Snare a complex, overseas advantage

For all the discussion around changing regulation, tax reforms and economic uncertainty impacting property investment, the UK's ability to attract overseas investors is remarkably consistent. In fact, over the past 12 months, we've seen growing interest from international investors who view current market conditions as an opportunity to acquire high-quality assets, particularly in London and other established urban locations.

Such assets include mixed-use freehold blocks, which combine residential and commercial income streams to create a level of diversification that many investors find attractive.

A building that generates income from multiple tenants in different sectors can offer greater resilience than a single-let asset. Residential demand remains strong in many parts of the country, while well-positioned commercial units continue to provide reliable income. Consequently, mixed-use freehold blocks and larger multi-unit investments are increasingly becoming the assets of choice for overseas buyers seeking both income and long-term capital growth.

Alongside this trend, we're seeing increasing complexity in the ownership structures behind many of these transactions. In a growing number of cases, the borrower itself is a UK special purpose vehicle (SPV), but the ultimate ownership sits elsewhere. It's not unusual to find overseas consortiums, trusts or high-net-worth investors behind what initially appears to be a straightforward UK property company.

These structures have existed for many years and are often entirely legitimate. In some cases, they reflect historic tax planning arrangements, while in others they simply provide an efficient way for multiple investors to participate in a transaction. However, they can create challenges for lenders, particularly when it comes to understanding beneficial ownership, completing due diligence and satisfying increasingly stringent compliance requirements.

Historically, private banks have been particularly active in this area. Their client base naturally includes many individuals and organisations that invest through international structures, and they have often been well positioned to support complex transactions. More recently, however, we've seen some lenders becoming increasingly selective in the opportunities they pursue.

Read the full story in B&C Magazine, here.