SIC codes for a property investment company

Limited company structures differ depending on the type of business activity. When it comes to property, generally speaking you’re either investing or trading in property, or sometimes you might be doing both.

When you buy property through a limited company, you own the property investment company through shares. The company then buys the properties, the mortgages are in the company's name, and the company pays corporation tax on profits.

SPVs - what are they and why are they important?

A special purpose vehicle (SPV) is simply a regular limited company which is used solely for a particular purpose. In the case of property investment, an SPV is used to purchase and rent out properties.

Choosing the right SIC code for your property company

When setting up a limited company, you’ll need to choose a SIC code. A SIC code (Standard Industrial Classification) defines what a company’s business activities are. Every company must have at least one SIC code but can have up to four if required.

Why it’s important to choose the right SIC code for property companies

It can be difficult to get a mortgage for a trading business, so it’s important your company is set up correctly for the types of business activities you’ll be doing.

• If you’re building an investment portfolio and plan to apply for a buy-to-let mortgage, lenders prefer properties to be held inside an SPV with the SIC code 68209.

• If you’re trading in properties (aka, buying and flipping), use the SIC code 68100.

Here’s a handy table of the different types SIC codes for property business activities

FAQ: What if I buy a property to flip then decide to rent it out instead? Can I do this in the same company?

"Technically, yes. As stated above, you can include up to four different SIC codes on your SPV and trade doing both the above. However, for a number of reasons we suggest you keep these separate - namely, the loss of entrepreneurs relief, and lending issues. There are ways around this, for example having a group structure allowing you to move properties from one company to another. We would always suggest booking a call with a tax advisor when setting such structures up."

Your share structure is a separate decision, and getting it wrong can cost you tax or block a mortgage. See share structure mistakes.

Before you register, check your company name and decide on a registered address. See choosing a company name and company addresses.