Real Estate Investor Magazine South Africa February/March 2019 | Page 57

period. With nearly 50,000 students in total, a full sixth of the city’s population is engaged in study with many choosing to remain living in the city after graduating. The resulting spike in demand for city centre living is creating a hotbed of innovation within the housing sector, as developments compete to attract this younger generation. It’s no coincidence, comments Mertens, that Amazon established its first  Amazon Academies – which run programmes and events to empower small, local businesses – within this northern quadrant. And then, London: Over the next 25 years-or-so, London’s population is projected to increase by 15.4% which will push up demand for housing across the capital. It’s projected that 60% of Londoners will rent their homes by 2025, almost literally meaning that property developers can’t build fast enough. Property prices here have risen by 32.36% over the past five years and, with the influx, seem set to keep appreciating. Back to Brexit. Mertens says that the Pound devalued after the announcement but is likely to strengthen as trade negotiations become clearer.  “This, coupled with a slightly stronger Rand, makes property in the UK around 25% cheaper for South Africans than it was just a few years ago. But, even with the world’s positive reaction to President Ramaphosa’s first forays into tackling corruption, our economy remains uncertain in the face of this year’s election. We advise keeping Rand-holdings and Rand-denominated debt to a minimum. The time to diversify off-shore and expand your investment asset classes is now.” Sovereign Trust SA advises local investors entering the UK buy-to-let residential property market to set up a company structure to purchase the property, rather than purchasing in their personal capacity, and in this way cap tax on their net rental income at 20%. Sovereign Trust SA would register such companies as ‘offshore landlords’ with HM Revenue and Customs (HMRC) to circumvent the much-higher taxation of rental income that’s levied on individuals.  For South Africans looking at investing in the UK as a means of tax-efficient offshore succession planning and retirement provision, Mertens would advise utilising a Guernsey Conservo International Retirement Plan (40ee) or a QNUPS (Qualified Non-UK Pension Scheme). “These structures are able to hold shares in underlying company structures, so it makes sense to combine them with UK property investing when appropriate for specific needs. As a case in point, if a discretionary trust were to be the shareholder, UK Inheritance Tax (IHT) may apply and the trust would also be liable for the UK’s 10-yearly charge, which can be as high as 6%. Conservo and QNUPS structures are exempt from these taxes.” Sound advice, proven by the fact that offshore companies effectively bought tens of billions of  Pounds-worth of UK- based buy-to-let property between 2005 and 2014. “The truth is that no-one can predict the future, and that’s the case with Brexit, too,” says Mertens. But bear the following in mind.  UK property has long been a stable asset class coupled with a strong base currency. London is the financial services  capital of the world and has the  highest regulatory and compliance standards across the world.  Moreover, the UK has an excellent and highly respected legal process which ensures that, when you buy property, you have the security of title on the asset. With their urbanisation trends, the UK’s northern cities exhibit incredible potential to amplify property investments in the buy-to-let ambit. Kicking into the UK property market should be every local investor’s goal.” BRING YOUR BRAND TO THE FOREFRONT Sponsorship opportunities now available. Contact us at: [email protected] [phone]