Foreign Buyers Guide to purchasing in the UK...
Brett Alegre-WoodChairman, YPC Group
Hey guys,
If you are a foreign buyer looking to invest in the UK the process is a little different than our normal clients who are a UK resident investing. This difference offers many additional benefits as well as a few additional risks and costs.
This blog is all about raising your awareness to these as well as giving you absolute clarity as to the process of buying.
Over the past 5 years the team and I have helped literally thousands of investorâ??s get on the property ladder and grow their property portfolios. In this time we have developed many strong and lasting relationships with professionals in each area; offshore trusts and companies, on and offshore mortgages, conveyencing as well as sourcing, lettings and management of property.
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There are five key areas that we need to cover that affect our relationship.
Structure of ownership
We will refer you to our preferred offshore structuring company. They will discuss the benefits of building your portfolio through a company and trust structure versus building in your own name. Whatever your choice it will not affect your ability to work with us. The setup and management of the company and trust will cost around Â?2000 - Â?3000 plus yearly costs after this which will vary depending on the client.
Conveyencing and Solicitors
Protecting your interests both through the purchase but also throughout your ownership is paramount. We use a professional firm of property solicitors with offices in South Africa and London. Their costs are around Â?1500 plus disbursements.
Mortgage and Finance
As you are an offshore buyer you will normally be restricted to a loan to value of between 70%-75%. Our team will place your mortgage with an offshore lender and in the currency where the security is held (UK property in a GBP mortgage) although depending on your circumstances we can offer various currency mortgages. Our team only deal with offshore investors so you can be certain that they known exactly what they are doing. They charge 1% upon completion of your property.
Accounting
The UK enforces a withholding tax on all income generated within the UK by offshore investors. The Accountants we work can organise a remittance to ensure this withholding tax is not imposed. They can also prepare your yearly returns. They are a well known South African group of Accountants with offices all over South Africa and London. The cost of this service will vary with each client.
Lettings and Management
So you own the property but donâ??t live in the country! You need someone to look after it... Donâ??t worry thatâ??s all part of the service. We will undertake the full management of your property so rather than dealing with letting agents, organising snagging, re-letting, regular inspections and remortgaging services we will look after all the running around for you.
Foreign buyer considerations in the UK
The UK offers some fantastic opportunities to investors from all around the world, its stable political climate, proximity to Europeâ??s labour force, lack of housing; strong currency and developed financial markets mean that investing successfully is a simple so long as you do so based on good solid principles, strategies and fundamentals. This is where YPC steps in to ensure that every property and every step you take is a successful one.
However you need to be aware of some of the issues presented to overseas buyers.
â?? Money laundering regulations â?? New regulations mean that more and more detail is required to ensure who and where any flow of money is coming from and who and where it is going too. Most delays we face with foreign clients have to do with the KYCs (Know Your Client) requirements of the Money Laundering Legislation.
â?? Currency fluctuations â?? The currency risk due to fluctuations between the currency you earn your income in and the currency you have bought the asset in are a very real risk. There are many ways you can limit this risk so make sure you are fully aware and take appropriate action to limit this risk.
â?? Property can go up as well as down â?? Like every economy the UK economy is prone to cycles and therefore prices fluctuate. Your investment should be viewed in the long term and appropriate strategies taken to limit your risks should the economy
The property buying process
1. Secure the property â?? Using the team at YPC you will choose a property which you find suitable for your requirements.
2. Decide on the best structure â?? Choose a structure that suits your needs.
3. Secure a mortgage â?? Once you have the structure you will then be referred to the mortgage broker who will secure you a mortgage.
4. Begin the Conveyence Process â?? Using our solicitors they will correspond with all parties and bring the deal together.
The process will normally take no longer than 6-8 weeks providing you can provide the appropriate documentation.
Congratulations on your decision to work with us and invest in UK property. I am sure that you will find just like me (I am an Aussie investing in the UK) that the UK provides a stable and certain return for your money with little hassle. The team and I are looking forward to building your portfolio from 0-10 properties and beyond.
If you have any questions please feel free to give the team a call on 0207 812 1255.
Live with passion,
Brett Wood
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