We are often approached by UK residents looking to acquire property in the South of France, with the French Riviera extremely popular amongst UK investors. Despite the fact the UK was a prominent part of the European Union, one of the largest contributors to the EU budget, the country decided to retain sterling. There are occasions where this can have an impact when looking to raise finances in euros in a different country. However, as a prominent mortgage broker, we have a reputation for “thinking outside the box” and finding solutions where many of our competitors fail.
This next case study involved a UK resident, living in the UK looking to acquire a large property in the south of France. The client was an ultra-high net worth individual with significant cash flow and assets. The fact that time was of the essence with regards to the fundraising was an issue of which we were acutely aware. In many ways, this is a prime example of Enness being approached by real estate agents who have looked elsewhere with no luck. We have built our reputation on creating bespoke funding solutions by considering different angles others may well have missed.
This client was a UK resident living in the UK but looking to acquire a sizeable property on the French Riviera. As an ultra-high net worth individual, he had significant income and asset backing to support his short-term finance needs. On occasion, there can be issues where individuals are looking to borrow in a country in which they have little or no footprint at the time. In recent years we have seen a tightening of money-laundering regulations and in some cases, this has hampered attempts to raise funds overseas. However, we have numerous contacts in the lending market and were very confident that we could find a solution.
As we sat down with the client to discuss their requirements in more detail it became obvious there had been issues trying to secure the funding. It seems that the client’s UK residency, and a preference to raise funds on mainland Europe, had created a stumbling block. As we touched on above, the lack of both a financial and physical footprint hampered negotiations. It appears that the real estate agent involved ultimately decided to take a different route and approached us.
So, the basic scenario was as follows:-
Client: UK resident
Property Location: French Riviera
Property value: Sizeable
Preferred funding provider: European bank
Type of funding: Short-term bridging loan
Timescale: Funds required instantly
So, we have a client who has been made aware of a large property on the French Riviera up for sale. We have a very strong presence in France and we know the French Riviera is a very popular market amongst worldwide investors. Therefore, we were fully aware of the time challenges when this type of exclusive property is made available. Time is of the essence and we started to look at the potential solutions immediately.
As we touched on above, the fact that the client was a UK resident looking to acquire property in France using a European bank was challenging. There was no physical or financial footprint, which would have helped with compliance, and eventually, it turns out that the real estate agent involved tried but failed to agree on funding with local banks. We have no issues being brought in to “firefight” short-term funding requirements where other parties have failed. We are proactive rather than reactive and have secured numerous bespoke funding solutions over the years.
As we began to discuss the situation in more detail things became a little clearer and we started to see the emergence of some options. So, the requirements were as follows:-
Property: French Riviera
Funding: European bank preferred
Type of funding: Short-term bridging loan
Residency: No footprint in France
Exit route: To be discussed
These types of case study can be frustrating because we know the client has sufficient funds and sufficient assets but it is more down to the paperwork/technical side. However, as an independent broker, we have access to more than 300 lenders on a worldwide basis – and extremely strong relations with many of them. It was fairly obvious from the start that we would require the services of a private bank. We knew there would be greater flex ability with regards to income, assets, paperwork and timing. This suggests there is an additional risk but this is not the case because private banks/niche lenders simply take account of a client’s worldwide income and assets.
It was fairly obvious from an early stage that local funding in France was unlikely especially with the extremely short timescale. During our discussions with the client, we became aware of the fact they had significant UK assets on which there was no debt. We began to think, it would be possible to secure short-term bridging finance on the UK asset in a relatively short time. We have numerous contacts in the bridging loan sector and the fact this was to go towards a property in the south of France would not necessarily be an issue.
So, while it would obviously have been more convenient to obtain funding from a European based bank in euros as opposed to a UK bank in sterling, this was not a huge issue. The exact details of the solution were as follows:-
Type of funding: Bridging loan
Duration: 12-month flexibility if required
Security: Debt-free UK asset
Funds available: Within two weeks
Exit route: Refinancing French property with UK private bank
As it happens the funds were released just in time to arrive at the Notaire’s office in France allowing the client to lodge the funds and complete the property purchase. On numerous occasions, we find the more preferred route of funding is not always the most applicable (or even the best) especially when there is a relatively short timescale. Yes, we may well have been able to find a French bank willing to provide short-term funding to a UK national living in the UK. The problem is, this would have taken time and time was literally of the essence in this case study. There was also the issue of an exit route which is something that all bridging lenders demand went releasing funds, especially under more challenging conditions.
We have a reputation for thinking outside of the box and creating bespoke solutions which many of our competitors fail to consider. As a consequence, we are often approached as a “last resort” especially for funding actions where time is of the essence. While we obviously consider more traditional routes to funding we also have an eye on bespoke structures which perhaps more accommodate the client’s individual financial scenario. As an independent mortgage broker we are not tied to anyone or any group of lenders and therefore have carte blanche right across the sector. This is an element of our company which is vital, especially when looking to secure short-term funding!
One of the keys to our ongoing success is our ability to think on our feet, act quickly but also remain focused and still ensure maximum competitiveness on terms and conditions. Our status as an independent mortgage broker allows us to bring various parties into the mix thereby encouraging them to offer very competitive rates. If you ever find yourself in a similar scenario to this case study we would welcome the opportunity to review your requirements in more detail. We can happily discuss the potential options and provide an array of different solutions using real-time market rates. This allows you to compare and contrast the cash flow and short, medium and long-term financial liabilities of each option. Obviously, the key is to maximise funding but this must be considered within the constraints of a client’s financial resources.