HMRC no longer reviewing Family Investment Companies
As a professional Deputy acting for clients with large awards of compensation, either because of medical negligence or personal injury, the purchase of property is an issue I deal with frequently. In most cases, the order appointing a Deputy restricts the authority to buy or sell property without first obtaining the permission of the Court.
This usually isn’t too difficult to obtain when purchasing a property as somebody’s home. The Court still needs to be satisfied that it would be in their best interests to do so - it will be necessary to establish that the property is suitable for their long term needs and is structurally sound, represents reasonable value for money, and above all that they can actually afford to buy it.
Buying a property overseas – the key differences
However, what happens when they are looking to buy a property abroad? This will often be a second property to be used as a holiday home. There may be very sound reasons why this should be considered – for example their health may benefit from extended periods spent in a warmer climate and often suitable holiday accommodation for a disabled individual can be hard to find. Although the situation is improving and more property is becoming available for holiday rental, the option of buying your own can still seem very appealing.
The principle of best interests remains the same as for buying a property as somebody’s home, but the task of convincing the Court of this is likely to be a little more complex. More effort needs to be put into the application as an ill thought through submission which may lack the essential information could easily scupper your chances of success.
You will still have to satisfactorily cover the basics such as suitability, affordability and value for money. Even so, that may not necessarily be straightforward. In the UK, we automatically look to obtain a full survey and valuation before buying a property. However, this may not be the usual custom abroad and it can sometimes be difficult to convince the seller why this is necessary.
It is also essential to have a proper understanding of the legal system of the country where you are looking to buy. Local expertise is therefore indispensable. This could be through a local lawyer or perhaps by engaging an expert based in the chosen country. Either way, they will be able to guide you through the often lengthy process of buying a property abroad.
Ownership of foreign property
One of the legal considerations you will need to consider is how the property should be owned. Will you obtain suitable legal title sufficient to protect the purchaser’s interests to the satisfaction of the Court? For example, if the purchaser is a child, how would you protect them? We would probably use a trust in this country but this concept is often alien in many foreign jurisdictions.
Also, consider the country itself – is it politically and economically stable so that you can be confident your investment is safe? Most people would assume that somewhere like Spain is a safe haven but that hasn’t stopped many British purchasers experiencing severe difficulties or substantial losses on their property purchases. Consider in advance what would happen if you should need to sell the property in a hurry – is this likely to be a problem?
The Court will also need to know full details of local property taxes and any other on-going charges or obligations. Buying the property is only the start – but what if it will be very expensive to run and maintain the property? If the property needs adapting, is planning permission (or its equivalent) likely to be granted? A local accountant or surveyor may be able to advise you on these issues.
Buying a property in France
In a recent case, we successfully purchased a property for our client in the south of France. It did take much longer than buying in the UK – and this in a secure, stable, neighbouring country like France. We had planned for most eventualities but there were still practical issues that made life that little bit more difficult, particularly at completion. For example, when signing the contract it was necessary for the Deputy to be physically present at the office of the Notaire (French lawyer). Even once the Order was made, authorising the purchase had to be notarised and a special legal certificate (known as an “apostille”) added before it would be accepted in France. Certainly not insurmountable but still an extra hoop to jump through. We benefited from specialist advice through a French solicitor and this proved invaluable.
If property prices continue to rise at the same rate as in recent years, then perhaps the Court can expect more of this type of application, particularly if purchasers become priced out of buying at home. It will therefore pay just to spend that little bit more time planning ahead and gathering all the evidence you need to give you the best chance of convincing the Court you are doing the right thing. After all, it is still one of the biggest financial decisions most people will ever make, so doing it on behalf of someone else will be even more challenging.
If you have any questions about buying a property overseas and involving the Court of Protection, please contact Simon Hardy or a member of our Court of Protection team. We also liaise closely with our real estate team, who can assist further with any conveyancing issues in the UK.
You may also be interested in reading our other blogs relating to Court of Protection and specifically:
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