While the Mortgage Credit Directive (MCD) is going some way to cleaning this up so that mortgages are not just being taken out in France to help with estate planning, British buyers can now buy property in France under British law.
Other duties
There are also other duties to pay heed to when purchasing abroad. Mr Howarth continues: “Stamp duty and legal status nearly always vary from country to country and the status or type of purchase.
“Therefore we advise anybody buying abroad to approach an accountant and a solicitor familiar with the client’s circumstances and local tax or legal regulation.”
Law and orders
For Mark Posniak, managing director of Octane Capital, simply keeping abreast of all the changing legislation, both domestic and international, can be a pain for clients.
He knows of several property investment clients who had been putting overseas property into a company structure to maximise tax-efficiency and minimise their bills, but have found themselves caught out by freshly complicated legal structures and ever-changing tax legislation.
He says: "New laws are being introduced by the government all the time and the benefits of having an offshore company are quickly being wiped out for investors.
"I have met many investors who, in hindsight, would have avoided having an offshore company.
"Legally, there are also administrative costs to consider when it comes to managing the investments on behalf of the beneficiaries and lenders often struggle to understand the complex structures here.
"This means finance for them can be very difficult."
Helpful hints
Add to this the various "personal tax, inheritance tax, and legal issues which will need to be addressed on an individual basis", says Nigel Green, chief executive of the deVere Group, and the picture becomes less clear.
He also reminds advisers to get to know the client's needs intimately, as they will need to take into account personal circumstances and the various structures of the country of residence.
Thankfully there are helpful guides and international organisations that can help. Earlier this year, the Association of International Life Offices created a guide specifically to help advisers whose clients wish to leave the UK to work or retire.
According to the guidebook, which is available for free on www.ailo.org, it covers a host of issues that an adviser should bear in mind when dealing with overseas clients, such as:
- The tax position.
- How to deal with savings and investments.
- Implications for property ownership.
- Pension options.
- How to structure a will.
Bob Pain, chairman of the Association of International Life Offices believes the Moving Abroad guide will be '"welcomed by advisers and clients who need to understand the issues they will face when planning to leave the UK.”
simoney.kyriakou@ft.com
