What is a Faster Payment?

Faster Payments is an initiative introduced in 2008 and operated by payments authority Pay UK. It allows funds to be transferred rapidly and securely between UK bank accounts at any time.

How do Faster Payments work?

Businesses can make Faster Payments in several ways, including via mobile banking, internet banking, telephone banking, in-branch and by using payment platforms.

How can businesses benefit from Faster Payments?

Faster Payments help businesses by providing a quicker and more convenient solution for moving money. The scheme’s primary goal is to reduce the time – from initiation to receipt of the funds – that it takes to complete a payment.

What types of businesses can use Faster Payments?

Any UK business requiring domestic disbursement of funds (and international companies looking to send money within the UK) can use Faster Payments.

Are Faster Payments free?

No, there are fees involved in using Faster Payments for businesses. The fee is completely different for each business and depends on different factors such as industry and volume of payments.

How long do Faster Payments take?

Faster Payments take a matter of seconds. Provided the beneficiary’s bank is also a direct participant of the Faster Payments Scheme, the money will be received almost instantly. In rare cases, Faster Payments may take up to two hours.

Do Faster Payments have a transaction limit?

Faster Payments have an individual transaction limit of £250,000.

Can Faster Payments be reversed?

No, Faster Payments cannot be reversed or cancelled.

Which banks use Faster Payments?

The Faster Payments Scheme states that 99.99% of UK bank accounts can accept Faster Payments. Non-bank payment platforms, such as Equals Money, can also use the scheme.

Preparing for overseas property investment in a post-Brexit, Covid world

If you’re planning on buying a property overseas as an investment, then the world is your oyster. There’s an endless range of property types and locations, from well-known markets to far-flung riskier opportunities.

However, as with any property exchange, there are some risks that investors should factor in and prepare for, especially in this post-Brexit, Covid world that we now live in. Before you buy a property overseas, there’s a lot of homework to do. Here are some pointers to get you started.

Speak to a tax adviser

Owning overseas property could influence your tax obligations. If you live and pay tax in the UK, you must let HMRC know about any income you make from rental properties overseas. This can be completed with self-assessment forms found on gov.uk.

From ensuring you are not taxed twice, to claiming for remittance, tax on overseas investment properties can be complex, so it is always best to speak to a tax adviser.

Non-EU buyers of properties have been targeted by some countries for higher tax rates in the past such as France where taxes on capital gains can be as much as 49%.

Overseas taxes should always be factored into any cost planning you do before investing in a property abroad which is why it’s essential to do your research into the impact of Brexit on your chosen country. Preparing yourself financially for taxation on any income may help you to assess whether there will be a return on investment.

Research your mortgage options

If you aren’t buying an overseas property outright, you may be looking to take out an overseas mortgage. You can do this with a UK bank or an international lender.

Payments to international lenders may be affected by fluctuations in the exchange rate. If you are repaying your mortgage in a foreign currency, the lender must notify you if the exchange rate fluctuates by more than 20%, as this could affect your ability to keep up with future mortgage commitments. To protect buyers, lenders must offer the option to pay your mortgage off in another currency.

It is also quite common for UK buyers to buy a home abroad outright by remortgaging a UK property.

If you’re unsure about your options, speaking to a financial adviser may give more clarity on the mortgage options available to you. The Money Advice Service have a detailed guide about choosing the right financial advisor.

Check the rental rules

If you’re buying-to-let, then make sure that you are legally allowed to do so before formalising any agreements. Before signing any form of contract or agreement for your property, it’s important to make sure you have all the necessary permissions and licences in place on the property you are purchasing, to be able to let it out.

Speak to a currency exchange specialist

As with any international transaction, it’s worth speaking to a currency expert before completing your property purchase.

Changes in the exchange rate can significantly affect the cost of a property, so seek advice on the best ways to protect your money. Our experienced team of currency experts can help you secure some of the best rates available by advising you on the best payment method for the requirements of your international payments. By choosing a suitable method, you can save money by locking in favourable rates or buying currency at the ideal time.

“We’ve already seen increased interest in overseas purchases this year and managing currency fluctuations is a key consideration when estimating the costs involved.”
Matthew Goacher – Private Client Manager, Equals Money

Access

As the UK is no longer part of the EU, there are now limits on the amount of time that British nationals can spend in the Schengen Area. That limit currently stands at 90 days within a 180 day period. The clock starts upon entry into the area and does not distinguish between countries.

Staying longer than these time periods may necessitate residency applications for the country in question that will entail, in certain cases, proof of income and/or education/employment.

For example, those looking to become Spanish residents must now provide proof that they have at least £2,000 a month coming into their account, or have a contract with a Spanish company. Families will need to show they have an additional £500 a month for each family member, on top of the base level income of £2000.

Where to invest

The location of your overseas property is of course important if you want it to be a good, long-term investment.

For example, buying in an area where there is a large demand from either locals or tourists will help you make a large return on investment.

Researching the area can also give you a better idea about general asking prices in the locality, or an acceptable price to charge to tenants renting your property. It will also help you decide whether you are getting a good deal on the property you are looking to buy.

Typically, it is easier to find bargains in countries where prices have fallen dramatically, but it’s also normally deemed safer to buy in more established markets.

Finding tenants for your overseas property

In order to make profit from your overseas investment, you need to be consistently attracting tenants to your property. The Covid-19 outbreak has made this nearly impossible for the last 12 months, but as vaccines are rolled out around the world, there is optimism that travel will return again later this year.

To prepare, it’s a good idea to speak with a local estate agent to market the property for you. A local property company will have a better knowledge of the area, and have a larger base of clients to advertise the property to.

However, costs for an international estate agent must also be factored into any financial plans. This fee can be particularly high if you need the agent to manage the property, which is quite common for overseas investors who live in the UK.

There are cheaper marketing options available, such as holiday lettings sites like AirBnB or Booking.com.

“Many clients want to fully understand the Brexit implications now so that everything is in place as soon as Covid restrictions are eased and travel resumes.”
Matthew Goacher – Private Client Manager, Equals Money

If things go wrong

International property purchases are not regulated by the UK’s regulator, the Financial Conduct Authority (FCA), so there is not the same level of protection as you might get in the UK if things go wrong. Overseas property purchases are also not protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme.

So, it’s important to be aware of the risks before purchasing an overseas property investment.

Get in touch

If you’re considering buying a property overseas and have any questions for our currency experts about how best to make your international payments, give us a call on +44 (0)20 7778 9350 or email [email protected].