Investing in new UK property

I moved to the UK over 10 years ago and run a successful business. I am 52 years old and have a family. My son is an adult and lives separately. But recently he said he wants to move to Australia, where his wife is from. This got me thinking about how to organise my life when I retire. Then a major investor showed interest in one of my companies, and I had some spare cash.

Michael, 52 years old

Businessman

Clients’ names and photos have been changed

Michael is a good example of determination. Many years ago, he moved to the UK. He completed language courses, started his own small business, and actively familiarised himself with the culture and traditions of the country. He legally formalised his status in the UK, obtained permanent residence (ILR, Indefinite Leave to Remain), and then became a full citizen.

Now he is 52, his life is settled, and his business brings in a stable income. He and his wife can travel, buy organic products, and spend money on their interests. Michael’s hobby is photography, and his wife Olivia is fond of cooking.

Their son, Robert, graduated from a prestigious medical university and is now a surgeon. He recently met a girl from Australia, and they started dating. Her name is Marie, and she is a paediatrician. Medicine brought them together, and they now live together and are planning their wedding.

Robert recently told his parents that Marie had offered him a job in Australia, where a modern medical centre is opening. This is a great opportunity for young doctors to prove themselves, gain experience and expand their professional skills. If all goes well, Robert and Marie will be able to stay in the country and obtain citizenship there.

The parents are ready to help the young couple financially — one of Michael’s companies has attracted the interest of major investors, who have offered a good amount of money for it. Our client planned to give part of the funds to his son, but he did not know what to do with the rest of the money. The imminent departure of their children will force Michael and Olivia to consider how they intend to live in retirement. Is it possible to invest money to ensure the level of comfort to which they are accustomed? This is why the idea of investing in real estate arose.

Goals and objectives:

• priority — to create conditions for a decent standard of living in retirement;
• increase Michael and Olivia’s wealth by increasing the share of passive income;
• effective asset structuring;
• preparation of alternative ways to transfer inheritance to children;
• Tax optimisation.

Features of Michael’s case

Michael’s case differs from the standard assignments that Imperial & Legal experts work on. Our client was interested in rental property. He was looking for a house and/or flat suitable for renting out, as he did not plan to live in them himself. The property (or properties) had to generate a stable income, which created organisational difficulties.

In addition, our client expressed several wishes. The first concerned legal formalities. The transaction had to be conducted in such a way that the property could be easily transferred to the children by inheritance in the future. The second condition was related to the tax burden. It had to be minimised by removing additional expenses from Robert and Marie in the future.

Solution

First, we analysed the task set by the client. At this stage, we determined that only property from a developer would suit Michael, but not properties on the secondary market. Apartments “with history” are a good option for living, with reservations, for generating passive income. But the client wanted to eventually pass on the property as an inheritance, so the search was narrowed down from the outset.

Next, we assessed Michael’s budget. He planned to use his own funds to purchase property in the UK, which greatly simplified the preparation process. Any mortgage options would have created a long-term financial burden, and the payment obligations upon inheritance would have been transferred to the client’s son.

Investing in property with minimal risk and high returns limited the choice of area. We selected several interesting flats in a modern, newly commissioned residential complex. The client liked it — it is located in a quiet and prestigious area, often chosen by wealthy people who value comfort, safety and convenience. Before discussing the details of the deal with the developer, we brought our lawyers on board to work with Michael.

They had to not only check all the documents, but also develop an ownership structure that would reduce the tax burden and allow for the simple transfer of assets by inheritance, with minimal tax payments. Once this task was completed, our specialists calculated the payment options for the transaction, helping to reduce overhead costs.

When Michael became the legal owner of three flats in the new residential complex, we discussed options for further cooperation with him. The client did not want to delve deeply into the organisational aspects of finding tenants, payment issues, resolving potential conflicts, and repairs. Therefore, in agreement with Michael, our specialists took over the control and management of the rental.

How we handled Michael’s case

Results for the client

Michael is very pleased with the initial results of his collaboration with Imperial & Legal. He has a stable passive income, and the property he owns has already increased in value and is in demand among tenants. An additional advantage is the creation of a financial “safety cushion”. New flats in a prestigious area of London are a good and profitable alternative to bank deposits or other ways of protecting and diversifying assets.

With our help, Michael was able to minimise the additional tax burden, and his personal involvement in any organisational issues related to renting is limited. The ownership structure selected by our lawyers allows the asset to be easily inherited, sold or partially converted into residential property (when Michael decides to retire and devote all his time to Olivia and raising his grandchildren).

The key to success is the coordinated efforts of the entire Imperial & Legal team. Our lawyers, tax advisors, managers, technical experts and rental business specialists worked on the project. This was the only way to fulfil Michael’s request. An extended service package provides additional comfort for the client. It allowed Michael to retain full control over the property without having to delve into the details and engage in tedious micromanagement.