UK property owned by an offshore company: we’ll find the mortgage finance you need
Many of our HNW clients use non-UK registered companies, offshore trusts and LLPs as holding vehicles for their UK properties.
Their reasons are as varied – and private – as their personal financial circumstances. They are non-dom and "deemed UK domicile" as well as British residents, looking to minimise the effect of UK capital gains tax, inheritance tax and stamp duty.
And if money screams but wealth whispers, it’s understandable that they value the absolute banking confidentiality assured in these tax-free and low-tax territories.
Lending available in the UK
When it comes to arranging offshore mortgages on these UK properties, not many UK retail banks can offer mortgages on properties owned in a company structure.
And offshore ownership adds another layer of complexity that high-street lenders are not able to service.
Cost-effective finance is available within the UK. You'll need access to a private bank, commercial or investment lender that has experience and expertise in dealing with complex ownership structures.
But which one?
How do you find the right finance?
The issues for you, the borrower, are:
- How do you find the right bank, who will lend to you in the right way?
- Or, how do you find the right broker, who has connections into the right banks?
It’s possible you may make a direct connection to a bank that’s willing to lend on your circumstances. But is it the best deal for you – not only at the most affordable rate, but considering the implications for your wealth management, UK stamp duty and inheritance tax liability?
If a bank proposes restructuring your current trust arrangement or holding company, is this in your long-term interests or to suit their criteria?
At this level of complexity, it’s important to give our clients alternative offshore lending options. Not many lenders are going to tick all the boxes. It’s our job to help clients navigate the options in conjunction with their legal and tax advisers. Luther Yeates, Senior Finance Broker, Clifton Private Finance
Which offshore jurisdictions can be considered?
We can arrange finance for clients who are using offshore holding vehicles in:
- The "crown dependencies" of Guernsey, Jersey and the Isle of Man, with their zero-rate corporate tax: not members of FATF (the intergovernmental Financial Action Task Force against money laundering and terrorism financing), but fully compliant with MONEYVAL.
- The former British colonies which are pure tax havens, including the Bahamas and St Kitts which are CFATF-compliant (Caribbean Financial Action Task Force) and the Cook Islands which is APG-compliant (Asia/Pacific Group on Money Laundering)
- Hong Kong (low personal and corporate tax) - fully FATF-compliant.
- Mauritius (low tax) - ESAAMG-compliant (Eastern and Southern Africa Anit-Money Laundering Group).
- Belize: no corporate tax on income from abroad - CFATF-compliant.
- Luxembourg: maximum corporate tax 21%- FATF-compliant.
- The British Overseas Territories including BVI, Cayman, Bermuda and the T&C – CFATF-compliant but have been fighting hard to protect their banking privacy from British government oversight.
The attraction of UK property holdings for HNW clients
The power of a Georgian manor house or a Mayfair address retains its cachet, according to Knight Frank’s 2019 review of the UK’s super-prime market.
Prime and super-prime properties in London, and country estates in the UK, have been regarded internationally as secure long-term investments.
And the current value of the pound, combined with a Bank of England base rate at 0.75% (only half a point above its historic low of summer 2016) is encouraging major investors to lock in low refinance deals.
What are the challenges for remortgaging UK property held offshore?
- Pre-Brexit uncertainty has meant that some high-end properties have dipped in value in the short-term.
- That can create problems if it takes a borrowing requirement above the 50% LTV that many lenders are comfortable with.
- And high London values can also exceed many lenders’ single-property loan limits: often around £7.8M.
All these concerns narrow the field of willing lenders. The deals are out there – but you need to know where to find them.
An experienced broker at Clifton Private Finance will research all the options available which may be approppriate to your circumstances, and can advise on the most suitable option, according to your priorities.
We will package your application to ensure that it meets the criteria of our targeted lenders, giving them all the information they need for a swift approval, but no more than necessary.
Can I get a UK bridging loan for an offshore company?
We find that many of our overseas and expatriate clients are looking for fast, short-term finance:
- They’re used to acting quickly and don’t want to wait around for more complex long-term finance to be in place before making a purchase.
- They’re over in the UK and want to get a deal completed before they fly out again.
- They’ve already put a deposit down and need finance in place quickly to avoid losing it.
There are a limited number of lenders who will offer bridge finance to a holding company in an overseas jurisdiction.
The good news: amongst those lenders who are willing to come to the party, we can find rates that are comparable to those offered to UK-based personal borrowers.
What to watch out for
Our concern, as brokers acting for you, will be to make sure that we can set up the long-term mortgage finance that will be your exit from short-term, higher-cost bridging.
There’s no point arranging the best-available short-term borrowing for you if you’re not going to be able to repay it at the end of 12 months.
- At the sums involved in this kind of borrowing these are not deals that will be arranged within weeks.
- We will be starting to set up your exit finance at the same time as arranging your bridge funding.
Get an experienced, determined broker working for you
These are complex arrangements that need experience, and a measure of don’t-take-no-for-an-answer from the advisor working for you.
Some of the banks we’ve put these deals through with have themselves remarked "We’ve never had a case like this before."
It’s our job to present your circumstances to the right lender, in the right way, and to work with them to make it possible.
Call us on +44 203 900 4322 to discuss your requirements.
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