AIPP chief writes to UK business secretary

Mark Sharp, CEO of the Association of International Property Professionals (AIPP), is seeking clarification from the UK government over where international property fits into regulation surrounding collective investments.

In a letter to Business Secretary Vince Cable, Sharp asks for clarification on a number or issues and requests a “full and frank dialogue” with the government and the Financial Services Authority (FSA) on which type of property investments constitute a collective investment.

Currently, any investments where income is “pooled” can be classified as collective investments and therefore can only be sold by FSA regulated bodies, effectively banning their sale by overseas property agents.

However, the definition of a pooled investment is not clearly defined in the case of property investment and “there is a lack of knowledge within the FSA about issues relating to the overseas property industry”, according to Sharp.

“Does a property based in Spain bought a by local and Chinese buyers suddenly become a collective investment once a British buyer purchases?

Does the fact that a property is new build make a difference? There are a whole number of issues that need clarification”.

Two-pronged attack

The AIPP are working closely with overseas property lawyer John Howell to protect the interests of those working in the industry. Sharp is focusing on lobbying central government while, Howell has set up a working group seeking to influence the FSA.

Worst case scenario

The worst potential outcome for the industry is for the FSA to put a blanket ban on developments with “guaranteed rental” offers which would effectively outlaw their sale via agents.
Currently, if the developer and the rental management company are separate and are “not connected”, the development is unlikely to be classified as a collective investment.

However, the current rules are ill-defined and it is worth while seeking legal advice before undertaking the sale of an investment with any kind of guaranteed rental scheme into the UK buyer market.

In the words of John Howell:

“Without action, there is a real risk that the FSA will continue with a series of piecemeal decisions that conflict and make no sense. The simple way out of the mess could be for the FSA to ban it all”.

Lobbying from both Howell and Sharp is essential to ensure out interests are protected.

Further reading

Act now of face FSA ban
FSA crack down poses serious industry risk

Source: Global edge

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