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Why UK Expat and Foreign National Investors are Looking North in 2024

With another excellent year ahead for UK expat buy-to-let property investment, the North of the UK stands to perform best in 2024.

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2024 looks to be another great year for UK expat and foreign national investors to buy UK buy-to-let properties.

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With the rental market still exceptionally busy as a result of incredible demand and high mortgage rates stopping first-time buyers getting onto the ladder, buy-to-let property owners stand to make big profits.

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Expat property enquiries up following rate holds

Offshoreonline, an online mortgage adviser for expatriates, has observed a significant upswing in expat mortgage enquiries, attributing this to the Bank of England’s decision to hold the UK Base Rate steady in November.

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At the same time, a straw poll of estate agents conducted by the expat online mortgage broker revealed a steep rise in enquiries during the second week of November, indicating a growing interest in the UK expat buy-to-let market and house buying in general.

The current stability in the UK Base Rate has created a favourable environment for potential buyers of UK buy to let properties in 2024, according to Offshoreonline.

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With this positive outlook, expat mortgage holders are presented with a critical decision—whether to opt for a fixed or variable rate mortgage, the firm said.

Source: Best Advice

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Huge Surge in Chinese Interest in UK Property Investment

UK Housing Market Ripe for Overseas Buy-to-Let Investment

With good-value property prices and rental growth exceeding wage growth, UK houses are attracting huge interest from overseas investors.

Read on for more information on how this affects buy-to-let property markets in the UK.

How Many Chinese Investors Want to Buy UK Property?

Chinese investors are getting into overseas property investment in a big way, according to Juwai IQI.

The property portal states that the top four destinations for overseas investment are English-speaking countries: the United Kingdom, the United States, Canada and Australia.

Juwai IQI indicates a massive increase in overseas property investment enquiries among Chinese investors. In Q3 2023, Juwai IQI saw a 76% increase in interest in buying UK property as a non-resident to Q2. In addition, those figures were 35% higher than Q1.

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How Are Chinese Investors Spending Their Money in the UK?

According to Juwai IQI’s email newsletter, these Chinese investors are from an upper-middle-class background and are interested in buying townhouses and apartments.

It’s easy to see why.

Some of the UK’s major cities are seeing huge rises in rental prices for city centre apartments.

City Residential Estate Agents state that the average rental price for apartments for sale in Liverpool City Centre has increased by 12%. Meanwhile, property price growth has slowed due to low activity in the market, making UK property investment both attainable and lucrative for overseas investors.

Why Do Foreign Investors Want to Invest in the UK Property Market?

So, why would a Chinese investor want to purchase property in the UK?

According to a report by Irwin Mitchell, the country has an international reputation as a ‘favourable and open global destination for investment, offering a robust legal framework and business-friendly environment, despite recent economic and political changes’.

As such, foreign investment is rising throughout the UK. Activity in 2022 was substantially higher than in previous years. An influx of Chinese property investors is highly likely in 2023 and beyond.

Interestingly, overseas investment in the North West property market is up by 20% over pre-pandemic levels, with investors looking to cities like Manchester and Liverpool thanks to their local infrastructure, local skills and regeneration plans.

The North West currently leads the way for capital growth projections. Savills predicts an 11.70% capital growth in the region between now and 2027, meaning property investments stand to see substantial appreciation during that period.

According to the HM Land Registry UK House Price Index, the average property price in the UK costs £291,044. However, the average property price in Liverpool is £180,268. Liverpool – and the North West region – offers better value property investments than many other places in the UK.

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Huge Rise in Chinese Buyers Over the Last Year

Earlier this month, Juwai IQI saw a huge increase in Chinese spending on overseas property, reaching $3.4 billion – $1 billion more than in 2022.

Juwai IQI attributes this growth to “revenge buying” – when buying rates rise rapidly after a period where investors cannot purchase due to restrictions or difficulty.

According to an EY report, the number of households that can afford to invest in property in China is set to rise by 50% in 2025. In addition, Chinese consumers have typically high savings rates, while investors are also moving to diversify their investment portfolios.Why not read the Rwinvest Top UK Cities for Overseas property investment report for futher insights.

With UK property price growth down to 0.2%, gross rental yields continuing to rise, and property prices not expected to go up until 2025, we can expect to see more foreign investors purchasing property on UK shores in the near future.

By Dale Barham

Source: RWinvest

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UK Expat and Foreign National Investors Use Re-Mortgage Products to Improve the Energy Efficiency of Buy-to-Let Property

As we move into the colder months in the UK, energy efficiency starts to become a bigger consideration for tenants. This is not an insignificant consideration, with many tenants still concerned about the rising cost of energy, in addition to high inflation and the rising cost of living more generally.

‘A low energy efficiency rating is enough to dissuade many desirable tenants from renting a property’ says Stuart Marshall of Liquid Expat Mortgages. ‘This means that owning a property with a bad EPC rating can be very costly for UK expat and foreign national investors because of a loss of rental income. Further, the need for good energy efficiency is likely to be reflected in legislation too. While the government recently announced that it was scrapping its requirement for rental properties to have an EPC rating of a C or above by 2025, it’s likely that this plan will be replaced by other, similar legislation if the UK is to reach its target of net zero by 2050.’

Because of the increasing focus on energy efficiency in rental properties, it’s important for UK expat and foreign national investors to make their property as energy efficient as possible. This will make sure that their investment property remains attractive to desirable tenants, while also making sure that the property is compliant with any potential environmental legislation.

5 Ways UK Expat and Foreign National Investors Can Make Their Investment Property More Energy Efficient.

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  1. Switch Lightbulbs. Switching to LED lightbulbs is one of the simplest ways to increase the energy efficiency of a rental property. Not only do they last five times longer than traditional halogen lightbulbs, but they also use significantly less energy to produce the same light, while emitting lower carbon dioxide emissions.
  2. Draught Proof. Another very easy and affordable way to improve energy efficiency is to reduce heat waste through draught proofing in common problem areas like doors, chimneys and skirting boards.
  3. Energy Efficient Appliances. Replacing old appliances with more energy efficient ones is another very easy way for UK expat and foreign national investors to improve the energy efficiency of their rental property. Appliances with an A+++ rating are the best performing. Having higher rated appliances will improve the property’s EPC rating and will also improve the energy efficiency of the property.
  4. Insulation. Improving insulation is one of the most common ways for UK expat and foreign national investors to improve the energy efficiency of their property. There are many ways to do this, from improving insulation in roofs and cavity walls to installing double glazed windows and thermally efficient doors. An easier way to improve insulation is to install thick curtains or have existing curtains lined.
  5. Replace the Boiler. A more costly way to improve the energy efficiency of a property is to replace the boiler with a more efficient one. While this is more expensive than many of the other methods mentioned above, installing an efficient boiler can make a significant difference to the energy efficiency of the property and equate to massive savings for potential tenants.

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Utilise a Re-mortgage Product.
While improving the energy efficiency of an investment property is pretty much essential now, conducting a number of renovations can be costly for UK expat and foreign national investors. This is especially true for portfolio investors who have a number of properties that require green renovations.

‘One of the best ways to fund these renovations is through a re-mortgage’ says Stuart Marshall. ‘This is a course of action that we’ve discussed with many of our clients looking to conduct green renovations. This is because there are plenty of quality re-mortgage products available for UK expat and foreign national investors. These products allow UK expat and foreign national investors to utilise their existing equity in their property to raise capital for green renovations. But using a re-mortgage product can also pay dividends elsewhere as increased equity can make it easier to negotiate a better mortgage deal. So, UK expat and foreign national investors can often benefit from green renovations and also from reduced mortgage rates and lower monthly repayments.’

‘Utilising the services of an expert UK expat or foreign national mortgage broker is the best way to negotiate a better deal and gain access to exclusive broker-only deals. This can really make all the difference in maximising the quality of an investment venture. But we’ve seen re-mortgage products work time and time again in improving the terms of buy-to-let mortgages while also raising capital to conduct green renovations that will pay dividends long into the future.’

By Ulysses

Source: EIN News

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Foreign Property Investment in the North West Up 20%

According to law firm Irwin Mitchell’s latest FDI (Foreign Direct Investment) report, the North West property sector is primed to see significant investment from overseas buyers.

Irwin Mitchell has compiled the summer 2023 report in collaboration with leading economic consultancy Cebr. It offers foreign investment analysis and ‘on the ground’ commentary on the UK’s largest cities and key sectors.

The UK real estate section of the vital sector insights states that the property industry (grouped in with hospitality) had an investment position of £209 billion in 2021. However, this figure took a hit due to COVID-19, Brexit, and the war in Ukraine.

While not immune to these challenges, the appetite for investment in the UK from overseas has proved to be resilient.

According to the report, the property market in London remains desirable to foreign investors, especially when it comes to Grade A office space.

There has been an increase in taxes for property investors, and regulations have tightened, but this hasn’t put off international buyers, who continue to choose the UK over other countries.

In particular, strong growth has been observed in the North West and the West Midlands. There were 88 new investment projects in the North West last year, up 20% compared to before the pandemic, which suggests the region has quickly recovered from the lull in investment over the past few trying years.

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The Key to More Foreign Property Investment is ‘Levelling Up’

According to Adrian Barlow, the firm’s National Head of Real Estate, ‘continued levelling up is key to maintaining investor interest in areas outside the capital’.

With many exciting regeneration projects in the North West, the future of foreign property investment in the region seems promising.

This includes massive plans such as Liverpool Waters and the Atlantic Gateway scheme.

As part of Liverpool Waters, Canadian investor Starlight Investments is taking on a 31-story residential tower. This build-to-let scheme has a development value of £50m and will add to the company’s £20bn North American portfolio, showing that overseas companies are eager to be involved in the North West property market.

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Why Are Overseas Investors Interested in the North West?

There are plenty of attractive factors for overseas buyers regarding North West property. This includes the region’s much more affordable property prices than other areas, such as those in the South of England.

For example, the UK House Price Index shows that the North West region’s average house price is £215,648, while the average house in the South East goes for £394,096.

Another reason the North West appeals to foreign real estate investors today is the prediction for high capital growth in the area. According to property experts Savills, the region’s mainstream capital value is forecast to grow 11.7% over the next few years leading to 2027, while the South East is set to hit just 3% growth in the same timeframe.

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What do high rates mean for HNWIs seeking mortgages?

Interest rates have dominated the headlines in 2023. As inflation remains sticky and well above its 2 per cent target, the Bank of England’s monetary policy committee has voted on 14 consecutive occasions to hike the base rate.

The impact on mortgage customers has garnered a great deal of political and media interest.

Understandably, the fate of high-net-worth individuals seldom enters the conversation, but within the mortgage market we cannot afford to overlook the issues affecting such borrowers.

Indeed, now is an opportune moment for lenders and intermediaries to take stock of the challenges that HNWIs face when looking to secure, and in the current climate repay, a mortgage.

Moreover, we must consider what can be done to ensure wealthier borrowers are offered suitable support in the higher interest rate environment.

The challenges involved in HNW mortgages

It may seem entirely counter-intuitive to think that HNWIs will regularly struggle when it comes to securing a mortgage. Yet this remains the reality; they run a surprisingly high risk of being turned away by conventional lenders.

For context, Butterfield Mortgages conducted research in the past, surveying more than 500 UK adults who all had a net worth in excess of £1mn. We found that 12 per cent had been rejected for mortgages in the preceding decade.

But why are so many HWNIs turned down for a mortgage?

It comes down to the often complex and diverse nature of HNWIs’ wealth – their income, investments and liquidity.

As a rule of thumb, the wealthier an individual is, the more complicated their income structure and finances are likely to be.

For instance, HNWIs tend to have their capital locked up in illiquid assets, spread across multiple jurisdictions. Meanwhile, they may have irregular or no formal source of income, and perhaps have not built up an attractive credit profile by repaying regular debts.

As a result, the process of applying and being approved for a mortgage can be far more complex for these individuals.

The standard ‘tick-box’ methodology applied by many high street lenders can pose unexpected complications, simply because how HNWIs make, spend and invest their money typically differs significantly from most prospective borrowers.

Further, HNWIs may not be UK residents, and they may also differ in the reasons they want or need a mortgage, both of which would create additional obstacles.

Many lenders will not supply finance for a property that will not be an individual’s primary residence, nor to an overseas buyer.

As such, HNWIs seeking finance for a buy-to-let investment or a second home will often struggle to find a mortgage on the high street.

Lenders and brokers require skill and experience

HNWIs being rejected for mortgages remains a prevalent issue.

As noted, they are ill-suited to the methodology that many mainstream, high street lenders apply to assess mortgage applications.

Meanwhile, their desire for a loan to purchase an investment property naturally rules out a swathe of other lenders.

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Clearly, HNWIs need to find specialist lenders and brokers who are well-versed in this type of client.

More specifically, they need lenders and brokers that have the skill, experience and resources to review each borrower and application on a case-by-case basis; to take in the full picture of the person’s financial profile, to understand the type of property they want to buy and why, and to assess their ability to repay a loan.

In essence, a more bespoke approach is required when working with HNWIs.

Lenders and brokers reliant on processing huge volumes of applications will, generally speaking, not have the structures and processes in place to operate in such a flexible manner.

Returning to the matter of rising interest rates – this economic shift over the past 20 months has only heightened the challenges that exist for HNWIs, thereby placing a greater onus on lenders and brokers to assist wealthier borrowers as they seek to navigate the mortgage market.

How higher rates affect HNWIs

For more than 13 years – between March 2009 and May 2022 – the BoE’s base rate resided below 1 per cent. It was never going to remain at such historic lows, which were largely indicative of economic turbulence stemming from the global financial crash, Brexit and the pandemic.

That rates would rise at some point was a given. As many who are longer in the tooth would also note, a base rate of 5 per cent or higher is also normal in the grand scheme of things – this was the general benchmark for much of the 1990s and 2000s, while the 1980s saw a base rate predominantly in double figures.

However, while a higher base rate is by no means atypical, the speed at which it has risen has undoubtedly created challenges for borrowers.

Jumping from an all-time low of 0.1 per cent in December 2021 to 5.25 per cent by August this year is a sharp rise, and coming after a prolonged level of such low rates, has placed a strain on many people who will have purchased properties with little consideration as to how such a shift could impact them.

HNWIs are no exception here. Again, while not featuring in the general discourse around higher rates and the impact on mortgage customers, HNWIs warrant attention and support.

Broadly speaking, HNWIs direct their investments towards high-value properties, such as those in prime central London. They may, for example, require a £5mn mortgage for the purchase of a £7.5mn townhouse in a prime central London postcode.

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Coupled with the size of the mortgages HNWIs take on is the length of their terms. HNWIs investing in a second home or BTL property may take on mortgages that have five or 10-year terms, unlike the 25 or 30-year terms that most UK homebuyers will be able to access.

If not on a fixed-term loan, the hikes to the base rate since the end of 2021 will have taken a notable toll on even very wealthy borrowers. With less time to spread out increased costs on an already large mortgage, some HNWIs will be struggling to make repayments.

Again, the complicated nature of their finances and investments comes into play. HNWIs might be asset-rich (owning all manner of assets) but have limited access to liquid cash.

Seeing their mortgage repayment skyrocket will require them to release equity from other investments or access cash from other sources.

As with the application process, it is important that preconceptions do not cloud the due attention that HWNIs require. Those lenders and brokers who are used to operating in this space will likely be acutely aware of this point.

Improving support for HNWIs

Butterfield Mortgages recently conducted a survey of mortgage customers in the UK. It revealed that just 44 per cent of borrowers feel they have received satisfactory guidance and communication from their mortgage providers since the initiation of the interest rate hiking cycle in December 2021.

This underscores the importance of lenders working with borrowers to recognise potential issues as they arise and, whenever possible, bringing forward solutions.

The necessity for this aid extends to HNWIs regardless of their affluence, and lenders must be unwavering in their dedication to aiding borrowers who need to continue to invest in property with a sense of assurance.

Alpa Bhakta is the chief executive of Butterfield Mortgages

By Alpa Bhakta

Source: FT Adviser

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Overseas-owned London homes forecast to climb over coming year

Overseas buyer appetite for London’s housing market is set to climb this year despite the mortgage crisis, offering a boost to prices as figures revealed the estimated value of foreign-owned homes in the capital stands at £55.2 billion.

There are 103,425 homes in the capital, including houses and flats, that are currently registered with an overseas correspondence address or to an overseas company.

The total value is based on current average prices and calculated by estate agent Benham & Reeves.

The firm said that equates to non-UK buyers accounting for 2.76% of London’s total existing housing stock (valued at just over £2 trillion).

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In the City of Westminster, foreigners own nearly 13% of all homes. In Kensington and Chelsea it is more than 10%.

Benham & Reeves submitted a Freedom of Information request to the Land Registry on properties with the title registered to an overseas correspondence address, and also looked at Government data on properties registered with an overseas company.

The research found the value of overseas-owned property in London is highest in the borough of Westminster at nearly £14.9 billion, and that represents a estimated 12.8% of total dwellings.

The study estimates that foreign homeowners are sitting on £84.2 billion worth of property across England and Wales. The total stock in those countries is valued at £7.9 trillion.

Marc von Grundherr, director of the estate agency chain, said: “Foreign home ownership levels have climbed by 3.2% in the last year alone and the vast majority of this activity is individual buyers, rather than offshore entities.”

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His firm expects a further 4% to 5% increase nationally over the coming year, with London being a big contributor. That comes as activity picks up post-pandemic “whether it be as an investment for their child’s education, for professional reasons, or to relocate completely”.

Von Grundherr said many international parties are less exposed to the impact of lenders passing on the Bank’s interest rate rises since they usually buy with cash. He said there are a number of “primarily cash buyers undeterred by increasing interest rates. Secondly, those who may be looking to borrow in order to buy still see the cost of doing so in the UK as fairly favourable compared to their own domestic markets”.

He added: “There are those who will protest over the increasing presence of foreign buyers within the London market, but it’s fair to say that they are very much delivering a well needed boost to current market sentiment and we certainly haven’t seen prices skyrocket as a result of this demand from foreign shores.”

He added that some buyers could also help provide rental homes at a time when many buy-to-let landlords look to sell up amid rising borrowing costs.

Looking at the new build sector, Amy Meyrick, head of international sales and marketing in real estate consultancy CBRE‘s residential team said: “There is a preference for developers to sell a proportion of units off-plan before construction starts, and international buyers are typically more willing to commit to this. Those who are equity-driven and cash buyers play an important role as they are less affected by the current mortgage rate environment.”

By Joanna Hodgson

Source: Evening Standard

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BTL mortgage drought hits UK expats

A growing number of UK homeowners working overseas are finding themselves grappling with skyrocketing mortgage rates when renting out their properties, the Financial Times reports.

The newspaper says that these individuals are often required by lenders to switch from standard residential loans to ‘consumer buy-to-let mortgages’ – usually at higher interest rates.

In recent months, these rates have experienced a sharp increase, fuelled by the expectation that the Bank of England will push up rates to tackle inflation.

The situation is further complicated by the falling number of products in the expat mortgage sector.

Banks discontinued expat mortgages in early 2020

The FT says that many major banks discontinued expat mortgages in early 2020, as the UK’s exit from the EU imposed fresh regulatory challenges for British banks providing financial services throughout the bloc.

When expat borrowers reach the end of their fixed-rate agreements and seek refinancing, they may encounter interest rates as steep as 8% or 9%, according to lenders and mortgage brokers.

Some banks have even started rejecting expat remortgage applications or requests for larger mortgages.

And while some banks continue offering mortgage transfers – where borrowers receive a new rate offer from the same lender – the rates are significantly higher than before.

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BTL mortgage market for non-UK residents

Lorraine McLean, head of BTL mortgages at Skipton International, which is based in Guernsey, said the bank had seen strong demand from expats who had been offered ‘a ludicrous rate’ when renewing – or nothing at all.

The bank said it had seen a 40% rise in completions in the first quarter of this year, compared with last year.

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UK-based lenders lost the so-called ‘passporting’ rights

The FT article says that when the UK left the single market for financial services, UK-based lenders lost the ‘passporting’ rights that saw them to do business in any EU country with minimal extra authorisation.

One director at a major lender told the newspaper that before Brexit, lenders in the UK lending to EU or UK citizens across the EU had to show they were following lending rules in the UK.

Now they must follow the regulations in the borrower’s country of residence – and lenders don’t have the appetite or capacity to do this.

The lender was offering transfers on expat buy-to-let mortgages, the director said, but no longer offered loans to new expat customers and did not allow expanded mortgage borrowing for current customers.

Source: Property 118

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Expert Mortgage Brokers are Helping UK Expat and Foreign National Investors to Combat Rising Mortgage Rates

What’s Happening to Mortgage Rates?

Mortgage rates are on the rise again, with the Bank of England continuing to increase interest rates to combat high inflation. The Bank of England’s base interest rate is now at 5%. The future outlook does not look to bright either, with analysts now predicting that interest rates will peak at 6% before they start to come down in mid-2024. ‘In short’ says Stuart Marshall ‘rising interest rates are massively increasing the cost of borrowing for UK expat and foreign national investors. It’s also reducing availability in the mortgage market, with lenders being forced to withdraw hundreds of products to keep pace with the changing cost of borrowing.’

How are the Higher Mortgage Rates Affecting Landlords?

Higher mortgage rates are obviously increasing the monthly cost of managing an investment. However, they are disproportionately affecting the 20-30% of landlords with higher LTVs of between 50 and 75%. For these investors, huge amounts of rental income are having to be devoted to mortgage repayments. And in some cases, rental increases cannot cover these higher costs.

The higher mortgage rates should discourage many UK expat and foreign national investors from investing in higher value areas like London and the South East. In fact, because these regions are so expensive, sales in these regions account for 51% of all landlord sales. These areas already offer lower rental yields because of their prohibitive price, even more reason to look toward more affordable areas.

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How Can Expert UK Expat and Foreign National Mortgage Brokers Help?

Because of the way the market’s moving at the moment, having an expert UK expat or foreign national mortgage broker on hand is a necessity. The mortgage market is moving quickly but the UK expat and foreign national mortgage market is moving even quicker. There are a number of ways that expert UK expat and foreign national mortgage brokers are helping both new and existing UK expat and foreign national investors at the moment.

‘One way that expert UK expat and foreign national mortgage brokers are helping UK expat and foreign national investors at the moment is to help lock in a fixed rate mortgage deal in advance. With interest rates climbing so rapidly at the moment, locking in a fixed rate deal can mean massive savings. It also helps UK expat and foreign national investors to plan their finances, as they’ll know exactly how much they will need to pay month-to-month. In a turbulent market, stability goes a long way to success! An expert UK expat or foreign national mortgage broker will have the best awareness of the available deals and access to exclusive deals too, which can make huge differences with current mortgage rates. Mortgage rates can be booked in in advance too, which can be useful in avoiding higher rates if the existing deal is coming to an end.’

‘We are also advising some customers to opt for a longer mortgage term. This can help to offset the increased cost of higher mortgage rates, keeping monthly payments lower. While this amounts to more interest payments over the term of the mortgage, for savvy investors, overpayment options mean that UK expat and foreign national investors can still pay off their mortgage in a significantly shorter time than the term of the mortgage. Overpaying is also another fantastic way to reduce the cost of managing an investment. Find out how much overpaying could save by using our overpayment calculator.’

‘Injecting additional equity when refinancing is another good option for UK expat and foreign national investors, and something we’re suggesting to many customers seeking advice from us. This will lower the LTV and mean that the higher mortgage rates will have a lessened effect. However, for UK expat and foreign national landlords with a low yielding property or a depreciating property value, it’s likely that this option will not be preferable. For some investors, the best option will be to sell and use this money to buy a more lucrative and manageable property. An expert UK expat or foreign national mortgage broker will be able to assess the needs of an investor and decide whether this is necessary, and how best to conduct this.’

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Not All Doom and Gloom

‘Despite the rising mortgage rates, there are still plenty of reasons for UK expat and foreign national investors to invest in the UK property market. An expert UK expat or foreign national mortgage broker can help to find the right deal on the right property, making sure that the investor can manage the cost of the investment and take a profit too. It is also a good market for UK expat and foreign national investors are there is a strong demand for private rental properties at the moment. There are currently 33% less homes available to rent than the five-year average, while demand is 50-85% higher than the five-year average. Further, according to Zoopla, there are more homes being lost from the rental market than are being replaced by the flow of new investment. This presents an opportunity for UK expat and foreign national investors to invest in the right property and capitalise on strong demand in the UK rental sector. Rents are also rising fast as a result of this demand – now at 10.4% growth from last year. Further, UK expat and foreign national investors can pick up a bargain as the sales market is currently weak and there are bargains to be had, especially with a quality mortgage deal in place, which will increase UK expat and foreign national buyer power.’

Source: Newswires

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Fall in demand expected in UK property market from overseas buyers

THE downturn in house prices is likely to lead to a fall in demand from foreign buyers in the UK property market, a leading expert has predicted.
New data revealed earlier this month revealed that more than 70 per cent of ‘prime central London’ properties sold so far this year have been bought entirely in cash.
The report by estate agents Savills has fuelled concerns that rich overseas buyers are snapping up properties at the expense of working Londoners.

But Jonathan Rolande, from the National Association of Property Buyers, said demand from overseas investors was likely to become “subdued”.

He said: “London has continued to attract investment from the wealthy despite the downturn in prices in the last year. The minor fluctuations can be overlooked by those who still see the UK, and central London in particular as a safe place to leave their money. For many buyers, an inflation rate of 9% is nothing compared to rates in some countries.

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Outlining what he thinks will happen next, he continued: “With the hope of substantial gains in the property sector fading fast, demand from foreign cash buyers will soon be more subdued. However, the trusted nature of Britain’s legal system around property means London will still be an attractive prospect for those who stand to lose more by leaving capital in their home country.

To redress the inequality felt by many Londoners, another increase in Stamp Duty for these buyers may well help to do so but the Government walks a tightrope. The huge wealth that these investors bring to the UK would be missed if taxes were set so high, and they were deterred from coming here in the first place.

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Mr Rolande added: “It is therefore more likely that the general downturn in prices will serve as its own deterrent. Ironically, this also means that many locals will still be unable to afford a city property as mortgage lending rules tighten and higher interest rates make borrowing even more expensive, despite lower asking prices.”

A total of 71 per cent of prime central London have been bought mortgage-free in the seven months from January. That compares with about 35 per cent for the UK as a whole.

It comes as soaring inflation has led the Bank of England to push interest rates to a 13-year high of 5 per cent, which has in turn led banks to raise mortgage rates, making large home loans increasingly difficult to afford.

Source: Evesham Observer