Buy-to-let
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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.

Contact us today to discuss Expat Mortgages and how we can assist you.

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.

Discover our Expat Mortgage Broker services.

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

brokers
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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.

Contact us today to discuss Expat Mortgages and how we can assist you.

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.’

Discover our Expat Mortgage Broker services.

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

UK house prices
Marketing No Comments

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.

Contact us today to discuss Expat Mortgages and how we can assist you.

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.

Discover our Expat Mortgage Broker services.

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

hong kong
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Hong Kong buyers dominating foreign homeownership in England & Wales

House hunters from Hong Kong have been found to be the most prolific overseas buyers operating in the nation’s residential market, accounting for over 13% of all foreign-owned homes in England and Wales, according to newly released market analysis.

London lettings and estate agent, Benham and Reeves, submitted a Freedom of Information request to the Land Registry to ascertain the 50 most prominent foreign nations represented among individual residential property owners in England & Wales, and how many properties they own.

According to the data, buyers from the 50 most represented foreign nations among owners of homes in England & Wales combine to own 187,275 properties.

Hong Kong buyers most prominent nation

Buyers from Hong Kong own the largest proportion of these properties, with 24,759 homes representing 13.2% of the aforementioned total.

Contact us today to discuss Expat Mortgages and how we can assist you.

Buyers from Singapore own 15,752 properties or 8.4% of the total; while buyers from the U.S. account for 6.4%.

Buyers from the UAE account for 5.7% of the total, while buyers from Ireland (5.3%), Malaysia (5.2%), China (4.6%), Australia (4.4%), Kuwait (4.3%), and France (3.7%) are also strongly represented on the national housing market.

Increase in foreign buyer numbers

These figures come after the total number of properties owned by buyers from the top 50 foreign nations increased by 3.8% between January 2022 and January 2023.

Ownership for Chinese buyers has increased the most in the past year, rising by 18.8% to own 8,736 properties.

Discover our Expat Mortgage Broker services.

Hong Kong nationals have increased their presence by 11.6% since 2022, and Israeli buyers have increased their footprint on the national housing market by 9.8%.

Significant increases have also been recorded among buyers from Gibraltar (6.7%), Austria (6.7%), Turkey (6.7%), Egypt (6.3%), Norway (5.1%), Germany (4.8%), and Sweden (4.7%).

Among the top 50 most represented nations in England & Wales’ housing market, three have actually seen their ownership proportion decline in the past year.

Buyers from Ireland now own -3.5% less property, buyers from Taiwan have reduced ownership by -3.3%, and Russian buyers now own -0.5% less property than they did at the start of 2022.

Director of Benham and Reeves, Marc von Grundherr, commented:

“It’s no secret that England & Wales is a hugely attractive market for overseas property buyers, with London being a particularly desirable location. The stability of our property market offers reliably a profitable space for investment buyers, and our country, with its rich history and culture, has long held great appeal for people looking to buy outside of their home countries.

“Many experts believed that Brexit would result in there being fewer overseas owners as access to the EU was reduced and the anticipated economic struggles removed some of the profitability of investing in our great nation. Our exclusive research reveals that none of this has come to fruition and that, in fact, our market has only become more popular.

“While this popularity isn’t limited to one single nation, it’s certainly being driven by Hong Kong buyers who continue to be the most prominent foreign nations operating within our bricks and mortar market.

“This is certainly no new trend and Benham and Reeves has had a local Hong Kong office since 1995, helping those who are looking to purchase in England and Wales. However, it’s fair to say that our team of experts in Hong Kong have never been busier and we expect this to remain the case going forward.”

Source: Property Reporter

Buy-to-let
Marketing No Comments

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.

Contact us today to discuss Expat Mortgages and how we can assist you.

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.

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.

Discover our Expat Mortgage Broker services.

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

UK house prices
Marketing No Comments

Time to buy – UK house prices & lower expat mortgage rates

Volumes are up and interest rates stable in the UK housing market

UK-based buy-to-let mortgage broker Offshoreonline has reported its best figures for expat mortgage enquiries in March 2023 since before the pandemic. In fact, volumes are now equalling pre-pandemic levels.

“In a very short space of time, the main structural issue with the UK housing market, a lack of supply, seems to have been turned around,” says Guy Stephenson from Offshoreonline.org. “If anything, we’re now seeing an excess of supply over demand. This makes UK house prices attractive for expat home buyers. They have more choice, and sellers will be more likely to take a good offer, given the shortage of UK buyers as a result of a rise in UK mortgage rates.”

Property portals such as Zoopla and Rightmove are reporting the supply of houses put on the market is increasing month on month. The trend started in January 2023, when listings rose by 5.9%. It then continued in February with the figures rising 28%. Now, in March, the listings recorded by estate agents are up a further 17%, according to Rightmove.

Contact us today to discuss Expat Mortgages and how we can assist you.

Decline and recovery

Highlighting the sometimes contradictory picture in the UK housing market, Guy says, “The Bank of England began pushing the UK base rate sharply higher, mainly from August 2022. Therefore, UK mortgage rates inevitably rose steeply too. This caused a market shock, and housing demand declined rapidly in late 2022.

“Despite the headlines suggesting a demand collapse, the UK house price reports such as those produced by Halifax, Nationwide and the UK government reveal that, over time, UK house prices in the better quality areas have stood up, mainly because supply has been so limited. With strong demand chasing a very limited supply, house prices in the UK have remained firm in these areas.”

If you’re someone who held off on a buying decision, now could be a very good time to make a move. The supply of houses for sale has shown a rapid recovery, increasing choice and making the UK housing market very attractive for buyers. At the same time, major mortgage lenders have released lower expat mortgages rates in the UK.

The Birmingham Bounce

Offshoreonline quotes the example of a client based in Singapore who, having spent months searching for an investment apartment, finally reluctantly put an offer on one in Birmingham at just over £200,000. The flat came with a tenant in situ, but when the service and ground rent costs were factored in, eventually they concluded it didn’t make financial sense.

Having spent most of 2022 house hunting, they therefore withdrew from the purchase in March this year. Within one week, they found a larger, more suitable terraced house at just below £200,000 with no service charges, which transformed the financial case for investing. The whole deal, from search through to offer and acceptance, was completed in under eight days.

Discover our Expat Mortgage Broker services.

What do Singapore-based expat buyers need to get a UK mortgage?

According to Offshoreonline, there’s not only a wide choice of expat mortgage lender, but the application process is also simple. Buyers will need a deposit of at least 25% of the sale price. They’ll also need to confirm their employment status and where they live in Singapore, perhaps with a local utility bill. Apart from that, the property’s rental potential will be a key factor. Houses need to generate a minimum of £510 monthly rent for every £100,000 borrowed.

Are UK mortgage rates going up or down?

After the chaos of the mini budget in late 2022, happily, markets have settled. The UK economy is still performing well. It has avoided recession and retail sales are still stronger than most people expected. So, Offshoreonline expects the UK base rate to stay at current levels for a while.

“We’re not going to get back to the unnaturally low UK base levels seen over the last 10 years as ultimately these were due to the Bank of England intervening to offset the dramatic impact firstly of the financial crash in 2008 and subsequently the pandemic.

Whilst forecasting interest rates is virtually impossible, our view is that the long-term average for the UK now is probably a UK base rate in a range somewhere between 2.5% to 4%, or perhaps a little more, with mortgage rates around 1% above these figures. We currently have a range of lenders offering expat mortgages from 4.99% to 5.40%. So there’s a good amount of choice,” says Guy.

By Kaur Harsharan

Source: Expat Living

landlords
Marketing No Comments

The buy-to-let locations landlords can invest in for as little as £25,000

Landlords enjoyed record-breaking rental growth last year, boosting yields and putting the property market on the radar of investors looking to diversify their portfolio. But investing in the buy-to-let sector has become increasingly fraught with regulatory pitfalls and higher borrowing costs thanks to inflated interest rates.

The sector has been losing more investors than it has attracted since 2016, when a three percentage point stamp duty surcharge was introduced for additional properties. The tapering of mortgage interest tax relief on buy-to-lets followed soon afterwards.

For those willing to navigate the complex rules, buy-to-let is a familiar option which if done properly gives investors two sets of returns; rental income and capital growth of their underlying asset.

Where to start? Here, we take a look at the best places to invest with a cash budget of £25,000, enough to cover a 25pc deposit and stamp duty, using data from Hamptons estate agency.

In the three locations below, an initial £25,000 investment would produce an average gross yield of more than 9pc – significantly more than the target 4pc rate of income from a typical pension pot in drawdown.

Contact us today to discuss Expat Mortgages and how we can assist you.

Where £25k will earn you the highest returns

Hartlepool and County Durham

The highest yielding location for landlords with £25,000 to spend in England and Wales is Hartlepool in north east England. Yields are generally highest where house prices are lowest. Cheaper property prices and high tenant demand in the North have boosted rental returns, making it a popular region with investors.

The port of Hartlepool is a rental hotspot for modest budgets, with an average gross yield of 9.7pc. A typical flat in the area costs £68,130, meaning landlords will need £17,030 for a 25pc deposit and a further £2,044 to pay stamp duty. They can expect an average yield of 11pc on their investment, one of the highest on this property type in the country.

Recent house price growth means an average terraced house in Hartlepool no longer falls within a £25,000 investment, but is still within reach for those who can afford to stretch their budget a little further. A typical terraced house in the area costs £95,100, requiring a £23,780 deposit and £2,853 for the stamp duty bill. It equals an upfront investment of £26,630 and would yield an average gross yield of 9.2pc.

Paul Gough of We Love Renters, a property management company in Hartlepool, said there were three main tenant demographics that landlords had targeted in the town in recent years.

Two or three-bedroom houses for families were very popular among investors, said Mr Gough, who owns a portfolio of properties in the area.

He added: “Old Victorian houses which can be developed into one-bed apartments have also become increasingly popular, as they are perfect for single male tenants. Short-term lets for contractors have also taken off in a big way.

“There has been a lot of government money directed towards the wider Teesside region over the past year and there are thousands of contractors in the area.

“These workers often live elsewhere in the country but are staying in Hartlepool for weeks at a time. They don’t want to be paying hotel prices, so short-term bedsits for anywhere from a few nights to six months are in high demand.”

Investors can expect rental income before expenses of £7,494 a year from an average flat in the town and £8,794 from a terraced house, according to Hamptons.

Next door in County Durham investors can find the second highest yields for a budget of £25,000 in the country. Landlords with a modest investment can achieve an average gross yield of 9.2pc, or higher if they invest in a cheaper property type.

The average flat here costs £76,020 according to Hamptons, more expensive than nearby Hartlepool. Landlords would need a combined £21,290 to cover a deposit and stamp duty and could expect a typical double-digit yield of 10.3pc.

A terraced house in County Durham is also out of reach to a landlord with £25,000, although possible if they have a few thousands pounds more to invest.

A property of this size costs an average of £100,880 in the area, requiring a £25,220 deposit and £3,026 stamp duty bill – £28,250 in total. Landlords renting out a typical house here can expect an average yield of 8.7pc.

Discover our Expat Mortgage Broker services.

Blaenau Gwent

The borough of Blaenau Gwent has the highest rental yield in Wales for investors with a £25,000 budget, at an average gross rate of 9.1pc.

A £25,000 budget would be enough to cover the £17,660 deposit on an average flat in the area, plus £2,119 in stamp duty. Landlords can expect an average yield of 10.3pc on a flat and £7,239 in annual rental income, before any costs are deducted.

Investors would need more than 60pc more to invest in a terraced house in Blaenau Gwent, where property values have risen in recent years. At a typical price of £117,060, the upfront cost of investing in a terraced house is £32,780 to cover a 25pc deposit and stamp duty bill, according to Hamptons.

Landlords can expect higher rental income from a terraced house, an average of £10,088 a year – but yields will be lower because of the bigger initial investment, at an average of 8.6pc.

By Rachel Mortimer

Source: msn.com

UK expat
Marketing No Comments

Less Affluent Areas Driving Rental Growth for UK Expat and Foreign National Investors

Huge Rise in the Number of Rental Households.
With fewer young people buying a home, the number of privately rented households has grown by 1.12 million or 29% in the last decade. This is compared to only a 6% increase in the number of households generally. Clearly then, there is a disproportionate rise in the number of people renting compared to the general growth of households. ‘This rise in rental demand and consequential growth in the rental sector has led to huge profits for UK expat and foreign national landlords over the years’ says Stuart Marshall of Liquid Expat Mortgages.

‘But recent data from real estate agent, Hamptons International, suggests that understanding the causes of this rise in the number of privately rented households might be key to making a profitable investment in 2023.’

Contact us today to discuss Expat Mortgages and how we can assist you.

Less Affluent Areas Seeing Bigger Increases in Rental Households.
Much of the reason for the rise in the number of rental homes is to do with the tighter lending criteria introduced in the aftermath of the global financial crash. These tighter criteria put homeownership out of reach for many people with either low deposits or below average incomes. As a result, home ownership has become most difficult in less affluent areas.

This is supported by Hamptons’ data which shows that the growth in the number of privately rented households between 2011 and 2021 was highest in the most deprived 10% of areas in the country. Accordingly, 23% of households in this poorest 10% now rent their home privately – an increase of 5% from 10 years ago. Expanding the focus further shows that 60% of privately rented homes are in the bottom 50% of affluent areas.

Less Affluent Areas to Drive Rental Growth.
‘But why should this matter for UK expat and foreign national investors? Well, choosing the right area is one of the most important parts of an investment journey and will go a great way to determining the success or failure of the investment venture. With rents rising so much in recent years, choosing an area with high rental demand will be incredibly important and lead to big profits for UK expat and foreign national investors. If less affluent areas are performing better when it comes to rental demand, then UK expat and foreign national investors would be wise to look in these areas when buying a property as they are more likely to make a larger profit.

To put in perspective how profitable these less affluent areas are from an investment standpoint, rents paid in the 10% of most deprived areas have doubled between 2012 and 2022, to 5.4bn. Because of these factors, it’s likely that the less affluent areas of the UK will continue to drive rental growth throughout 2023 and become the ‘investment hotspots’ of the future.’

Discover our Expat Mortgage Broker services.

Properties in Less Affluent Areas Accessible with UK Expat and Foreign National Mortgage Products.
‘Further, properties in these less affluent areas are far more affordable than in many other areas of the country and are more likely to turn a profit more quickly than properties in other areas’ adds Stuart Marshall. ‘This can prove to be incredibly fruitful for UK expat and foreign national investors and is especially true for UK expat and foreign national investors utilising UK expat and foreign national mortgage products. These products can help investors to spread the cost of their investment and with property prices skewing lower in the less affluent areas, UK expat and foreign national mortgage products can be incredibly powerful, even enabling discerning investors to buy a portfolio of properties.’

‘Less affluent areas are also becoming more popular for buyers as high mortgage rates push people to look to more affordable areas and towards smaller properties. This means that UK expat and foreign national investments made in these areas are also likely to see big capital gains alongside high rental profits. This comes at a great time for UK expat and foreign national investors as buy-to-let mortgage choice is at its highest since before former Chancellor Kwasi Kwarteng’s mini-budget. The market is also commonly seeing improved choice for buyers while sellers are accepting average discounts of 4.5% or £14,100 off their asking prices.’

Source: EIN News

property market
Marketing No Comments

Tumultuous year for UK property market presents opportunity for foreign buyers

The war in Ukraine and the mini-budget of former Prime Minister Liz Truss last year had caused a jump in interest rates which left domestic buyers struggling.

The property market in the United Kingdom is becoming increasingly attractive for foreign buyers, but it is widening the divide between richer homeowners and high-interest mortgage holders.

The war in Ukraine which started in February last year, along with the mini-budget of former Prime Minister Liz Truss in September last year, had caused a jump in interest rates which left domestic buyers struggling.

However, house prices have since cooled and mortgage offers are on their way down, along with a weakening of the British pound.

Contact us today to discuss Expat Mortgages and how we can assist you.

UNDER PRESSURE

The UK property market has repeatedly proven its resilience, but every period of economic hardship puts it under pressure, said observers.

Soaring costs of living and the subsequent raising of interest rates in a tumultuous 2022 have created a challenge for home buyers and homeowners.

Trade association UK Finance’s director of mortgages Charles Roe said: “As a result of that volatility in the financial markets and particularly in the hedging market, the futures market for interest rate swaps, what we found is that some lenders couldn’t price their products, so they withdrew the products from the market.”

The situation has since stabilised. It is making the market particularly attractive to overseas buyers and helping to prevent a dramatic house price slump in the capital.

Mr Ed Lewis, head of residential development at Savills, said: “I know what the hurdles are for, particularly the younger age group, getting into the property ladder.”

He added: “But London doesn’t work without it being an international city. And London doesn’t get built without international investment.”

Discover our Expat Mortgage Broker services.

THE BUYERS FROM ABROAD

Prices at the top end of the market have seen little change, and that is widening the gap between richer homeowners and those with high-interest mortgages.

The rising interest rates signalled the end of a long era of cheap borrowing.

The last time the base rate of interest was as high as the current rate was in 2008, with the average UK property price having risen 72 per cent since then.

Foreign buyers, many from Asia and the Middle East, have contributed to the jump.

Dr Filipa Sa, a senior economics lecturer at King’s College London, said: “If we keep foreign investment constant at the level of the year 2000, we see that in 2019, house prices would have been about 17 per cent lower.

“I look at the effect on the price to income ratio, which is a measure of affordability, and I see also that foreign investment increases the price to income ratio. The effect is also quite big and statistically significant.”

While foreign investors tend to buy at the top-end of the market, researchers said that there is a knock-on effect driving prices up overall.

An additional 2 per cent tax is levied on foreign buyers, but estate agents noted that it has not dented the demand, due in no small part to the UK’s limited housing supply.

That is the greatest challenge for the market currently, but there remains no consensus on how to solve it, said observers.

By Fabian Koh

Source: CNA

Buy-to-let
Marketing No Comments

Buy-to-let mortgage repayments up 32% in the last year

The cost of maintaining a monthly buy-to-let mortgage interest payment has climbed by 75.7% in the last year, with those making a full mortgage repayment each month seeing an increase of 31.6%, according to new research from Octane Capital.

Octane Capital analysed the current cost of the average buy-to-let mortgage and how this monthly repayment has increased in the last year as interest rates have climbed.

The research shows that currently, the average buy-to-let investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.

With a current average buy-to-let mortgage rate of 5.32%, this would see the average investor pay back £1,312 when making a full monthly repayment.

The average mortgage rate has increased by 2.12% in the last year alone, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.

However, many buy-to-let investors will opt to simply maintain the mortgage secured on an investment property by way of monthly interest-only repayment

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The figures from Octane Capital show that in the current market, the average interest-only monthly repayment has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.

Despite this increased cost, investor appetites for buy-to-let investment remains strong and previous research by Octane Capital shows that the total value of loans issued to buy-to-let investors has climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.

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CEO of Octane Capital, Jonathan Samuels, commented: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week, with buy-to-let investors also seeing the cost of borrowing climb substantially.

“These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.

“Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”

By ROZI JONES

Source: Property Reporter