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Truss to announce stamp duty cut – report

UK housebuilders rallied on Wednesday following a report that Friday’s mini-budget could include a plan to cut stamp duty.

According to The Times, prime minister Liz Truss will announce the move in the mini-budget in an attempt to drive economic growth. It was understood the PM and chancellor Kwasi Kwarteng have been working on the plans for more than a month.

Truss believes that cutting stamp duty will encourage economic growth by allowing more people to move and enabling first-time buyers to get on the property ladder, The Times said.

It cited two Whitehall sources as saying that cuts to stamp duty were the “rabbit” in the mini-budget, which the government is billing as a “growth plan”.

Under the current system, no stamp duty is paid on the first £125,000 of any property purchase. Between £125,001 and £250,000 stamp duty is levied at 2%, £250,001 and £925,000 at 5%, £925,001 and £1.5m at 10% and anything above £1.5m at 12%. For first-time buyers the threshold at which stamp duty is paid is £300,000.

During the pandemic, then chancellor Rishi Sunak lifted the stamp duty threshold to £500,000.

At 0910 BST, Persimmon shares were up 5.4%, while Taylor Wimpey and Barratt were up 4% and Berkeley was 3.5% firmer. On the FTSE 250, Redrow was 5.6% higher, while Bellway and Crest Nicholson were up 3.6% and 3.4%, respectively.

Tom Bill, head of UK residential research at Knight Frank, said: “Nobody can accuse the new government of lacking an economic vision. If its low-tax approach extends to stamp duty, recent history tells us it will trigger higher levels of demand in the housing market at a time when mortgages are getting more expensive, which will support social mobility.

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“Prices could move higher in the short term if supply initially struggles to keep up but more balanced conditions will return provided the cut is immediate and permanent.”

Neil Wilson, chief market analyst at Markets.com, referred to the potential stamp duty cut as “the old Tory trick of juicing the housing market in its heartlands to boost confidence (wealth effect) whilst doing not a lot for housing supply”.

“I’m not for concreting over the green belt at all, but there will be questions about the economic soundness of this policy, as there always is. However, with interest rates rising so quickly, an offset to the cost of buying a home would grease the wheels of the market -without higher rates could cause the housing market to seize up.”

He added: “Clearly a stamp duty cut is good news for housebuilders who can expect higher selling prices as a result.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, argued that a stamp duty cut could do more harm than good.

“Buyers are unlikely to be unhappy at the prospect of a tax cut, but if the government chooses to cut Stamp Duty in an effort to stimulate the housing market, there’s a risk it could do more harm than good.

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“It’s easy to see why the government is concerned about the housing market. We’ve seen demand fall consistently since May, when rocketing bills, rising house prices and ever-increasing interest rates started to take a toll on buyer enthusiasm. There’s a risk that if rate rises accelerate, pressure on buyers could reach a tipping point, where demand dries up.

“We know from very recent experience that a Stamp Duty holiday can stimulate demand. However, the only reason these holidays work is because people feel they have a small window of opportunity to take advantage, otherwise they’ll miss out. The point at which they think they can just wait for the next one, they will start to become less effective.

“Even if it does stimulate demand, it overlooks the fact that the real brake on the property market is a severe shortage of supply. With an average of 36 properties on each agent’s books, we’re still close to an all-time low in the availability of property for sale. Driving demand without addressing supply would risk more buyers chasing a tiny number of properties, which would push prices up.

“By ramping up prices at a time of rising mortgage rates, the end result would be higher monthly mortgage costs, which would be increasingly unaffordable. And the Stamp Duty holiday wouldn’t help on this front. This in itself could be enough to put buyers off, and if it deters enough of them, it could end up having the opposite impact to the one that’s intended.”

By Michele Maatouk

Source: Sharecast

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London rental properties letting within minutes

One lettings agency in London says that tenant demand is so great in the capital for rental properties that many homes are being let within minutes of becoming available.

Benham and Reeves point to demand created by the return of professionals and international students, along with the growing shortage of available properties to rent, for creating a ‘challenging market’.

Tenant enquiry levels have continued to increase over the summer, across the firm’s 19 branches.

They say this is the ‘Most competitive London rental market that we have ever known’.

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Many branches have had almost no stock
In addition, tenants are finding that many branches have had almost no stock available, at best one or two apartments available to rent.

In a market update, the agent says: “Many properties are renting within hours – and some within minutes – as applicants immediately make an enquiry as soon as a property goes live on our website.

“This is swiftly followed by a full asking rent offer and once agreed, a holding deposit – so anxious are they to secure a property.

“This of course is great news for buy-to-let investors who, in many parts of the capital, are seeing their rental properties let immediately with voids at an absolute minimum. Sometimes just a day or two.”

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London is now a ‘landlord’s market’
The update also makes clear that the imbalance between supply and demand means that London is now a ‘landlord’s market’ with property investors expanding their property portfolios.

And rents are rising to pre-pandemic levels – some are now 10% higher.

Investors from overseas are also finding that the weakness of sterling makes London property considerably more affordable, while the shortage of rental properties means demand is the highest that the agent ‘has ever seen’.

Professionals returning to live and work in London, along with international students, are fuelling demand.

In some areas, including the City and east London, around 85% of applicants have been international students.

With the rental market so competitive, tenancy renewals remain at an all-time high – often more than 90% of existing tenants are renewing because they see there is a limited choice of properties available.

Source: Property 118

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Overseas investors ‘will not be deterred’ from UK property by new rules

Despite measures and additional taxation to curb overseas investors in UK property, the asset class still holds great allure for a number of reasons.

On 1 August 2022, a new register of overseas entities was launched in the UK. This means anyone investing in or acquiring property in the UK from abroad will need to register with Companies House.

The aim of the register is to prevent individuals or companies buying property with illicit funds, but some believe the additional paperwork could serve as a deterrent for some legitimate overseas investors.

However, David Hannah, group chairman at Cornerstone Tax, believes the UK property market will still provide enough of an attraction to foreign buyers for myriad reasons, as it still presents an “exciting opportunity”.

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Big demand from overseas investors
Hannah points out that the UK property market is very much an international market, and it can therefore be affected by geo-political events all over the world.

“Even if domestic demand cools, I think international demand will increase and the UK market will be affected because of it. I don’t think foreign investment will be overly deterred by the new rules coming into place on 1 August.

“Property in the UK represents an exciting opportunity for foreign buyers because of the drop in the value of the pound.”

The historic house price growth has always provided an attraction to overseas investors, gaining the sector a reputation as a safe haven as it generally shows less volatility than many other asset classes.

In recent years, this growth has been even stronger due to a range of contributing factors.

Hannah comments: “UK house prices continue to rise at a staggering rate domestically, being pushed higher by factors such as the influx of oversea investors.

“In the past, factors such as the stamp duty holiday have caused more people to consider buying property. However, due to the increase in average house prices, it has made it more difficult than ever for buyers to purchase their first property.

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What’s in the pipeline?
Recent data revealed that overseas investors now own around £90.7bn of property in England and Wales. Around half of this (£45.3bn) is concentrated in London, which has historically attracted the most attention from foreign buyers.

This was according to research from Benham and Reeves, which also named the south east and the north west as the top two property investment destinations for those living abroad, after the capital. Overseas owners have around £15.6bn tied up in the south east, and £7.6bn in the north west.

In total, according to Benham and Reeves, 247,016 properties across England and Wales are owned by overseas investors. As well as the highest value of properties, the highest number of these can be found in London, with 85,451 foreign-owned.

One of the biggest draws in recent years has been the falling value of the pound, which makes it cheaper for overseas investors buying property here.

A challenge for anyone buying property right now in the UK is the supply gap, as less sellers have been coming to the market.

Hannah notes that the 24% rise in prospective sellers putting homes on the market offers hope that this trend could be easing, “thus causing a more manageable supply and demand level and potentially slowing the rapid rise of property prices”.

The register will also be applied retrospectively to property bought up to 20 years ago in England and Wales and since December 2014 in Scotland. UK property owners who live overseas should ensure they are up to date on the latest requirements.

Source: Buy Association

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Will new disclosure rules deter foreign buyers?

The UK property market continues its upward trajectory as recent data from Halifax shows that the average house price now stands at £294,845, which represents a 6.8% rise, or £18,849 since the start of the year.

Supply-demand imbalance continues to be the main contributor to the rising prices.

With inflation in the UK rising to 9.4% in the year to June – marking its highest rate in 40 years, many are expecting a sharp decline in the property market, but the influx of foreign investment for properties in the UK could continue to push house prices higher. Recent research from Benham and Reeves shows that overseas nationals now own almost 250,000 homes across England and Wales – amounting to £90.7 billion worth of property.

London continues to be home to the highest value of foreign-owned homes, with all of the city’s top five property deals in 2021 – all of them worth £20 million or more – involving Chinese billionaires according to Beauchamp.

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Following sanctions imposed to Russian investors there were fears that foreign investment would falter, however Chinese investors seem to have picked up the slack. There are now 85,451 properties (amounting to a total value of £45.3 billion) in the capital owned by oversea investors who are able to take advantage of the UK’s thriving market.

The drop in the value of the pound, which has fallen by 11% since the start of the year, seems to be one of the major appealing aspects of buying property in the UK. 61 luxury properties in London – each worth more than £10 million, have been sold in the first six months of 2022 – representing the highest number in a decade.

Even though overseas buyers are an important segment of the market throughout the UK, there have been attempts to deter foreign investment.

There will be an introduction of new rules that will come into force on 1 August. The new register of overseas entities maintained by Companies House means that buyers will be forced to declare their ownership and provide details of beneficial owners.

The register will be publicly available at Companies House and intends to dissuade individuals looking to buy UK properties with illicit funds. It is unclear how significant this new regulation could be and whether it will deter foreign investment in the UK property market.

David Hannah, Group Chairman at Cornerstone Tax, is not convinced that it will.

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“What people must consider is that the UK property market is an international market, meaning it can be affected by geo-political events all over the world.

“Even if domestic demand cools, I think international demand will increase and the UK market will be affected because of it. I don’t think foreign investment will be overly deterred by the new rules coming in to place on 1 August.

“Property in the UK represents an exciting opportunity for foreign buyers because of the drop in the value of the pound.

“UK house prices continue to rise at a staggering rate domestically, being pushed higher by factors such as the influx of oversea investors. In the past, factors such as the stamp duty holiday have caused more people to consider buying property. However, due to the increase in average house prices, it has made it more difficult than ever for buyers to purchase their first property.

“There is hope that more available properties will enter the UK housing market and the latest House Price Index shows an increase of 24% in the number of prospective sellers bringing homes to the market – thus causing a more manageable supply and demand level and potentially slowing the rapid rise of property prices.”

By EYE CORRESPONDENT

Source: Property Industry Eye

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Knight Frank: Scottish commercial property investment hits pre-pandemic levels in first half of 2022

Scottish commercial property enjoyed its best first half of the year for investment volumes since 2018 as the market continued its recovery from the Covid-19 pandemic, according to new analysis from Knight Frank.

The independent commercial property consultancy found that £1.2 billion of commercial property deals were agreed between January and June 2022, up 54% on the same period last year. The figure is also 21% ahead of the five-year average – albeit, this was skewed by low investment volumes during 2020 and, to a lesser degree, 2021.

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Overseas investors represented more than two-thirds (68%) of the total investment figure, equivalent to £843 million, with UK property companies the second most active buyers totalling £296m – 23.9% of overall investment volumes.

Investment in retail assets increased by more than 55% on 2021, rising from £148m to £230m with retail warehousing accounting for £165m of the total figure. Offices were the most popular asset class with £410m worth of deals, boosted by the sale of HFD Group’s 177 Bothwell Street in Glasgow, in what is believed to be a record transaction for Scotland.

Edinburgh saw £400m of investment, while Glasgow accounted for another £329m. Deal activity in Aberdeen continued to pick up, reaching £189m, largely from the sale of two retail warehousing assets.

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Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The first half of the year has underlined a couple of key trends that have emerged over the last two years: retail warehousing and industrials remain in high demand, while prime offices are highly sought after – underlined by the deal for 177 Bothwell Street.

“Similarly, overseas investors accounting for such a high share of investment during the last six months also highlights the strength and depth of the buyer pool for Scottish commercial property.

“An uncertain macro-economic outlook will likely cool deal activity over the next couple of months. However, commercial property has typically acted as a hedge against inflation for investors and, with yields in Scotland’s main cities comparatively good value and supported by strong occupier markets, we expect interest to remain strong in the second half of the year.”

Source: Scottish Construction Now

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Foreign owners hold £90.7bn worth of property in the UK

Overseas nationals own almost 250,000 homes across England and Wales, the latest research by London lettings and estate agents Benham and Reeves shows.

In the current market, that is £90.7bn worth of property, suggesting that the UK remains a safe haven for foreign homeowners.

On a regional basis, London is home to the highest value of foreign owned homes, with the 85,451 properties belonging to overseas homeowners equating to a total value of £45.3bn.

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Westminster ranks top, with foreign owned homes commanding a current market value of £11.8bn, while in Kensington and Chelsea this total sits at £10.7bn.

Tower Hamlets ranks third, although some way off the top two, with overseas homeowners sitting on £3.7bn worth of property, followed by Wandsworth (£3.3bn) and Camden (£3.2bn).

Outside of the capital, Buckinghamshire is home to the highest value of foreign owned homes at £31.1bn, while Tandridge (£1.6bn), Liverpool (£1.4bn), Salford (£1.1bn) and Manchester (£1.1bn) also make the top 20 list.

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Director of Benham and Reeves, Marc von Grundherr, commented: “It’s not just domestic homeowners who have benefited from some extreme rates of house price appreciation in recent years and despite attempts to deter foreign interest, the value of homes owned by overseas buyers remains considerable, to say the least.

“While London is home to the highest concentration of foreign owned property market wealth, it’s certainly not confined to the boundaries of the capital alone, and overseas buyers remain an important segment of the market across England and Wales.”

By MARC DA SILVA

Source: Property Industry Eye

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UK Expat Buy-To-Let Mortgage Market Review

The UK expat buy-to-let market creates a busy news cycle. Liquid Expat Mortgages will often pick the most important headlines to break down.

The continued activity in the UK expat buy-to-let mortgage market is partly due to increased interest coming from Hong Kong as the political situation continues to evolve there.

Despite the rises in the base interest rate, interest rates are still relatively low by historic standards and many lenders are not increasing – or increasing only marginally – their rates for expat buyers, as the expat buy-to-let marketplace is particularly lucrative.

Zoopla which noted that the number of people looking for rental properties this year is 76% higher than the average number for the same time between 2018 and 2021.

In the ongoing race to get rental properties to an EPC rating of a C or higher, 17% of landlords have already attempted to improve the energy efficiency of their property, while 22% of portfolio investors have begun green renovations.

Liquid Expat Mortgages takes a look at the top headlines from recent news in the UK expat buy-to-let mortgage market.

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Activity in the expat buy-to-let and remortgage markets is similar to the high seen late on in 2021, indicating that expat business is not being dampened by the consistent interest rate rises.” — Stuart Marshall MANCHESTER, GREATER MANCHESTER, UK, June 29, 2022 /EINPresswire.com / —
As we move into the second half of June, Liquid Expat Mortgages takes a look at the top headlines from recent news in the UK expat and foreign national mortgage market.

Expat Buy-to-Let Market Remains Strong After Rate Rises.
Activity in the expat buy-to-let and remortgage markets is at a similar level to the high seen late on in 2021, indicating that expat business is not being dampened by the consistent interest rate rises coming from the Bank of England. This is, in part, due to increased interest coming from Hong Kong as the political situation continues to evolve there.

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Despite the rises in the base interest rate, interest rates are still relatively low by historic standards and many lenders are not increasing – or increasing only marginally – their rates for expat buyers, as the expat buy-to-let marketplace is particularly lucrative and competitive. Further, there are still many interested buyers as the UK property market remains an attractive investment option offering a relatively stable asset class.

‘Anecdotally, this is something we’ve been seeing’ says Stuart Marshall. ‘The UK expat and foreign national buy-to-let mortgage market is very busy at the minute. Many UK expat and foreign national investors are benefitting from uncertainty in the domestic marketplace that is being caused by the consistent base rate rises. This is currently acting as a deterrent for domestic buyers and meaning less competition for UK expat and foreign national buyers. This means that properties are staying on the market longer and prices are coming down faster. There is also a more competitive rental market since fewer people are graduating to home ownership. This means UK expat and foreign national buy-to-let mortgage holders are seeing higher profits as competition in the rental market pushes up prices.’

Sky High Confidence Indicating a Profitable Marketplace.
In Shawbrook’s Changing Face of Buy-to-Let Report, it was revealed that 67% of landlords are confident about buy-to-let in 2022. It also showed that 34% of landlords are planning another buy-to-let property purchase in 2022. This is another indicator that expat buy-to-let is thriving despite the recent rate rises. This is largely due to rising rents contributing to greater profits, slightly dampened house prices in the UK and enticing yields. There is also an increased desire or necessity for those in the rental market to continue renting, with the survey showing that only half of renters expect to leave the rental sector in the next fifteen years, while 13% of renters are committed to long-term renting.

The increasing number of people in the rental market is also shown in a recent report by Zoopla which noted that the number of people looking for rental properties this year is 76% higher than the average number for the same time between 2018 and 2021 . Aside from the difficult market conditions, this could also be partly due to the number of young people leaving their parents’ homes and returning to the city centre post-pandemic.

As noted above, the difficult domestic conditions are creating a fertile investment landscape for those using UK expat and foreign national mortgage products. Consequently, buyer confidence is high among UK expats and foreign nationals. ‘This is likely to increase as forced sales start to bite in the marketplace too’ says Stuart Marshall. ‘Smaller salaried homeowners with larger mortgages are in a precarious position with the interest rate rises and are facing the real possibility of negative equity amidst falling house prices. Forced sales are inevitable with the way the market is currently poised. This will only lead to a higher number of properties available in a slower marketplace, meaning that investors will be able to utilise UK expat and foreign national mortgage products to secure a fantastic investment property at a reduced price.’

Another thing to note from Shawbrook’s report is that 29% of brokers said that three quarters of the portfolio investors they were dealing with were considering opening limited companies for their buy-to-let ventures. ‘This is continuing a trend that has emerged in recent years’ says Stuart Marshall. ‘With an increasing number of legislative changes for landlords, there are many good incentives for UK expats and foreign nationals to incorporate their investment properties in limited companies. A good broker will be able to help with this.’

Green Buy-to-Let Mortgages at a Record High.
In the ongoing race to get rental properties to an EPC rating of a C or higher, 17% of landlords have already attempted to improve the energy efficiency of their property, while 22% of portfolio investors have begun green renovations. The most popular renovations were new windows and new boilers, with 23% and 22% of those improving their property’s energy efficiency conducting these renovations respectively.

Stephanie Charman, head of strategic relationships at Sesame Bankhall Group, estimates that the cost of improving the EPC rating of a property will range between £5,900 and £10,400. ‘This is obviously a significant cost to landlords’ says Stuart Marshall. ‘However, discerning investors are talking to expert brokers and finding ways to minimise the cost of these renovations. One such way is to remortgage – which has proven very popular amongst the UK expat and foreign national investor population – and use some equity from the property to finance green renovations, especially with the chancellor’s new discount to green technology.

This is also a good strategy to take as the number of green mortgage products continues to grow, with 19% of all buy-to-let products now green mortgage products . These products offer discounted rates to UK expat and foreign national investors who commit to green renovations or purchase environmentally friendly properties. This can be an incredibly fruitful strategy in the current marketplace as both environmentally-conscious and cost-conscious consumers are looking to rent properties with higher EPC ratings.’

Source: MENAFN

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Property market investment is crucial to economic recovery

The past two years of economic uncertainty, induced by the global pandemic, have impeded strong performances across most industries. Certainly, all will be glad to see the back of the restrictions and lockdowns that strained growth as businesses seek to recover.

Yet, amongst the volatility, the UK property market once again flourished, highlighting the sector’s reliable reputation in such times.

This resilience was likely made possible by investors seeking financial opportunities that have been historically more reliable during a period where other potential assets have not looked as secure.

What’s more, there appears to be no slowing down, with buyers snapping up property faster than ever, twice as quickly as they did in 2019, according to data from Rightmove.

Alongside thriving market activity is the rise in house prices that continued surging even throughout the pandemic. According to Nationwide’s April House Price index, average house prices have reached £267,620, with price rises increasing higher than 10 per cent in each month but one in the past year.

Despite positive growth, the industry must remain prepared for potential challenges ahead. The rate of buying is a consequence of a shortage of property, a situation that cannot continue forever. And pundits have predicted house prices to be pulled back down by the cost of living squeeze and rising mortgage rates.

This is why many will be hailing the return of international investors since the end of Covid restrictions at the start of the year.

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Why is overseas investment important?
The health of the economy and the health of the property market are closely linked. Consumer spending and borrowing are affected by house price increases or dips. As such, receiving overseas investment will be crucial for maintaining the growth of the market and, in turn, the UK’s economic recovery.

And judging by the figures, this is anticipated to be the case since travel restrictions into the country were dropped in February.

According to Knight Frank’s City Wealth index section of their 2022 Wealth Report, in 2021 London saw more cross-border private capital in real estate than any other city in the world, with more than $3bn (£2.39bn) invested. Their forecasts estimate this trend to continue over 2022, with a further $24bn expected to be invested in the capital.

When taking into account the ongoing housing crisis that desperately needs to be tackled, a significant boost in investment would be welcomed in order to address the vast undersupply in housing.

To offset the shortage, the UK needs to be building 340,000 new homes a year, of which 145,000 should be affordable. However, only approximately 216,000 new homes were supplied in 2020-21.

More often than not, news of international investment flows into the UK property market is met with some disdain due to negative connotations linked to the housing shortage. However, foreign investment can ensure the commencement of property development by buying new residential units off-plan and funding development schemes.

This is a huge positive when considering the slowdown of construction activity due to problems associated with the pandemic.

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It is not just the capital where these projects are taking place. International investors are placing bigger bets on areas outside of London such as the West Midlands and the North of England, with the likes of Manchester, Leeds and Newcastle becoming recognised as better value for money investments.

At the same time, investment in regional areas has been bolstered by a change in homeowner preferences. Many households are now seeking bigger homes outside of the city, suited to home-working needs, and increased investment flow has the potential to boost their development of new housing for years to come.

Could external factors delay international investment flows?
While the return of international investment is certainly promising for the property market, it is important to recognise the wider macroeconomic headwinds that have the potential to slow down the market’s growth outlook.

For one, the steady climb of interest rates poses added challenges to investors.

The base rate, which recently rose to 1 per cent, influences the interest rates that many lenders charge for mortgages, loans and other types of credit. For investors, this means taking into account higher mortgage rates in line with rising interest. This in turn poses risks to the pace of real estate development.

Elsewhere, there is soaring inflation and a cost of living crisis to contend with. The Bank of England has warned that prices might rise to 10 per cent this year, a 40-year high, and this jump in inflation coupled with the rising interest rate could erode rental returns and devalue property if house price growth slows, which commentators are anticipating.

However, despite the above, UK property has long been considered a safe bet for international investors, and it is unlikely this will change any time soon. Capital from areas such as Hong Kong, China and the US remains strong. Also, the drop in the pound since Brexit has allowed for more favourable exchange rates that stretches investors’ money further.

Looking ahead, it becomes essential, then, that the expected return of global investment flows is used to its full potential. Doing so will be key to ensuring the continued strength of the property market and, ultimately, the pursuit of a steady economic recovery.

Jamie Johnson is chief executive of FJP Investment

By Jamie Johnson

Source FT Adviser

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Overseas buyers’ interest in UK housing market rising

‘Visa’ was the most searched term by brokers in April, shows data provided by Legal & General’s SmartrCriteria tool.

This is the second month in a row that Visa has topped this chart, with search volumes falling by only 4% on a monthly basis.

Visa was also the most searched term overall in 2021 and in 2020, according to Legal & General in a report released in January this year.

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The firm also notes a “surge” in searches for self-employed borrowers, with searches using average or the latest years’ accounts shooting up by 64% on a monthly basis, while searches using account evidence or multiple years’ worth of accounts overtook this, going up by 80%.

Meanwhile, searches for self-employed sole-traders increased by 43%.

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Searches that incorporate environmental criteria also rose, by 24%, although this was “from a low base”, Legal & General says.

Legal & General Mortgage Club director Kevin Roberts says: “Today’s findings are another reminder of the resilience of the UK property market.

“Despite wider economic pressure, demand so far has remained steady, and in some areas of the market is even rising.”

By Gary Adams

Source: Mortgage Strategy

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London house price growth to hit 8% in 2022

London’s millionaire mansions are set for ‘a long overdue recovery’ in house price growth, agents have predicted.

A report by real estate advisory company, London Central Portfolio, has indicated the prime central London residential market has continued to witness positive signs over the past three months.

This is despite the uncertainties caused by the Omicron variant and some overseas property investors not yet travelling to London.

The data, provided by Bricks & Logic, suggested that average prices in the area have increased by 1.7 per cent. The February 2022 prices have now surpassed levels seen before the pandemic by 0.6 per cent.

Residential property in PCL yields have also spiked, the report said.

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The average annual rental return for a flat in PCL was 3.4 per cent in February 2022. However, one must take into account that PCL has a significantly higher proportion of flats (87.5 per cent) than houses (12.5 per cent), which has driven the overall average.

According to Foxtons, the average flat price in central London is £1,091,708, while the average house price is £3,253,175.

Andrew Weir, chief executive of London Central Portfolio, said the current climate pointed “towards the investment opportunities within the flats sector.

“We have seen evidence of buyers seeking to acquire small apartments within prime addresses, as many professionals return to the capital.

“The gradual lifting of international travel restrictions and the full return of overseas investors will almost certainly see the performance gap between houses and apartments draw closer together once again.”

PCL is forecast to see particularly strong activity over the next 24 months based on an anticipated return in travel from the world’s high-net worth individuals and a severe undersupply of homes for sale and rent.

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Tom Bill, head of residential research for Knight Frank, told FTAdviser: “The return of international buyers has been erratic, it can be a bit more seasonal, so you might find more international buyers returning in April or May time…the story of prime central London this year is a long overdue recovery.”

Two separate reports, published by Savills and Jones Lang LaSalle, also predicted similar increases of 8 per cent and 7.5 per cent respectively.

The greater London market, which excludes the prime properties in central London, has outperformed the central areas of the capital over the past 24 months, with prices increasing by 9.4 per cent since February 2020.

Bill added there has been an increase in people looking for space in greenery, “so house prices in Dulwich or Wimbledon are performing more strongly than Knightsbridge, Chelsea or Bayswater”, he said.

However Bill explained: “London has an affordability problem… You have the race-to-space being layered onto that during the pandemic. This will start to recede, but that affordability squeeze is still going to keep driving people out of London.”

When talking about the general scope of house prices in the future, Bill mentioned: “I would expect the regions as a whole to outperform London, in terms of house price growth over the next five years.

He also predicted: “The Midlands is going to do well in terms of house price growth, and generally speaking you’re going to have a broad ‘levelling up’ of house prices over the next five to 10 years.”

By Calum Kapoor

Source: FT Adviser