Are you an investor seeking new property investment opportunities?

If so, you could consider making an investment via our Property Authorised Investment Fund (PAIFs).

Here at The Mistoria Group, we are launching a student-focused £100M PAIF and are looking for investors to work with.

This article introduces PAIFs, explains how they work, and identifies the eligibility criteria for applicants.

What is a PAIF?

PAIF stands for Property Authorised Investment Fund. It is a type of tax-efficient UK investment fund used for collective investment in rental property.

The government website defines a PAIF as “an open-ended investment company (OEIC) whose investment portfolio comprises predominantly real property or shares in UK Real Estate Investment Trusts (UK REITs) and certain other similar entities.”

The main aim of PAIFs is to remove some of the tax obstacles associated with group investments in rental properties. Instead, investors are taxed as though they had invested directly in the properties themselves.

This benefits them because it increases the overall profitability of the fund.

How does it work?

A PAIF is an open-ended investment company; this means that it can issue and cancel shares at any time.

The money a PAIF earns comes from three main sources. These are: property income, other taxable income like interest and foreign dividends, and UK dividends.

The PAIF then distributes this income to its investors who pay the tax on the income themselves, rather than the fund paying it. This is far more efficient than if the fund paid the tax.

Generally, the only type of tax that a PAIF may need to pay is corporation tax, but it is often set up to avoid this.

Who can apply?

A company must inform HMRC and meet certain eligibility conditions before becoming a PAIF.

First, the fund manager must give HMRC written notice that they intend to follow the PAIF rules by a particular date.

To be eligible to become a PAIF, a fund must meet the following eligibility conditions:

  • It must be an open-ended investment company (OEIC)
  • It must be a property rental business, own shares in UK REITs, or a foreign equivalent
  • It must have Genuine Diversity of Ownership
  • Corporate investors should not hold 10 per cent or more of the fund by net asset value
  • It must not borrow money using a profit-related non-commercial loan
  • At least 60 per cent of its net income in each accounting period must come from the property investment business

The fund manager should also give notice to HMRC that the OEIC will become a PAIF and obtain approval from any shareholders and regulatory groups.

HMRC will then check whether the OEIC meets the conditions.

If it does, the PAIF rules will apply to it from the date given in the original notice. The PAIF must meet the conditions above throughout the regime.

How The Mistoria Group can help

At The Mistoria Group, we are proud to be one of the leading property companies in the North West of England. We offer a range of property services, including property investment, sourcing, renovations, and lettings.

We now want to use our many years of experience and contacts in the industry to launch a student Property Authorised Investment Fund (PAIF).

Our plan is to raise £100 million to purchase and renovate about 440 student houses in the region. We will then develop these properties into high-quality shared units with a gross yield of at least 10 per cent. We aim to then sell the portfolio after 10 years for an additional profit.

We will provide full management of the investment, including sourcing the properties, renovations, and lettings.

We are offering individuals looking for a hands-off “armchair investment” the opportunity to profit from the student property market without having to manage property themselves.

By investing in our student PAIF, investors will gain greater liquidity and security than they would otherwise have in this asset class.

For more information about our student PAIF, give our team a call on 0800 500 3015, or email info@mistoriagroup.com