I was recently introduced to a Hong Kong resident looking to purchase a buy to let (BTL) property in London. They came through a trusted introducer for whom we had completed a complex deal so they knew we could handle the complex nature of this Indian non dom investor client.
The client was an Indian passport holder, expatriated in Hong Kong and the property in questions was located in North London and valued at around £6million. The investment was to be purchased in an offshore Isle of Man Special Purpose Vehicle (SPV), and would have a rental income of £10,000+ per month.
Buying in an SPV can be an attractive option for investors as it allows them to capture value from property related projects. SPVs are usually set up to manage risks associated with their investments.
A number of challenges arose when approaching this transaction; firstly, they were an Indian passport holder and a non-resident non-domiciled individual, with no UK footprint. Additionally, changes to non-domiciled people being taxed on their worldwide income at the UK’s rate of income tax means structuring the loan efficiently is very important.
Secondly, the client owned a business in the commodities industry in Hong Kong, and had a very complex income structure sourcing from various subsidiary companies. Securing a mortgage as a non-domiciled individual can be difficult as proving affordability based on overseas income is something not all lenders will consider.
Regardless of these hurdles, I knew of a lender who was comfortable with Isle of Man SPVs and clients based in faraway jurisdictions. The lender was a private bank based on the Isle of Man and they were able to comprehend the client’s complex circumstances and were comfortable with such the large loan.
I was able to secure great terms for my client; the bank agreed to lend £3.6million at 60% loan to value at a fixed rate of 2.25% over five years.
If you are looking to purchase property in an SPV, get in touch with Enness and we would be happy to discuss the opportunities with you.