Author: Louise

Home buyers and owners in France and Spain – watch out

One of the biggest changes for Britons buying or owning homes in an EU country since the start of 2021 has been the length of time you can stay.

And there is another…… taxes

As non-EU citizens, Britons no longer benefit from EU exemptions. What does this mean in practice?

Let’s take a homeowner in France

A french Gite home

Vendors in France are usually subject to both Capital Gains Tax (CGT) and social charges which fund the services in France – of which there is no direct equivalent in the UK.

Social Charges increase from 7.5% to 17.2% if the seller is not an EU or EEA citizen. More than double the rate for non-EU citizens.

Combined with 19% CGT, it means that a property vendor pays a total of 36.2% in tax, with CGT and social charges combined, on the profit they make from their home at the point of sale.

There are also increased property expenses

As an EU citizen there is no need for a “fiscal tax representative”, which charges around 1% of the sale price to do a capital gains tax declaration. But as a non-EU citizen a Briton is obliged to make a capital gains declaration supported by a tax representative accredited by the French Tax Authority.

There is a glimmer of hope… in bureaucracy and exemptions

With France it is always a good idea to get financial and tax advice, as there are exemptions available to sellers and various ways of buying a property in a ‘Special Purpose Vehicle’ (SPV) of which there are many forms in France, all with upsides and downsides..

Apart from setting up in an SPV, there can be exemptions when buying personally. For example if you’ve held the property for more than 30 years – you are not liable to social charges or CGT in France on the gain.

Or you can plan for this in a similar way to the UK, by moving into the home in France and making France the primary residence, thus in theory enabling a house sale without attracting CGT using the main residence exemption.

As in the UK there are rules around this, so tailored advice is needed.

How about homeowners in Spain?

Another popular country for Britons buying a holiday or retirement home, but where the tax regime is different for non-EU citizens.

Income tax is levied at 19% for EU citizens but 24% for residents of a ‘3rd country’

And whilst it is still ok to get mortgages, banks might not lend as much money against the value of the property. Banks in Spain are tightening loan-to-values and post Brexit mortgage lending is typically at 60% LTV, lower than the 70% LTV for EU citizens.

This means having more cash available as a home buyer in Spain, given a 40% deposit is likely to be needed and along with buying expenses at 12-13% as a home buyer you may therefore need 52-53% of the value of the property in cash.

Increased cross-border visibility of tax affairs 

Whilst Brexit has fragmented our relationships with Continental countries somewhat, we live in a world of increased traceability. It is worth taking note that there is a Directive (2018/822) called DAC6, an EU mandatory disclosure regime that imposes mandatory cross border reporting on tax matters for tax residents in one or more EU State, meaning there is greater cross border reporting of tax affairs.

Double Taxation Treaties are international and exist between the UK and most Countries around the world, meaning you don’t pay the same taxes twice.

Whilst these fiscal changes are more enduring, let’s hope stock blips of British products on the Continental supermarket shelves are only temporary and the logistics and transportation challenges get resolved soon.

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

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What percentage uplift do vaccines provide economies and housing markets?

Faced with severe economic downturns in 2020 (estimated at minus 3.5 percent) and still in the midst of exceptional uncertainty, the global economy is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.

Vaccines have given a fillip of 0.3 percentage point relative to the previous forecast, reflecting increased economic confidence. The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, the effectiveness of policy support, exposure to cross-country viral spreading and the state of individual economies on entering the crisis e.g. low-income developing economies, entered the crisis with high debt that is set to rise further during the pandemic.

Property markets have surprised, particularly in the UK..

There was uncertainty with the housing market during the twelve week National Lockdown from 23rd March 2020. Initially it went into hibernation – as buyers, sellers, renters and landlords were told to delay home moves if possible, not to initiate new viewings and follow through pipeline transactions virtually.

It is estimated there were 450,000 buyers and renters with plans on hold, of which 373,000 were property sales with a total value of £82bn (Zoopla estimates). Sales were running at a 10th of the normal level for the time of year, similar to usual sales volumes of a December.

By the 2nd Lockdown on 5th November the housing market remained open for Estate Agents, removal firms and conveyancers abiding by Covid-safety measures in England, but with greater levels of restrictions in Wales, Scotland and Northern Ireland.

City-Scaffolded-Building-UK

At the same time the Pandemic caused transaction delays in England, prolonging Contract Exchange times from 96 to 124 days, a 29 per cent increase (Movewise).

This was followed by a mini housing boom, as a result of pent-up demand and the Chancellor’s stamp duty holiday. The extent to which government Bounce Back Loans (BBLs) were used for deposits on properties is unclear, but anecdotally it was happening and may have contributed in some way.

All of this combined to push prices up and create a property frenzy in some areas towards the end of 2020.

Fears are that the end of the stamp duty holiday, at the end of March 2021, will cause a sharp drop in transaction levels, which can typically lead to price falls. Already house price growth in the year to the end of January 2021 was 5.4 per cent, down from 6.0 per cent in December (Halifax) and new instructions to sell have decreased noticeably.

We are also now entering the 4th and final year of ‘Section 24’ changes to the way landlords calculate their buy-to-let mortgage interest tax relief, which will be fully implemented and reported in 2020/21 Tax Year in Tax Returns filed by January 2022. This tax-relief withdrawal had already had a dampening effect on the property investment market but will be fully felt in this final year.

London, UK, housing market

Whilst London has been harder hit than most of the rest of England, with a number of homeowners and renters migrating outwards, it may not continue a downward trajectory.

Kearney’s 2020 Global Cities Report ranks London as the No. 2 City, after New York, but London tops the rankings when it comes to the outlook based on long-term investments in governance and economics.

Whilst the rankings have been produced without fully taking into account the effects of the pandemic and prior to seeing any visible signs of the Brexit fallout, it provides a reference point. It also means London starts out in a really strong position, particularly rated for the cultural experience offered, the strength of Medical Universities, global service firms, its news agencies and the overall international travel experience.

Conclusion: property market uplift?

Whilst vaccines may have given a 0.3% upward fillip to world economies, how much might vaccines boost the housing market or otherwise?

It is difficult to strip out the myriad of interwoven drivers of house prices in the UK property market. Drivers such as: rising unemployment, – deteriorating after government support to industry is withdrawn, affordability levels, liquidity of the housing market as less stock comes to market post SDLT holiday is scheduled to end. These all hint at prices lowering. There are also more unknowns, such as the level and shape of the tax burden to be announced in the Chancellor’s March budget.

Yet house building rates still fall short of government targets, exacerbated by Covid, thus constricting supply of newer stock on the market.

The vaccine programmes boost morale and confidence, which can only help the country and economy get back on its feet – and this will have a positive knock-on effect on the housing market.

If you would like help finding the right property at the right price for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

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European Homeowners – where has Brexit left you?

We have been waiting a long time to find out about the situation for Homeowners and Homebuyers in Continental Europe, following the 11th hour deal between the UK and EU and what it means for:

  • Travel and moving around the European Union (EU)
  • European Homeowners
  • Finances / Taxation / Pensions
  • Health
  • Spain – a snapshot for homeowners
  • France – a snapshot for homeowners

Travel and moving around the EU

Travelling around the EU

From January 2021 the right to free movement guaranteed under EU rules ended for UK residents, who will only be able to remain within the Schengen-free zone ( most EU member countries), for a maximum of 90 days, within each 180 day period as a tourist. And this is irrespective of whether it is for work or leisure, in that country, or any other in the Schengen zone. There is a 180 day allowance over the entire year.

This is a challenge for people who have got used to homeworking and the idea that work can be non-location specific. This means some employed and self-employed Brits are feeling the draw to move to and work from countries like France, Spain or Portugal.

What if you want to stay longer?

Staying longer than 90 days in any 180-day period, to work or study, or for business travel, you will need to meet the entry requirements set out by the country you are travelling to. This could mean applying for a visa or work permit. Periods of time authorised by a visa or permit will not count towards the 90-day visa-free limit.

Passports and travel

You will need at least 6 months left on an adult or child passport to travel to most countries in Europe (not including Ireland). As a non-EEA national, different border checks will apply when travelling to other EU or Schengen area countries. You may have to use separate lanes from EU, EEA and Swiss citizens when queueing and you may need to show a return or onward ticket.

Different rules will apply to EU countries that are not part of the Schengen area and each country’s travel advice will need to be checked for entry requirements.

Driving Licence

A UK driving licence will continue to be valid to drive in EU countries. The exceptions are people who only have a paper licence, not a photocard one, as well as those with licences issued in Gibraltar, Guernsey, Jersey or the Isle of Man. In these cases an International Driving Permit (IDP) may be needed.

You will need a green card, which is a document you get from your insurer to prove your car is covered if you are driving in Europe. Motorists should contact their insurers six weeks before travelling, to ask for a green card. Separate green cards are needed for trailers and caravans. The green card is only proof of a minimum level of third-party cover – it will not necessarily match the level of cover that you pay for in the UK.

If you want to take a UK-registered vehicle to the EU for longer than 6 months of the year it is likely to be needed to be registered within the country and you may need to pay some taxes.

European Homeowners and homebuyers

Continental European Holiday Home

If the ’90 day’ limit is too restrictive you might consider other options like residency or citizenship. A resident is a person who is legally living or working in a particular locality, a citizen legally belongs to a country. Once you become a citizen of a country, you can then apply for a passport, whereas residency status is usually conditional and you can only apply for a travel document such as an ID card. 

Residency in an EU country will enable you to travel more freely, a bit like a Schengen visa, but  you only have the right to reside in that specific country. Citizenship in an EU country means you have the right to live, work and study in any other EU member country, which opens up access to other EU countries.

There are a number of countries which offer a so-called ‘Golden Visa’ programme, which tend to be conditional on investment in the country of concern which includes investing in property. Residency, offered contingent on buying a property of a certain value, can often be upgraded to citizenship.

Some countries that offer this type of incentive include Portugal, Greece (Residency only), Cyprus, Malta, all at differing investment thresholds.

Finances/Taxation/Pensions

The UK arguably has a reasonable taxation system and some Continental European countries have higher personal taxation regimes. Becoming resident of another EU country can mean being taxed in that country on worldwide income and potentially assets too. If you are not a resident, you will usually only pay tax on income that came from that European country.

If you are a property investor, filing tax returns in an EU country, the UK has double taxation treaties with most countries and this gives protection at an international level (not EU legislation level) that – in essence – you won’t get taxed twice on the same income.

It is worth checking the taxation protocol of the country of concern to see if the tax regime changes for citizens of ‘3rd countries’

Pensions

Whilst State Pension payment should not attract bank charges being paid, expats might incur extra charges for Private Pensions being paid into foreign bank accounts

Health

A replacement for the EHIC card is being introduced – a UK Global Health Insurance Card (GHIC) gives you the right to access state-provided healthcare during a temporary stay in the European Union (EU). In the meantime EHIC cards are valid until the expiry date shown and it’s a question of ensuring travel insurance covers other medical needs which might not be covered.

Spain – Homeowner Snapshot

Spanish Costa Holiday Home

If you were legally resident (and correctly registered) in Spain before 1 January 2021, you will be able to stay.

The Spanish system Tarjeta de Identidad de Extranjero (TIE) is being rolled out to register permanent foreign residents – but there is a backlog. So proof of application is meant to be sufficient at this point in time by way of the ‘Green Certificate’ a green A4 certificate or credit card-sized piece of paper from Extranjeria or the police. This is still a valid document and proves your rights under the Withdrawal Agreement.

You can exchange your paper ‘Green Certificate’ residence document for the new TIE but you are not obliged to. The Spanish government recommends obtaining the TIE because the biometric card is more durable and may simplify some administrative processes.

You will also need your NIE – Número de identidad de extranjero (similar to a National Insurance number).

If you have not yet applied for a residence document, you should carry evidence that demonstrates you are resident in Spain. This could include a tenancy agreement or a utility bill in your name, dating from 2020.

EHIC European Health Insurance Card and State healthcare: S1

If you have a registered S1 form (for Spanish Healthcare) and were living in Spain before 1 January 2021, your rights to access healthcare will stay the same e.g. receiving a UK State Pension

If you are not an S1 holder, but are registered for public healthcare in Spain in another way and are travelling outside of Spain, you may need to apply for a Tarjeta Sanitaria Europea (TSE – a Spanish-issued EHIC)  for travel to countries outside the EU.

You ought to buy comprehensive travel insurance to cover anything not covered by your TSE, or EHIC. An EHIC is not a replacement for comprehensive travel insurance.

Working in Spain

If you were legally resident in Spain before 1 January 2021, you have the right to work, as long as you remain legally resident. If you are planning to go to Spain to work, you may need a visa or permit. You should check with the Spanish Embassy in the UK.

France – Homeowner Snapshot

France Holiday Home Gite

For those of you with homes in France you visit but want to stay for longer periods then the new system in France will be of interest.

British citizens living in France will have to apply for a residence permit. For those living in France prior to 31 December 2020 they can apply online by 1 July 2021 in line with the Withdrawal Agreement. You need to have your new residency permit before 1 October 2021.

British citizens who arrive in France after 31 December 2020 will need to apply for a standard residence permit at a Prefecture de Police.

All UK nationals resident in France need to apply for the new residency permit. This includes UK nationals:

  • with a European carte de séjour (even if it is marked “permanent”, or has no expiry date)
  • without a European carte de séjour (it was previously optional)
  • applying for a second nationality
  • married to or in a civil partnership with (known as PACSed) FR or other EU nationals

If you have been living in France for over 5 years, you will be eligible for permanent residency and a 10-year renewable residency permit. If you have been living in France for fewer than 5 years, you will be eligible for a card with 5 years’ validity. You will need to provide evidence of your personal situation (e.g. employed, financially self-sufficient).

If you are a British national who has already worked in France, you will be issued a residence permit valid for 5 years. If not , you will be issued an APS (Admission exceptionnelle au Séjour), valid for 6 months and renewable once, if actively seeking realistic job opportunities (there is a likelihood of being hired within a reasonable period of time).

Conclusion

Moving around and doing business has become more challenging, but there are ways to make life easier for yourself by becoming familiar with the procedures and paperwork which are necessary.

Over time as officials, travellers and homeowners become more familiar with the process travelling and living in EU countries should become easier

Disclaimer

Please note this information is provided as a guide only and has been expressed in layman’s terms. Definitive information should be obtained from the Spanish or French authorities and the Foreign, Commonwealth & Development Office (FCDO) or the NHS.

This blog provides guidance on the rules – ignoring any prevailing Covid restrictions which change continuously

If you would like help finding the right Home for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

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From Covid Chaos to Brexit bluster for homeowners abroad

Just at the time we might be able to travel again and move about a bit more freely at some stage in 2021, then another challenge rears its head for Continental European homeowners.

Brexit-Britain-Europe-Hands

From January 2021 the right to free movement guaranteed under EU rules ends for UK residents, who will only be able to remain within the Schengen-free zone (encapsulating most EU member countries), for a maximum of 3 months, within each six month period, regardless of whether a post-Brexit trade deal is done or not.

And this is irrespective of whether it is for work or leisure, in that country or any other in the same Schengen zone. There is a 180 day allowance over the entire year.

This is a challenge for people who have got used to homeworking and the idea that work can be non-location specific, as has become more ingrained in our psyche. This means some Brits are feeling the draw to move to and work from countries like France, Spain or Portugal, potentially still for UK-based enterprises.

However in spite of this, individual EU countries have some discretion, with some offering longer stays for non-Europeans who invest in property above a minimum threshold level. Or in other assets. This arrangement has been dubbed a Golden Visa.

Currently a work-around is for Britons to change their formal residence from Britain to one of the 27 members. Although from 1.1.2021 this becomes more complicated.

There are other also other considerations, like, taxation. The UK currently has a reasonable taxation system and some Continental European countries have higher personal taxation regimes. Becoming resident of another EU country can mean being taxed in that country on worldwide income and potentially assets too.

Then there are healthcare and pensions to consider. On the upside, a replacement for the EHIC card may yet still come, but in the meantime it’s a question of ensuring travel insurance covers medical needs, which we tend to do anyway. Expats might incur extra charges for Private Pensions being paid into foreign bank accounts (although State Pension payment are free).

What isn’t yet clear – given no agreement has yet been reached on the future relationship between the UK and the EU – is to what extent bi-lateral agreements between countries might be reached. Countries like Spain and Portugal have long-standing relationships with the UK and will want to maintain the status quo. London is France’s ‘second city’ on account of the number of French people living in the city, so has vested interests. What are your thoughts?

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Another Lockdown. Another day in UK and Europe

We are all rightly concerned about Lockdowns and their effect on us and the economy. And it can be unclear whether we are doing the ‘right thing’ or not. We can put things in context if we take a look at our Continental European neighbours.

Understandably people question Lockdowns, yet it isn’t just the UK. France, Italy, Spain and even Germany – which has proved to be efficient in its Test-and-Trace programme, are imposing similar lockdowns and restrictions.

By mid-October 240,000 people lost lives in Europe with an estimated 7m infections, so many countries have felt the need to act.

The European economies, as measured by Real Gross Domestic Product (GDP), fell 40% in 2nd quarter of 2020 and more developed nations have felt the worst effects. 54m workers have been supported by some job retention scheme or another.

Projections are for European economic activity to suffer a 7% GDP decline in 2020 – the biggest since World War II, followed by a rebound of +4.7% in 2021

Economic activity would have been 3-4% lower in 2020 with none of this support according to the International Monetary Fund (IMF) .

European Impact of a 2nd round of the pandemic?

Addressing the concern about the amount of government spending, the (IMF) takes the view that Governments can’t afford not to spend, given it keeps people in jobs and businesses going. It is avoiding ‘Economic scarring’.

And it will be a very long ascent for most countries to get back to pre-2019 economic levels, possibly by 2022-2023. Governments will need to work at shrinking the debt and create stronger financial buffers, in a similar way to how banks addressed the 1997 Credit Crunch. Banks have remained resilient given their levels of capital, which have withstood a liquidity crisis this time around.

EU Countries have access to the European Recovery Fund. On average these funds will supply 3% of GDP and can help enhance growth by 0.75-1.5%. Some countries are suffering more than others.

Spain a big holiday home destination

Spain’s economy is affected more than others owing to the structure of the economy. For example hospitality and tourism are large economic sectors. It also has lots of small and medium sized companies which lack the resources of larger companies, as well as lots of temporary employment contracts.

Portugal a lifestyle choice for home buyers

Portugal too has a large Tourism industry, which is creating a big domestic effect, given all the travel restrictions.

UK – a favourite for expat property investors

The economy is forecast to decline by slightly more than Germany and France.

As for the property market, comparisons have been drawn with the Credit crunch of 2008. During the credit crisis UK property prices declined 19% from a peak in Sept 2007 to a trough in March 2009 (Land Registry). But the UK government stimulus now is far more than the stimulus package in 2008 and it is this which will help determine how quickly and by how much the economy recovers by.

The UK property market is currently buoyed by a flurry of buyers. Both homebuyers seeking to enhance their living space and investors rushing to beat the Stamp Duty holiday deadline of the end of March 2021.

At what stage will property market buying peter out?

We will see this activity slow once the reality of unemployment hits the market. London has already been affected as many migrant workers return home because jobs are hard to come by, leaving a larger than usual supply of rental properties. And as some residents migrate out to the suburbs and Home Counties where they get more living space.

The longer term impact on prices is likely to depend heavily on economic factors; growth, earnings and unemployment. 

The UK has long had a supply: demand imbalance and the building industry has been trying to keep up with the annual supply of houses. That remains the case and is now exacerbated by supply chain issues, slower conveyancing processes and a lack of resources at Local Authority level hampering local searches and causing delays in the buying process.

Expats who are still considering their investment plans given the introduction of the 2% stamp duty land tax surcharge for non-UK residents from April 2021, please get in touch.

Source: * IMF (annualised Quarter vs Quarter)

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say



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How to continue UK investing during lockdown?

There is so much uncertainty currently.

The Trump: Biden standoff, not only an unseemly moment for the USA but for Democracy globally.

Surrey Buy-to-let investment property

Due diligence can reduce uncertainty when investing in residential property by spending a significant amount of time researching and doing  analysis before jumping to site visits.

• Can the area deliver your target yields and capital growth aspirations?

•  If it can, is this likely to attract your ideal tenant type?

• And can you afford the type of property you want, whether it be freehold or leasehold, or number of bedrooms?

If you are in rush to beat a deadline, what about the sale status e.g. is there a chain? Has the vendor got other options which means they might be less flexible on price?

All of this before physical site visits, which – for me – are not only to view properties but also to see how professional the estate agent is when conducting the viewing. Are they adhering to best practice Covid guidelines? I tend to use this as a proxy for professionalism. If they’re professional during the sale, they are likely to be professional management agents and serve you well during a lockdown.

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say



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Suburbs or city-centre property investing – in a post-Covid world?

In the past we have tended to want to invest as close to city-centres as we could afford as it meant bagging a convenient location that would be desirable for would-be tenants.

UK Property Investment

Now we need to look at investment locations with renewed eyes. Office workers are reluctant to return to working in city-centres, for a whole host of reasons.

Continental Europeans have gone back to work quicker than we have in the UK: with over 80% of office staff back at their desks in France, over 70% in Spain, yet less than 40% in the UK, although some city-centres are suffering more than others.

Perhaps it is about manageability?

•  Continental city sizes do not mirror those of the UK. In France, Paris has just over 2 m inhabitants and its second city Marseille c. 900k Yet London has a population of 10m and Birmingham 2.5m.

UK property in Cities and towns

Some regional UK cities are also proving to be rental hotspots. Central postcodes in Cities like Bradford and Liverpool offer average yields close to 10%, whereas the suburbs in places like London can still work for rentals, like Enfield or Croydon.

London and other big UK city centre economies are suffering with office workers reluctant to return to offices. Yet London and some other UK cities are quite unique, characterised more as networks of ‘villages’, think Blackheath, Barnes, Wimbledon, so some areas are suffering less.

Suburbs and less-populated areas are holding up, given the work-at-home culture with people more comfortable shopping and socialising locally. A trend being dubbed the ‘hyper-local economy’.

I know when I commuted daily from Surrey to work in central London, it was years’ before I really had time to get to know my neighbours. When I did, I realised what a great bunch they are. They have since become friends and a support network. During Covid there is some good to emerge – the time to linger more in my neighbourhood, in the suburbs, outside of London where we have the best of both worlds, access to one of the best cities in the world and the sense of community and countryside on our doorstep.

Stamp Duty ‘Holiday’ in England and Wales

If you are looking to take advantage of the SDLT ‘holiday’ it is best to not leave it too late as there may be delays in the conveyancing process as many investors rush to beat the deadline. For expats this is more important, given the SDLT holiday ends end of March 2021. At the same time a 2% SDLT surcharge is introduced for overseas property investors in April 2021, meaning paying 5% above the standard rate.

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

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UK post-Covid property hotspots

Location Location Location!

Which ones are going to do better out of Covid?

Given recent news that Continental Europeans have gone back to work quicker than we have in the UK: with 84% of office staff back at their desks in France, 76% in Spain, yet 37% in the UK, some city-centres are suffering more than others.

As an overall observation many of the Continental city sizes do not mirror those of the UK. In France, Paris has just over 2 million inhabitants and its second city Marseille c. 900,00. Whereas London has a population of 10m and Birmingham 2.5m.

Whilst the ‘Stay at Home’ message in the UK is now proving difficult to overturn, there are nevertheless challenges with highly-populated cities. Sheffield has 18% city workers back in the office, Manchester has 15%, Birmingham 14% and Leeds and London have 13%.

Some of these regional UK cities are also proving to be rental hotspots. Central postcodes in Cities like Bradford and Liverpool offer average yields close to 10%, whereas the suburbs in places like London can still work for rentals, like Enfield or Croydon.

It’s time to think about the location of your investment particularly for expats who might want to invest ahead of the SDLT holiday ending at the end of March 2020 and the 2% overseas buyers SDLT surcharge coming into force in April 2020.

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here



COVID Rewrites UK housing rule book

In June the UK property market was buzzing with activity. This was odd just re-emerging from Covid. But would that housing market activity translate into sales?

We are learning the rulebook has been rewritten as the post-lockdown mini-property boom accelerates rather than slows down.

There is normally a seasonal slowdown in housing market activity over the Summer months, as both buyers and sellers turn their attention to Summer holidays. This usually translates into a softening of house prices of around 1.2%, an August fall, which has been the experience for the last 10 years.

UK Property - Surrey Cottage

But this year, there is an un-seasonal record high for new seller asking prices in seven regions, although London drags down the national average to a 0.2% fall due to its own more typical 2.0% seasonal monthly drop. Prices are more buoyant in places like Devon and Cornwall as people seek out-of-city dwellings and prices reach record levels.

Rightmove’s August house price index shows the highest number of sales agreed in a month since over ten years ago, up by 20% on the previous high, with a record total value of over £37 billion*.

There is the obvious pent-up demand filtering through and perhaps people reassessing their housing needs

Rishi Sunak’s SDLT holiday until the end of March ’21 has stimulated, not just home buyers but property investors and expats too, trying to pre-empt a 2% SDLT surcharge levy being introduced April ’21 for overseas buyers. Overseas buyers will pay the new 2% surcharge in addition to the existing 3% surcharge.

The lending market has been jumping around a lot as lenders try to find their ‘new normal’ with LTVs lowering and deals being pulled. The ‘shifting sands’ creates problems for investors not knowing whether they can rely on a lending facility they thought was there. This looks as though it might settle a bit but then the big challenge is how will lenders behave come October when the ‘Furlough’ scheme ends and more unemployment bites.

UK Regional property market

As ever there is a regional and segmented picture, not just one national one. In the East Midlands there has been a 3% rise in property investor inquiries since the SDLT holiday announcement. **

London seems to be suffering the most for landlord returns, this can be partly explained by the fact that rents have gone up considerably over the last few years and so there is a rebalancing but also current supply in London isn’t matched by demand, whereas cities like Bradford and Sheffield don’t have enough.

Interestingly rents have been rising with the average rent up 1.5 per cent at £965 from June**

Don’t work right to the SDLT deadline

The reality is that record levels of buyer activity lead to processing delays and mean that patience is required to get sales agreed to completion so investors might not want to work right up to the deadline of the SDLT holiday

Source: *RightMove August 2020 ** Zoopla July 2020

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

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Does Expat property Tax have to be taxing?

I have lots of property conversations with expats and there is always the thorny issue of what’s the best way to set up property investing tax-wise. So how to simplify a complex issue?

There are a few things worthy of consideration.

Should Investing be personal? Or via a Special Purpose Vehicle?

One of the challenging questions is how to set up your investing at the outset; buying personally or going down a Special Purpose Vehicle (SPV) route, which could be via a Limited Company (Ltd Co.) route or a Limited Liability Partnership (LLP) route.

Evidently everyone needs to have tailored advice for their personal situation, but are there any Rules-of-Thumb or principles that can be borne in mind?

Level of Borrowing

A key determinant is how you are going to finance the property purchase. If you plan to have a lot of borrowing, then it is worth giving serious consideration to buying via a SPV otherwise you could end up paying tax on ‘nominal’ income, given how the mortgage interest tax relief works for personal investments.

Prior to April 2017, landlords could deduct their entire mortgage interest costs as expenses against the rental income they earned. They would then pay tax at their personal tax rate on the remaining profits. Now though, mortgage costs are not treated as an expense, a 20% tax credit is used instead. This means higher-rate taxpayers are hit hardest and basic rate taxpayers could be drawn into the higher rate tax bracket unwittingly, by virtue of gross rental income being added to other forms of income.

Company structure

Limited Companies have a different tax structure, with Corporation Tax levied, currently at 19% for profits generated. And if you choose to take  dividends as a way of extracting profits from the company, dividend tax is applicable in addition (current rates), but you can time your dividend payouts for maximum tax-efficiency, or leave the profits rolling up within the company to buy the next property. A Ltd Company can help with IHT planning as well. Stamp Duty Land Tax (SDLT) still applies though.

So there is a constant tension and balancing between mortgage interest deduction, Stamp Duty Land Tax and the various other tax rates.

There are some accessible things you can do if married. You can apportion ownership between spouses – via a Declaration of Trust and assigning Beneficial Interest. Bear in mind you can’t just shift income between spouses, unless it is matched by a commensurate capital holding, or aligned with beneficial interest.

You can also do 90:10 split in a LLP vehicle.

Property Price point

The solution might be different whether you are buying at an accessible price point in the Midlands and up North, or at a higher SDLT tax band in London or the South east.

Non-resident investors used to be able to sell property free of Capital Gains Tax but that is no longer the case.

Number of properties

If someone is just starting out with 1 or 2 properties vs a portfolio landlord with 4-5+ properties, it is important to have a view at the outset of how many properties you intend invest in. It is harder and more expensive to switch from a personal investment to a Limited Company, but it is possible to hold properties in a mix of ways.

Nature of buying – trading or investing?

Are you a property trader or investor?

If you buy a property to make value-added improvements and sell on for a profit, you’re a developer or a trader. So you are likely to be better off buying as a limited company, given you have more flexibility for taking profits. As an individual you are more likely to have your gains taxed as income.

If you are a buy-to-let landlord you fall more into the investor camp. Traditionally investors have operated as personal investors, but some could benefit from using a limited company since the 2017 tax changes.

Personal vs Ltd Company mortgages

It’s important to consider the whole picture, not just tax. Lending is approached differently for a company vs personal secured borrowing so you need to also consider ability to borrow. Whilst there are more lenders who offer mortgages to Corporate bodies now, there is still more limited choice than for personal lending and what there is for Ltd Companies, usually comes at a premium to personal lending.

Top Tip – You need to take care unless you are holding – or plan to hold – a lot of properties – that you don’t end up spending more on the investment structure than you actually stand to make

Based on content from a Webinar interview by Louise Reynolds with Churchill Tax advisers

If you would like help finding the right properties or tax help then please get in contact.

My business focuses on helping time-strapped expats who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

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