INVESTING
Buying Offshore Property?
5 Tips for Choosing the Right Broker
BY ANDREW RISSIK
Buying and owning a property offshore exposes owners to currency-related costs, especially when there is market volatility. Having some knowledge of the currency market may just help in avoiding getting into a situation where poor rates can affect what you can afford.
Purchasing and maintenance costs will require settlement in another currency, meaning a Randbased buyer will need to do a currency exchange and an international transfer. In these situations, one is often faced with exchange rate risk and the possibility of poor rates of exchange and high transactional costs as well as long delays in settlement.
Using a broker that is reputable and regulated can save you thousands of Rands on a single transaction. Use the five points below to help you choose the right one.
1Don’ t just accept the first rate you’ re given
Never assume all providers offer similar rates or fees. Shop around before you commit, especially if you normally use your retail bank. Rates differ extremely from broker to broker, to the extent that you can pay up to 4 % more than you need to. In context, this could mean an extra cost of R40,000 on a property costing just R1 million.
Many brokerages will be happy to negotiate a better rate with you, especially if you are repeatedly sending large amount of funds offshore. It never hurts to ask!
2Find a specialist who can get you the most competitive rate
Finding an international money transfer specialist is the best way to ensure you get the ideal rate. Look for one that can offer you a rate as close to possible to the wholesale rate of exchange. In addition, find out what you will be paying for transfer fees and look for a broker who can offer you a much lower fee than a retail bank.
3Currency markets are volatile, let a specialist mitigate your risk so you can invest with peace of mind
Exchange control specialists are a valuable partner when making capital investments offshore. Their knowledge of compliance and their understanding of the complex exchange control and cross-border tax framework is vital.
Owning undisclosed offshore assets can pose future risks for an investor and their heirs. Choose a broker who will ensure you understand the movement of your funds. Your broker should also always report all transfers correctly with the South African Reserve Bank, which means you’ ll never have to worry about being stung by unexpected problems in the future.
Currency markets, especially in South Africa are extremely volatile and can be influenced within minutes by economic or political headlines, whether positive or negative; remember Nenegate? With so much liable to wrong at any given time, it’ s wise to have a dedicated currency expert in your corner. With
54 MARCH 2017 SA Real Estate Investor www. reimag. co. za