Buy to let in trust for self-employed expat

What was the situation?

An international client approached us who is a New Zealand resident. The client was still living and working in New Zealand as a self-employed management consultant, running two businesses owned by a family trust. The client was operating on the basis that the companies would pay him an income which would cover his outgoings, so although the profits of the companies were high, the client’s income was small.

The client wanted to purchase a property for their daughter in the United Kingdom.

What was the issue?

Though the client was financially able to purchase a property, lenders would not consider the purchase for a myriad of reasons;

• The client was an expat
• The client’s daughter would be living in the property, which would classify this purchase as either a regulated buy to let or expat residential purchase
• Lenders would not lend to self-employed expats
• Lenders would not lend to New Zealand residents.

 What was the process?

We completed a fact find with the client to ascertain what assets they had and to confirm the setup of their companies and the trust that owned the companies. Looking at what we learnt, we decided to discuss the option of putting the mortgage in the name of a Ltd Company rather than under a personal name. The client did not wish to set up a special purpose vehicle (SPV) in the UK and wanted to keep all assets under the current structure.

Knowing this, we then spoke with the usual expat lenders initially, whom all advised that this was outside of their scope. We also spoke with private banks, who also for various reasons could not help. After this, we approached some smaller lenders who traditionally handle mortgages on a commercial basis and were able to take a bespoke view on the deal.

What was the solution?

We found a lender that would consider the purchase at 70% loan to value (LTV), setting up under an SPV. The SPV was registered in New Zealand and therefore this became an unregulated buy to let purchase on the basis that the SPV was a separate entity to the trust. The final agreed set up after discussions with the client was that the funds would be sourced from one of his companies and provided to the SPV by way of loans from another of his Ltd Companies, so as to keep all entities related to one another.