JANUARY 2012 |
www.opp.org.uk
INDUSTRY EU tax the rich plan is crazy By Geoff Hadwick
“If you have a second home in Europe, hotfoot it to your accountant and start thinking up a game plan.” Richard Morais from Barron’s Penta wealth management service has advised overseas property investors this month. “The hunt for additional tax revenue is on in the EU, a corner of the globe never terribly squeamish about instituting tax-the-rich policies.” Morais, who is a contributing editor
at Barron’s and a former bureau chief for Forbes, reckons that the EU is about to go down a “tax the wealthy” route and is especially worried about Spain where the new government has “reinstituted a global ‘wealth tax’, hitting any foreigner considered a tax resident, defi ned as (someone who has lived for) more than fi ve months inside the country.” On December 31 2011, Morais says,
an overseas property owner residing for more than 183 days in Spain would have had to calculate his or her global net worth, after a €700,000 ($940,000) personal deduction, and a €300,000 ($400,000) deduction for their primary residence. “The Spanish state will then claim 0.2% to 2.5% of their remaining
Taxing | times in Europe mean that its governments want more of your money
net assets, just for the privilege of being rich. Ostensibly the wealth tax reinstated for the 2011 and 2012 tax years will again expire after two years,” he told OPP, “but I recommend you not hold your breath. Not in this revenue- hungry environment.” The “upshot” of this new tax attitude
across Europe, according to Morais, is that “anyone with a second home overseas needs to tell their accountant to be hyper- alert for foreign governments intending to carve some extra pounds of fl esh out of wealthy absentee landlords.” He is also worried that impending changes to the French capital gains tax system will
also damage the international property market. “The French état estimates the change in the capital gains rate for second homes will alone bring in Euro 2.2 billion in public revenue in 2012,” he told OPP, “a bite that will defi nitely hurt resale values of second homes in regions most favoured by wealthy foreign buyers.” And, according to Fredrik Lilloe, CEO of Estate Net France, a property broker in Mougins above the Côte d’Azur, “we have already seen evidence of reduced prices on properties owned by non-French residents wanting to sell before Christmas in order to avoid the extra tax-bill”.
FX opportunity opens Dire debt
Overseas mortgage specialist Conti has joined forces with currency broker Global Currency Exchange Network (GCEN) this month to create a new foreign exchange service called ContiFX, which will allow “agents and brokers to earn commission every time their clients transfer money abroad, whether it’s regular payments for an overseas mortgage, or the funds for a deposit,” the company told OPP. “ContiFX clients will benefi t from a
better exchange rate than a typical high street bank, no fees to pay, nor any limit to the amount which can be transferred,” says the fi rm. Clare Nessling, a director at Conti,
told OPP that “we’re committed to providing brokers with additional services, and, where relevant, partnering with appropriate organisations to help them provide a fast and effi cient service
to their clients.” The new agreement is exclusive, meaning GCEN will be the only international currency broker Conti can recommend to its clients, and Conti is the only overseas mortgage broker to have a relationship with GCEN. According to Nathan Bullas, a
director of GCEN, “foreign exchange services go hand in hand with overseas mortgages, and we’re delighted about this partnership and the competitive services which will be available through ContiFX.”
DEVELOPERS in India are facing mounting debt as borrowing costs fly past 20%, eating into their profit margins. The property industry in India needs
to repay 1.8 trillion rupees in the next two to three years to service its mountain of debt, according tohe global agency group Knight Frank. Also, Bhaskar Chakraborty, analyst
for brokerage IIFL, believes that debts will continue to spiral and put house builders and residential developers under even more pressure. “The next fi nancial year is going to
New commissions | are now on off er
be worse than this one, seeing the state of the industry with dwindling sales and high interest costs,” says Chakraborty. And Matthew Montagu-Pollock, boss of Global Property Guide, has told OPP that he expects India’s property boom to come to a “juddering halt” next year.
FINANCE | 13
NEWS IN BRIEF Brazil returns 191%
INVESTMENT company Landcorp International has started work on introducing UK investors to what it describes as “a pre-development land opportunity at Ecocity Brasil, which qualifi es for inclusion in a SIPP (a self-invested personal pension plan) and off ers fi xed returns of up to 191%.” According to Landcorp International, “Ecocity Brasil is destined to become the largest eco-friendly residential resort in North East Brazil set in a tropical paradise of 20,000 acres (80 million sq m) and made up of up to 30 separate developments.”
£150m London fund
ASIANS real estate investors who are currently looking to enter the London property market are being targeted by a new £150 million investment fund by Cordea Savills, the fund management arm of real estate consultancy Savills. The company told OPP this month that it expects the fund to generate returns of around 18% to 20% per year, with investors expected to put down a minimum stake of £200,000. Brian D’Arcy Clark, head of the fi rm’s residential acquisitions, told OPP: “There’s very good evidence that Chinese investors want to invest in London and there’s pent-up demand from high-net-worth individuals from China to come into the London residential market.” Cordea Savills added that the fund with form joint-ventures with developers in order to obtain apartments prior to construction for better prices.
New Irish tax
IRELAND’s government has revealed a plan to introduce a value-based property tax, with the aim to fi nalise it by the middle of 2012. The levy will replace the current fl at €100 tax announced in the budget for next year. Environment, Community and Local Government minister Phil Hogan said in a statement: “A full property tax, requiring a property valuation system, will take time to implement, so the Government is introducing the interim household charge to apply to the majority of owners of residential property in the Irish State.”
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