Real Estate Investor Magazine South Africa April 2018 - 100th Issue! | Page 53

UNITED KINGDOM
workplace or university, with in-house
concierge, gyms, media rooms, designer
fittings and fast internet.
The South African tax system has
also changed, so considering the way in-
vestments are planned and structured is
a crucial part of your success. The South
African economy and the country’s po-
litical uncertainties are also important
factors in the need to re-evaluate off-
shore investment techniques.
Our recent event unpacked these
issues, assisting those wanting to in-
vest offshore by keeping them up to
date with the latest trends, investment
hotspots and offering tips on how to go
about investing. Attendees were offered
a chance to ask questions and to put
their personal objectives and concerns
to a panel of experts in order to gain a
well rounded view of how best to invest
in the exciting UK property market.
Hurst & Wills prides itself on inde-
pendence and fluidity. Each client’s in-
TOP 10 TIPS FROM THE SEMINAR
1. Diversify: The rand’s positive reaction to the
appointment of Cyril Ramaphosa as the ANC’s new
leader means that South Africans are in the best
position in years to diversify their investments with
an overseas property portfolio.
2. Strong Rand/weaker GBP: “The rand is now at a fair
value considering the real economic and political
challenges that lie ahead,” explains Hurst & Wills’
Forex expert Andrew Rissik. “South Africans should
make sure that their rand-holding and rand-de-
nominated debts are as low as possible in order
to protect their wealth. An offshore investment
strategy is essential.”
3. Move ZAR in advance: South Africans are allowed
to take out R1m discretionary allowance and R10m
capital investment per annum overseas. More than
R10m requires special clearance.
4. Borrow offshore where possible: Be aware that
there is generally a minimum loan requirement
of £100,000 for purchases based on a 50% LTV.
Securing a non-resident mortgage is subject to
good income, an existing British bank account and
possession of a UK passport. Expect to pay interest
rates of 3-4.5%.
5. Offshore company use: According to our structure
expert, Tim Mertens of Sovereign, “The extent
of the use of offshore companies for [property
investment] is staggering, as in an approximately
10-year period from 2005 to 2014, it is estimated
that between 170-200 billion pounds worth of
property was purchased in offshore companies
alone.” Mostly as a result of IHT and SDLT avoidance
by offshore companies, the UK government started
to act, forcing us to find alternative structures such
as the popular QNUP structure.
vestment strategy is unique. They must
consider their personal wealth objec-
tives, their tax scenario, how to struc-
ture their portfolio and their family’s
exit strategy. As independent advisors,
it’s our job to make sure that our cli-
ents have a full team of experts behind
them so that they can make informed
decisions. We have joined forces with a
team of experts for our events in order
to offer our clients a holistic approach to
property investment.
6. Consider ATED tax: It’s a good idea to invest in
properties valued below £500,000. “ATED seeks to
tax offshore companies holding residential prop-
erty above a value of £500,000 where the annual
charge would be £3,500 on an upward scale” says
Mertens.
7. Plan ahead: Although the UK government has
introduced anti-avoidance measures and a general
tightening up of property ownership, there are still
effective and tax compliant structuring opportu-
nities for those who wish to purchase UK property
with professional advice.
8. Northshoring: Matt Jay of UK property company
Alliance coined the phrase ‘Northshoring’ as Lon-
don becomes more expensive. Investors should
be looking to the north, where yields of 6-7% are
possible, compared to 2-3% in London.
9. Property hotspot: Manchester is the number one
location for rental returns in the UK, with property
prices set to rise by 28% over the next four years
and rents expected to increase by 21%. With 96%
occupancy rates, billions have been set aside to
boost the region’s infrastructure, including a high-
speed train to London. 80 out of FTSE100 com-
panies have offices in Manchester and the BBC’s
recent move to Manchester marks the beginning
of a large-scale decentralisation from London.
10. Latest trend: Student accommodation is a
high-yielding and resilient asset class. The PBSA
(Purpose Built Student Accommodation) sector has
demonstrated that, given the choice, students will
elect to pay significantly more for PBSA accom-
modation than traditional HMO stock. Student
numbers are on the rise, with 1.7m full time
students in UK. 23% of these come from outside of
UK – international student numbers have grown by
70% over 10 years.
SA Real Estate Investor Magazine APRIL/MAY 2018
51