Property in the UK offers an opportunity to build wealth and benefit from monthly cash returns in sterling. While setting up a company as a hedging strategy helps guard against the uncertain economic climate in South Africa.
Why South Africans are taking their businesses to the UK
It’s all about stability, along with one of the lowest corporation tax rates in Europe.
Part of any astute investor’s strategy is to position a portion of their portfolios offshore, as has been reflected in the amount of personal foreign exchange allowances exiting South Africa over the past months. This is according to Anthony Doyle, from UK based Propwealth.
Many South African investors then ask, what to do with the funds, and how can they benefit from opportunities in the UK.
Like many major investment classes, the UK property landscape has changed radically during 2020 in the wake of Covid-19 pandemic.
Specialising in property investment as a business
“There are amazing opportunities in UK property now, in keeping with the far-reaching trends that have developed in the past 6 months. We see a major impact on the market that will benefit property investors who have a medium to long-term approach,” Doyle..
Opportunity in Residential investing
Retail and office investing more high risk, according to Doyle, plenty of stock is becoming available, as larger UK retailers reduce overheads, including retail and commercial spaces.
“Void periods will likely increase, and potential tenants will want to negotiate rents, bringing down yields, as ‘work-from-home’ scenario become the norm.” He believes office and shop conversions to residential homes could become a major opportunity.
Testing entry-level properties
South African investors have been looking at entry-level properties around the £45 000 to £200 000 mark as they test, and understand, the legal and investing procedures in the UK. Overall, there seems to be more confidence in residential investments post Covid-19.
Propwealth director Craig Illman says, the UK property market is poised for a new future. For long distance investors residential property looks a safer option owing to demand and institutional aspects like easier rezoning.
Much like South Africa, the United Kingdom has seen a mini residential property boom in June and July this year as pent up demand during lockdown was released.
And fortunately for investors, the future looks positive for traditional residential buy-to-let, says Doyle.
Setting up shop in the UK
Starting an entirely new business in the UK as an investment is not impossible either.
Britain is known for its complex bureaucracy, but if you have your paperwork in order it is an efficient process to get started.
“Incorporating a company is relatively quick and easy – The set-up can be done in 48-hours. Most people take the subsidiary option, opposed to branch. When it comes to a branch, you would have to declare your overseas company’s result at Companies House in the UK and most people don’t want to do that,” says Doyle.
“I would recommend that if an individual is looking to incorporate a company, they should go for the simplest structure possible; this would be one person being the director and one person being the shareholder which can be the same person. Over time more people can be added.”
Tax number applications including PAYE and VAT can usually be applied online though there are a number of questions and if completed incorrectly will lead to queries from HMRC. However, if completed correctly, you should receive the tax numbers within 5-10 working days.