Commercial Property Services
The Landscape
A more complex UK property landscape
With each legislative change relating to property, building and structuring a UK property portfolio is becoming increasingly complex and restrictive. This is particularly relevant for overseas buyers, where navigating UK tax and structural changes from another jurisdiction adds further complexity.
Recent proposals extending rules for non-residents and offshore structures beyond residential property into the commercial property space have further changed the landscape.
Domestically, restrictions on mortgage interest deductibility have already created market concern, deterring some investors from expanding their portfolios.
For all property investors, whether UK-based or overseas, establishing the right structure aligned to long-term objectives requires careful planning with an experienced advisory team.
Client Focus
A more complex UK property landscape
- The structure is designed for property investors or businesses intending to acquire and build a portfolio with a medium to long-term objective.
- It can provide an efficient framework for building a rental portfolio for current and future benefit through a UK or international pension, subject to suitability and regulated investment advice.
- The Private Investment Fund (PIF) structure allows for acquisition across sectors, including residential, commercial and retail, for a buy-and-hold strategy.
- While not a trading vehicle, the structure can accommodate a develop-and-hold strategy with occasional disposals.
- Each structure is bespoke and tailored to the client's individual requirements.
- Clients may appoint their own property management company, maintaining continuity with existing arrangements.
- Each structure operates alongside an FCA-authorised Fund Manager working in conjunction with the client's advisory team.
Benefits
- The structure enables clients to build a property portfolio efficiently and discreetly, while aiming to minimise exposure to UK capital taxes within the boundaries of current legislation.
- The Private Investment Fund may benefit from specific tax exemptions, including potential Capital Gains and Income Tax treatment depending on structure and approval.
- The structure is submitted to HMRC for approval at the outset, providing written confirmation of its status as an exempt vehicle.
- It can be geared with external lending where appropriate, allowing a mix of equity and debt funding strategies.
Restrictions
- The structure is not suitable for clients who rely on rental income to support their current lifestyle.
- It is typically suitable for initial investments of £2 million or above, with plans for additional investment.
- It is not appropriate for those intending to pursue short-term property development for quick resale.
The Process
Following an initial consultation
Following an initial consultation with the client and management team, the process typically involves:
Step 1
Establish pension suitability
Step 2
Establish the Private Investment Fund
Initiating tax advice and discussions with the Fund Manager to establish the Private Investment Fund. An application is submitted to HMRC seeking tax approval as an exempt vehicle, with written confirmation obtained.
Your Team
The management team may include
An FCA-authorised Fund Manager and advisers
A Property Tax Adviser providing initial advice
A Lawyer handling legal advice and conveyancing
A Pensions and Investment Adviser assessing suitability
A Pension Administrator in the appropriate jurisdiction
A Property Management Team
Fees
Establishment and ongoing management
As with all structures of this nature, there are initial establishment fees followed by ongoing management fees.
- Number of properties
- Portfolio size
- Level of management activity required
Certain fixed costs apply but are incorporated into the overall fee structure, which is assessed on a case-by-case basis.
Discuss your commercial property strategy
Speak to the Gresham Street Partners team about whether a Private Investment Fund structure is right for you.