence to be carried e.g. title review, carrying out the usual searches and enquiries of the seller, a buyer needs to be aware that as they acquiring shares in an SPV, i.e.  taking on the company as a whole, an additional level of corporate legal due diligence will be required;

Key areas of due diligence include:

• Confirming the SPV holds good title to the property
• Reviewing outstanding debts and potential disputes
• Assessing lease arrangements and tenant compliance
• Identifying environmental or regulatory risks
• Ensuring corporate records and tax filings are up to date

Thorough legal and financial due diligence is critical to avoid unexpected exposure after completion.

Tax considerations beyond SDLT

While SDLT savings are attractive, buyers must also consider:

• Corporation tax exposure within the SPV
• Deferred or hidden tax liabilities
• Capital gains implications on future disposal
• Increased scrutiny under anti-avoidance rules   

An SDLT saving at acquisition should always be balanced against longer-term tax consequences.

Financing and lender consent

Where property is subject to existing financing, lender consent may be required before a change in SPV ownership can occur. Buyers should review loan documentation for change-of-control provisions and potential penalties early in the process.

Summary

Acquiring property by purchasing the corporate wrapper/SPV can deliver meaningful tax savings and other commercial advantages, hence their popularity amongst investors. However, these benefits must be carefully balanced against the broader legal, tax, and financial risks of purchasing a corporate entity.

We recommend that any potential buyers engage early with their legal and tax advisers to ensure that any commercial efficiencies are realised while protecting long-term investment value.

If you are considering a property SPV  purchase and require assistance, or would like to discuss any aspect of the process in general, please feel free to get in touch with Amit Bhangham from our Commercial Property Team on amit.bhangham@thackraywilliams.com or Matt Lewins from our Corporate Team on matthew.lewins@thackraywilliams.com