One of my recent clients was a US National who had rescinded his passport for tax reasons and was now a British citizen. He’s a 30 year old entrepreneur who started a successful consultancy business and had been working out of the UK since 2006. Since this point he had been renting property in Central London but decided the buoyant market meant now was the time to invest. He had found a property valued at £4.3 million in Central London and came to me wanting to explore his financing options. Due to the fact that his capital was tied up in his business ventures he needed to raise the entire capital to fund the property.
The client had a fairly complex financial situation as he held assets overseas with a worldwide bank based offshore. The assets were made up of index tracking investments which carried very low risk and my client chose to invest in these rather than leave the money on deposit.
His bank, however, were only happy to lend him £2 million at a competitive rate. This meant that he still needed to raise an additional £2.5 million (including stamp duty costs). He had limited options as he wasn’t keen on bringing his offshore assets into the UK for tax reasons but was interested in exploring lombard lending and lending against assets as a solution.
I managed to source an appropriate lender – an investment bank who were happy to put the assets on their offshore platform and reinvest them into a bespoke portfolio aligned to the client’s risk profile. They also allowed him to raise funds against the investment in order to provide a deposit for his property purchase.
The rate was extremely competitive at 1% above 3 month LIBOR (0.5%). The structure of this facility means that the interest costs of the loan will be covered by the income generated from the investment if it performs to target, which also appealed to the client.
The client transferred his assets to the new bank and the investment portfolio and lending facility were implemented. The entire process took 8 weeks which was well within the client’s timescale for completing the purchase as he had exchanged contracts within days of his offer being accepted. In effect, this meant we managed to secure borrowing at 100% of the purchase price – an impressive achievement.
This method of lending – particularly with this criteria would be appropriate for clients with offshore assets who wish to buy property in the UK.