Finance Brief Alerter 02.07.11
02 July 2012
In this July edition of the Finance Brief we revisit the new tax
regime announced in the recent Budget and look in particular at the
implications for bankers when structuring new loans secured by
property located in the UK but held by offshore corporate vehicles.
Continuing on the property theme, we have a short analysis of the
LMA's new real estate finance facility agreement. Our third article
is a full briefing on the issues and legislation to take into
account when lending to individuals, and, finally, we provide a
guide to registering a yacht in Cyprus.
As ever, please do not hesitate to contact the authors of each
article directly if you would like any further advice on the topics
covered.
Implications for bankers of the new tax regime on loans
secured by offshore held UK dwellings
In our recent
Finance Brief Alerter we referred to the new tax
regime that the Chancellor announced, which could apply to high
value UK dwellings (over £2 million). In essence the proposed
changes amount to a three-pronged attack on the purchase and
ownership of UK dwellings through corporate vehicles whether
offshore or onshore. The first (already in force) is a 15%
rate of Stamp Duty Land Tax on the purchase price of the
dwelling. The second is a proposed annual charge of between
approximately 0.3% and 0.75% per annum depending on the value of
the dwelling. The third is the extension of the UK capital
gains tax regime to include gains on the disposal of UK dwellings
by non-resident non-natural persons and gains on the disposal of
shares in corporate vehicles which derive the majority of their
value from dwellings worth over £2 million. The rate of
applicable CGT has yet to be announced. The charges are
intended to take effect in April 2013 following consultation and
the publication of draft legislation in the autumn.
Read more >
The LMA Real Estate Finance Facility Agreement
The Loan Market Association (the "LMA") launched its
real estate finance facility agreement in April. We think
that the agreement will (and should) be welcomed. As
the LMA acknowledges, however, it is no easy task to produce a "one
size fits all" agreement, and the aim is more modest. Indeed
the LMA points out that it will be impossible to use the agreement
without amendments or additions. Matters such as updated
valuations and covenant-cure mechanics will have to be negotiated
on a case by case basis. Additional property-specific
representations and undertakings may be needed if the document is
used for a single-property facility.
Read more >
Lending to individuals
When lending to an individual borrower, or seeking to obtain a
personal guarantee or security from an individual, a lender will
need to consider a number of matters and potential traps. This
briefing paper sets out some of the relevant legislation, issues
and other factors that a lender should consider in financing
transactions involving individuals.
Download briefing paper here >
Yacht Finance – Spotlight on Cyprus
This briefing paper builds on our firm's
Yacht Financing briefing paper and focuses, in
particular, on Cyprus as a jurisdiction of registration. Whilst the
Cypriot flag has long been a popular "flag of convenience", recent
VAT reform is likely to increase this popularity among pleasure
boat owners.
We have set out below the basic aspects of registering a yacht in
Cyprus. Please do not hesitate to contact us should you have any
particular queries.
Download briefing paper here >
The next edition of the Finance Brief will be on 1 October 2012, in
which we will be looking at the remedies which are available and
the procedures to follow when enforcing against a personal
guarantor as well as issues around "COMI" and other further topical
legal issues for private bankers.
We are very keen to hear your feedback on The Finance Brief –
please do get in touch.