Leveraging UK assets



Q:As a first-time buyer of your magazine (Feb 2010), I have to say how useful this edition has been and I have not even got past page 11! I would like to ask a couple of questions as UK residents who have been here for three-and-a-half years and are about to complete our permanent residency. We are renting in Melbourne and want to begin a portfolio of smaller properties as opposed to one large PPOR (we expect to carry on renting). Our questions are: 

Can we leverage our UK property when looking to borrow here in Australia? We have equity available to leverage. Can we leverage our frozen pension schemes from the UK? I hear we can open ‘self managed funds’ here. Thanks for your advice. 

A:It may be difficult to leverage your UK property when you borrow in Australia, unless you can find a bank that will allow you to do that. It is not a common arrangement because banks obviously need security for loans they advance and if the security is difficult to access in the event of default, it is unlikely that they will let you access the equity in the UK property.

The same applies to your frozen pension schemes in the UK. If it is difficult for Australian banks to allow you to access the equity in your UK property, it may be even more so for funds held in a pension fund. I strongly suggest that you speak to a tax advisor to better understand the implications of accessing the funds in your UK pension schemes before doing anything further. In Australia, you could most certainly establish a self-managed superannuation fund (SMSF). In some cases, you may even roll over benefits from other pension funds into your SMSF. However, the rules are complex and specialist assistance is highly recommended.

– Eddie Chung
Eddie is a partner – private & entrepreneurial clients at BDO Kendalls.
If you have a question for our experts, email it to: editor@yipmag.com.au

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