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Londdon Expatriate buy to let Mortgage

Capital Gains Tax changes for expatriates and overseas buyers brings the UK in line with other global property markets.

The UK government published draft legislation that detailed changes to Capital Gains Tax (CGT) on the sale of properties for overseas and expatriate  investors. This brings changes for the UK in line with other property markets and aligns overseas and expatriate property investors the same as UK resident home-owners.

From 6 April 2015, non-resident UK property investors will be charged on gains made from the sale of their property of between 18% and 28%, this is the same rate as resident home-owners in the UK. The UK government has deemed any UK property owner who spends less than 90 nights in their property to be a non-resident investor and CGT will also be charged on off-plan properties. Other key points arising from the draft legislation are provided below.

The changes mean that non-resident UK property owners will need to consider obtaining a valuation of their property. We work with a number of valuers to assist you in obtaining a recent valuation should you need one.

If you need to clarify any points relating to the changes to the CGT legislation, we advise property investors to seek tax advice from a UK tax specialist with knowledge in this area.

Who will be affected by this new legislation?

From 6 April 2015, CGT will be imposed on disposals of residential UK property by non-resident individuals, trustees, estates and close companies.

Off-plan properties will also be treated as fully completed residential properties, so if a non-resident individual re-sells a property before the completion of a project then they will be liable to CGT on any gains arising after 6 April 2015.

The government has not extended the CGT charge to non-resident institutional investors disposing of shares or units in a collective investment scheme, provided they are ‘diversely held’ and not a mere vehicle used by private individuals to avoid the new tax. Non-resident institutional investors will be subject to a ‘narrowly controlled company’ test and a and a ‘genuine diversity of ownership’ test to ensure individuals are not transferring their interest in UK residential property to a non-resident company in order to escape the tax.

What is the rate of CGT for individuals?

The tax rate for non-resident individuals will be the same as the rates applicable to UK resident individuals. Using today’s tax banding’s, gains under around £32,000 will be liable for 18% charge and any additional gain will attract a charge at 28%.

Non-resident individuals from most countries will also be able to use the annual exemption, currently £11,000, to reduce the CGT payable.

In the unlikely event that a non-resident individual’s property is worth less on 6 April 2015 than was originally paid for the property, the non-resident owners can elect that the gain is calculated using the original base cost.

What is the rate of CGT for companies?

The tax rate for non-resident companies who dispose of residential UK property will be the same as the UK corporation tax rate, which is currently 20%.

Non-resident companies will also benefit from the associated allowances which come with corporation tax.

Can I claim relief using the principal private residence (PPR) exemption?

Non-resident owners of UK properties will be able to claim the same PPR relief as UK taxpayers, so long as they have resided in the property for at least 90 nights that year.

This new 90-night measure will came into effect on 6 April 2015.

What is the reporting procedure?

Where the non-resident individual or company already submits tax returns to HMRC, the reporting of the gain and payment of any tax can be made as part of the self-assessment tax return.

Otherwise, delivery of a return and payment of any outstanding tax must be made within 30 days of the disposal. 

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London Expat Mortgage

CONSULTATION ON WEAR AND TEAR ALLOWANCE

In the Summer Budget 2015 the Government confirmed its intention to introduce measures to improve how landlord’s businesses are taxed.

The new measures which are detailed in the full Consultation Document are designed to provide consistency and fairness in the taxation of rented properties. However, you still have until 9 Octoberto submit your comments and responses to the consultation.

An outline of the new measures is given below and we’ve also produced a handy fact sheet which you can print out:

The changes

The current 10% Wear and Tear Allowance which allows landlords to reduce the tax they pay, regardless of whether they replace the furnishings in their property, will be replaced. From April 2016 landlords will only be allowed to deduct the costs they actually incur for replacing furnishings in their rental properties.

Eligibility

All landlords will be eligible for the relief respective of whether they let their properties on an unfurnished, part furnished or fully furnished basis. However, Furnished Holiday Lets and commercial premises are excluded.

NOTE: The relief will only cover replacing existing furnishings – landlords cannot claim for the initial purchase of furnishings (i.e. when they buy a new property and furnish it for the first time).

How it will work

Landlords will be able to claim for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use; such as beds, wardrobes, tables, sofas, fridges, washing machines, carpets, curtains, cutlery and crockery.

However, if the landlord sells the item being replaced, the sale price of that item must be deducted from the purchase price of the replacement and the tax relief can only be claimed on the remainder.

Further, landlords cannot claim for ‘improvements’. If the replacement item is an improvement on what was there before (i.e. a washing machine is replaced with a washer-dryer), then only the cost of a like-for-like replacement can be claimed.

NOTE: Fixtures integral to the building (i.e. baths, toilets and boilers) that are not normally removed by the owner if the property was sold are not included.

The impact

Landlords will no longer need to decide whether their property is sufficiently furnished to make a claim as the relief because applies to all rented properties no matter the level of furnishing.

With the current 10% allowance, the higher the rent, the larger the tax relief. In some areas of the country, 10% is not sufficient to cover the actual costs incurred. The proposal will ensure landlords can claim their actual costs and provide a level-playing field for landlords wherever they operate in the country.

However, there will be a significant administrative and record keeping burden placed on landlords in order to claim the tax relief.

REF: Association of Residential Lettings Agents and HMRC

mortgages for expatriates

Premierexpatmortgages.com: The UK expat mortgage specialists

Welcome to Premierexpatmortgages.com, the official website of Premier Expat Mortgages. Globally renowned as one of the most experienced expatriate mortgage brokers for financing property deals, Premier Expat Mortgages specializes in providing Expat Mortgage UK financing services to international property investors that are based offshore away from the UK as well as global based expatriates. Being located in Hong Kong Premier Expat Mortgages has close associations with the UK based expat lenders, the UAE and Asian expat lenders and we have the expertise to fulfill the expat mortgage financing needs of international property investors.
Premier Expat Mortgages is a completely independent offshore mortgage brokerage that is competent in sourcing ex-pat mortgages from the whole of market enabling us to secure applicants the most competitive mortgage product. As we are recognized as Expat Mortgage financing specialists in UK property, we are capable of finding the most lucrative deals for our clients along with negotiating the most competitive terms to make the process much easier. We work with major lenders such as Royal Bank of Scotland, Lloyds Bank, Clydesdale Bank through to private banks such as Barclays and Investec. We work closely with each of our individual clients and endeavor to tailor the mortgage financing so as to meet and exceed their requirements. Premier Expat Mortgages strives hard to provide expert Expat UK Mortgage financing advice for new mortgage financing and refinancing for expatriates and also in helping them to secure overseas based life insurance. We also provide the most effective solution to refinance any UK property to release funds or help clients reduce their current mortgage rate. .
In addition to expat mortgages we provide expert advice and knowledge of commercial mortgages, bridging finance and secured loans. We work hand in hand with major developers around London such as Berkley Group, Linden Homes, Barratt Homes and Persimmon to provide new investment property in and around Central London to our clients. We also provide unparalleled property management and property furnishing services to clients and interested parties. Premier Expat Mortgages not only makes efforts to help clients with their UK mortgages, but is also proficient in helping clients with international mortgages worldwide.
Irrespective of whether you are taking a UK expat buy to let mortgage into consideration or are a resident returning to the UK and looking for a residential mortgage, Premier Expat Mortgages is the best overseas mortgage broker that can provide you with offshore mortgage financing for your next purchase. No matter what your UK Expat Mortgages financing needs are, we are always ready with our determination and guidance to walk you through the process.
Premier Expat Mortgages in all are here to help you locate your new build property, secure your overseas mortgage financing, help clients secure furnishings for the property and then find the ideal tenant to let your new build or existing property portfolio out to.
Just dial 852 9247 7065 and feel free to consult your next project with our experts. You can visithttp://www.premierexpatmortgages.com/ to get further information about us.

How To Obtain A UK Mortgage When You Are An Expat or Overseas Resident

To obtain a mortgage whilst based overseas for the UK property market isn’t always that easy anymore as clients are dealing with banks that are based overseas generally. These overseas lenders take a more serious view to applications as they don’t always have the means to credit check applicants income sufficiently. There is the important fact that income can be from various sources or that the applicant is self-employed so does not derive income from a standard working salary such as being employed by an employer. Overseas lenders will invariably use a number of ways to assess the finances and the source of income for the mortgage they are underwriting on behalf of the client. Firstly lenders will use a stress tested rental ratio and were are assuming this is a buy to let mortgage as most expats or overseas residents tend to buy for investment purposes. A lender will do this is working out that the rent is 125% of a stress tested rate. At the moment this is 5% or 6% dependent on which lender is approached. If this doesn’t sufficiently cover financing the property the lender will then look at the income and expenditure of the applicant. Lenders generally like to see that all expenditure for day to day living includes all living costs, mortgages, loans and day to day living expenses and doesn’t exceed 60% of the applicants total income. This is known as a debt to income ratio. If this passes the lender will then ask the applicant to supply the below documentation

· Proof of ID (Passport & Drivers Identification Licence) 1 each for joint application·

. Proof of Address(Utility bill or Rental Lease)

· 6 Months Bank Statements

· 6 Months Salary Pay Slips

· Current statements of existing mortgages

· 3 Months bank statements of rental income monies (if any)

· Others upon request(assets, bank deposits, savings, liabilities etc)

The general process to proceed on applying for a mortgage is as follows but will be different for all lenders as they have their own in-house criteria of rules and the way they settle and process mortgages through to the completion stage.

Process for Applying for a Mortgage

1. Prepare application and supporting documents

2. Package and submit to lender

3. Provide further documents lender requires

4. Lender grants Agreement to Lend*(Agreement In Principal) (3-4 Weeks)

5. Agreement In Principal sent to client

6. Client signs and returns Agreement In Principal top the lender

7. The lender creates a mortgage account for the clients mortgage payments and rental income to be deposited

8. Client pays lender fee

9. The lender instructs valuer to value the property

10. Client pays valuation fee

11. Valuer surveys property

12. Valuer returns valuation report to lender

13. Lawyers instructed

14. Lawyers performs searches and prepares Report on Title

15. Lawyer submits Report On Title to lender

16. Lender releases funds to lawyers

17. Lawyers exchanges funds and title

18. Property Completed

19. Full process 8 to 12 weeks

Clients will need to be aware of the tax implications and stamp duty requirements which can be found on the below websites

https://www.gov.UK/stamp-duty-land-tax/overview

*(AIP) Agreement In Principle to lend

https://www.gov.UK/topic/personal-tax/capital-gains-tax

Gerard Ward has experience arranging UK mortgages for 15 years and assists overseas purchasers and UK expatriates buying in the United Kingdom. I can also source mortgages in various other countries.

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