With every legislative change relating to property that goes by, how best to build a property portfolio in the UK is becoming ever more complex and restrictive, particularly for buyers overseas for which navigating the changes from another country proves even more difficult.
The latest proposals for Commercial Property from 2019 extend the existing rules for Non Residents and “Offshore structures” past that of just Residential Property.
Closer to home, the changes to deductibility of mortgage interest are already creating ripples within the market and leaving clients concerned or even deterred from adding more property to their portfolios.
For all property investors regardless of whether they are in or outside the UK, getting the right structure for your objectives requires careful thought with the right advisory team.
Introducing The Private Investment Fund
- The structure is attractive to a property client or business, with intentions to acquire and build a property portfolio with a medium to long term objective.
- It is an efficient structure to build a rental portfolio for current and future benefit through a UK or International Pension, providing client suitability and investment advice is established.
- The PIF Structure allows for the acquisition of all sectors, residential, commercial and retail for a buy and hold strategy.
- Whilst not a trading vehicle, the structure does permit a develop and hold investment strategy with occasional sales.
- Each structure is bespoke to an individual’s requirements.
- Each client may appoint their own property management company, maintaining a seamless development of any existing arrangements.
- Each structure will have an FCA authorized Fund Manager working along side the client’s own team.
- The creation of the structure enables a client to build his/her own property portfolio, efficiently, discreetly and minimising exposure to current UK capital taxes.
- The Private Investment Fund is exempt to Capital Gains and Income Tax, while the Pension structure can provide for long-term income requirements and protection of assets for future generations.
- The Fund structure is signed off by HMRC at source which provides confirmation and validation that the structure is compliant and non aggressive.
- The structure is relatively easy to gear with external lending, should the investment plan be a mix of equity and debt.
- The structure is not suitable for clients that rely on the rental income to support their current lifestyle.
- The structure is only suitable for initial investment of £2m and above with plans for further investments.
- The structure is not suitable for those that intend to solely develop property for short term sale.
After the initial consultation with the client and our management team, the following process is undertaken;
- Step 1 To receive pension advice through one of our preferred professional advisers allowing for a Pension to be created (if not already established) and to establish client suitability for investment of this calibre.
- Step 2 To initiate the Tax Advice and hold discussions with the Fund Manager to establish the client’s Private Investment Fund, with an application to HM Revenue and Customs (HMRC) for tax approval of the structure as a particular exempt vehicle. We receive this in writing from HMRC.
The Management Team will include:
- A FCA authorised Fund Manager and its advisers with whom the client will have a direct link to regarding the management of the properties;
- Property Tax Adviser who will draft the initial advice around the client’s own circumstances;
- Lawyer who will arrange legal advice and conveyancing
- Pensions and Investment Adviser who will assess the requirements for a pension and client suitability;
- Pension Administrator, located in the correct jurisdiction for you and
- Property Management Team
The Management Team will include:
As with all structures there are initial fees for the advice and establishment of each structure, followed by on-going management fees.These are based on a number of factors including number of properties within the portfolio, activity required to manage the properties, and size of portfolio.
There are certain fixed costs but these are included into the total fee, which is calculated on an individual case by case basis.Please contact us to arrange a meeting if this is of interest & value to you &/or your clients.