Investment in UK real estate using Jersey special purpose vehicles

3rd February 2017

Chris Marshall, Managing Director of Langham Hall in Jersey speaks about the current real estate investment environment, the use of Jersey special purpose vehicles in acquisitions, and how Langham Hall Jersey can help.

2016 has seen a great deal of turmoil around international capital investment. The twin shocks of the UK vote for Brexit plus the recent inauguration of what many will see as a controversial President of the United States has caused uncertainty in many walks of life, and this has certainly impacted investment into the UK.

Despite this we continue to see the UK as an area of focus for global investors due to circumstances both in the investor’s own domestic market and due to ongoing opportunities in the UK itself. Much of this interest appears to have originated from the US and China.

In the US, pricing is high and good quality deals can be hard to find. We observe that China appears to be suffering something of a property bubble with corporate and personal debt equating to some 300% of GDP and the Renminbi depreciating in value due to being pegged against a basket of currencies rather than just the US Dollar.

In the meantime, Sterling has depreciated following the Brexit vote and despite that, the UK continues to look quite stable compared to the rest of Europe.  Notwithstanding recent news surrounding certain international banking groups, we continue to see offices setting up in London to invest in the UK and rest of Europe.

In order to facilitate some of those investments, we find that Jersey is a popular choice for the jurisdiction of real estate ownership vehicles and we note that lawyers will need a quick and flexible solution in order to respond to demand from overseas clients.

Jersey is one of the world's leading International Finance Centres featuring reliability, political and economic stability, and a sophisticated and comprehensive infrastructure of laws. Client advisors and intermediaries tell us that they continue to use Jersey due to its reputation for having a high number of experienced professionals able to deliver the highest standards of client service.  Jersey has an established and robust legal and regulatory framework, is close to London and offers considerable expertise in offshore holding structures and UK tax reporting.
 
Typically, a company incorporated in Jersey will:

  • be subject to a rate of Jersey corporate income tax at 0%;
  • not be subject to capital gains tax, corporate tax or value added tax in Jersey for locally domiciled companies or its shareholders; and
  • save in certain circumstances, feature no tax on the transfer of interests in a Jersey company.

Other types of vehicle might offer additional benefits for acquiring and holding real estate, most notably the ability to structure tax efficiencies, however opportunities to “ring fence” assets and to facilitate joint ventures are common place. Private limited liability companies and unit trusts are the most common types of structure used in Jersey to acquire UK sited real estate assets. 
 
In recent years, Langham Hall in Jersey has established and now administers over 250 entities, many of which are Jersey limited liability companies or unit trusts established for the sole purpose of acquiring real estate, known as “special purpose vehicles” or “SPVs”. Once due diligence has been performed, we can usually establish a limited liability company in Jersey within 24 hours. We provide corporate secretarial, director, and full administration services to the Jersey special purpose vehicle, and can also provide similar services to a wider structure, even where not all elements are domiciled in Jersey. As an approved intermediary with a number of banks in Jersey, Langham Hall is normally able to significantly reduce the amount of time it takes to open bank accounts in the Islands, which is an important factor when considering time pressures around transactions.
 
Langham Hall Jersey is part of the Langham Hall Group, which having been established in 2006, now has offices in eight jurisdictions worldwide, including London, Jersey, Guernsey, Luxembourg, Hong Kong, Singapore, New York and the Netherlands. The Langham Hall Group provides services to over 170 funds with USD35 billion under management, has in excess of 200 professional staff and continues to experience significant growth. The senior management team of the Jersey office has over 70 years collective experience in providing administration services and acting as directors for investment vehicles and offshore fund structures, predominately focused on real estate and private equity investments.
 
We would be delighted to explore your options for future or existing business ventures.

For more information or an informal discussion, please do not hesitate to contact:

Chris Marshall
Managing Director
T: +44 1534 885 205
E: chris.marshall@langhamhall.com