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Brokers see uptick in expat mortgages as Covid regulations soften – analysis

Brokers have reported an increase in expat mortgage enquiries over the past few months as borders reopen and Covid restrictions are rolled back, with expectations for the market will grow more in the near future.

Anthony Rose, co-chief executive of LDNfinance said it had seen a “healthy increase” in expat mortgage enquiries, and said when it compared increasing enquiries against timelines it could be attributed to post-Covid borders opening up with looser restrictions on international travel.

Daniel Yorke, managing director at Expat Mortgages UK which is specialist division of Commercial Finance Network, said it had seen a “gradual increase over the past 12 months” but this had become more pronounced over the past three months.

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Chris Sykes, associate director and mortgage consultant at Private Finance, added that expat enquiries had fallen during the pandemic due to travel restrictions, but there had been an “uptick” in such enquiries in recent weeks.

According to figures from Knowledge Bank, expat residential searches increased by seven per cent from 2020 to 2021, and 16 per cent for buy-to-let (BTL) searches over the same period.

Matthew Corker, operations director at Knowledge Bank said it had 24 categories covering various criteria and it had been growing them as expats looking for UK properties had risen.

Corker said: “While the growth has been steady in residential searches, there has been a significant increase in ex-pats look for BTL properties. Partially driving this interest is the volatility in the stock market, coupled with UK house prices exceeding all growth expectations.

“Lenders are also reacting to this trend and there have been more and more adding products for expat borrowers. With house prices and rents looking set to keep increasing, we anticipate this growth to continue in 2022.”

Primis’ figures for Q4 also show that expat lending, which includes residential, BTL borrowers and foreign income lending, grew in Q4. This was partially attributed to the return of high loan to value (LTV) BTL mortgages for expats and a softening of criteria to apply for these products.

Yorke said there were multiple factors in the increase in enquiries, which included Covid-19 becoming more normalised, interest rates staying “exceptionally low”, Brexit leading expats to return to the UK and the UK property market’s strong growth and activity.

Sykes said he believed the growth in enquiries was due to the UK’s “light touch approach to Covid” in terms of restrictions, which meant it was the “least restrictive place in Europe”.

Rose added: “Most of our enquiries have been expats returning to the UK looking to buy, or they’re refinancing their existing UK properties. However, we have also noticed that the end of the stamp duty holiday and strong property market post-Covid has played a vital role in clients obtaining expat mortgages for BTL properties.”

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Challenges of lender choice and case complexity

Rose said one of the biggest challenges for brokers in sourcing expat lenders was the number offering suitable products.

He explained: “It’s a small, niche space which can involve placing square peg clients in round holes. Often, expats have bespoke circumstances that require providers to have a flexible approach to lending.

“A classic example is intended date of return home; some lenders require a specific date whereas others need some ballpark timelines. Naturally these times can change so it’s difficult for clients to pinpoint precisely. Lenders need to be mindful of this.”

Sykes said another issue was the “very manual process” to find a lender for an expat mortgage.

He said lenders needed to consider more factors such as what country the client is a resident in, what country they are domicile and pay tax in and what currency they are paid in.

Sykes added that some lenders needed borrowers to be employed at a “blue chip company” earning £50,000 or more, whereas others were more flexible on earning structure.

He also noted that along with the added complexity, some brokers would not have relationships in place with international and expat lenders to source the most competitive expat mortgage deal.

“If you don’t know who you are asking to narrow down these products then you cannot quote the most competitive deal,” Sykes said.

Yorke said on the biggest challenges were the increase in interest rates and LTV reductions which made it harder for expats to borrow money.

He added: “Complicated income structures make it harder for clients to be able to secure funding, or at least at the level they would ideally hope for. We overcome this by working closely with our clients to help educate them and make aware of exactly what documents & figures the lenders will need for an application.”

Expat mortgage market expected to grow post-pandemic

Sykes said that expat enquiries had fallen during the pandemic due to travel restrictions but it “remains to be seen” if there would be a return to pre-pandemic levels or if there is a “great deal of pent-up demand” after two years of restrictions in the UK and globally.

However, he added: “We do now see this as an area that we expect to grow post-pandemic, especially as London returns to life and with prices having stagnated in the capital, this could be an attractive time for expat buyers and importantly investors.”

Yorke said Expat Mortgages UK received over 20 expat mortgage leads per week and it planned to double this volume in the next six months and double it again in the last six months of the year.

He continued that it was a growing market as expat mortgages tended to have high value properties and loan values. He also said expat mortgages encouraged a deeper relationship with the client and there was less competition in the market.

Sykes said the average size of an expat case was usually higher than a normal first-time buyer case due to the increased complexity.

Rose said despite the lengthy and complex process of an expat mortgage the “job satisfaction” advisers got from completing these mortgages made it “worth the time and effort”.

He added: “Each client has a unique story to tell which keeps our job interesting and exciting. In delivering an excellent service, we can also benefit from the referrals we receive off the back of them.”

He also noted that clients who used LDNfinance for an expat mortgage were more likely to return when it came to remortgage their UK residence when they returned home.

By Anna Sagar

Source: Mortgage Solutions

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More Overseas Buyers Eye UK Property Market

With increasing numbers of overseas buyers looking toward UK property, we look at the reasons for this rise and where to look.

Increasingly, UK expats and foreign nationals have been looking towards UK property for investment purposes. Those living and working in the US, Canada and the Far East are facing strong investment prospects, emboldened by a weaker pound, the availability of foreign national mortgages, confidence in the UK housing market and economy more generally, and a vaccine programme that promises to keep foreign travel a distinct possibility.

What We’re Seeing – UK Expats and Foreign Nationals Look to UK Property.

‘The number of UK expat and foreign nationals buying in the UK with the help of UK expat and foreign national mortgages was incredible over the course of the pandemic’ says Stuart Marshall. ‘But there’s no sign of that slowing down in our new post-pandemic world either. Anecdotally, we’ve seen a huge surge in the numbers of enquiries talking about obtaining a UK mortgage while being paid in a non-sterling currency. As restrictions have eased, we’ve seen a proportional rise in enquiries for UK mortgages coming from UK expat and foreign national investors. And many of these are looking at around the £500,000 mark, indicating that investing in the UK property market is no longer just for the super-rich working overseas. Further, entry-level investors are also increasing their volume of enquiries in a bid to get a slice of the lucrative UK investment market.’

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There are many interesting things to note when looking at the enquiries we’re receiving. First off, investment in the UK property market remains strong from the Far East. This is no doubt due, in part, to the UK’s BNO passport scheme in Hong Kong, which is continuing to contribute to the steady stream of foreign investment in the UK. New build properties are also a popular choice with UK expat and foreign national investors at the minute as they try to bypass supply issues and capitalise on the cheaper cost of newbuilds. Another factor to note is that investors are seeing the opportunity presented by city centre flats. While these types of property are not as popular as they once were in the property market, they are growing in popularity again in a rental market which is struggling for stock. The more affordable cost of these properties coupled with the rising rental cost is the perfect combination for a quality investment using a UK expat or foreign national mortgage.

Lastly, London continues to maintain popularity with overseas buyers, with lower prices in the capital proving to be an incentive for foreign investment. Prices are once again rising in the capital and so is rental growth, meaning that it’s an excellent time for UK expat and foreign national investors to buy an investment property in London.

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London.

After the terrible effect of the pandemic on London’s rental market, prospects are starting to look up for UK expat and foreign national buy-to-let investors looking to the capital. ‘As we’ve said, many of the enquiries we’re getting are about London property. It’s a tried and tested route for many UK expats and foreign nationals and somewhere they’re familiar with. The pandemic has affected rental stock massively, with 57% fewer homes available to rent in the capital in August 2020 compared to the previous year. This lack of available homes is putting upwards pressure on rental prices with London rents predicted to recover to their pre-pandemic level by the middle of 2022.’

‘Crucially for UK expat and foreign national investors, the sales market in London remains inviting, with prices far lower than you would typically expect in the capital market. There were 14% fewer people looking to buy in London in August 2021 compared to in 2019’s pre-pandemic market. This is contributing to a stock increase in properties for sale in the capital (19% higher in 2021 compared to the same time in 2019). This stock surplus is making sure that prices stay low – a great thing for UK expat and foreign national investors looking to capitalise on the rising rents by using a UK expat or foreign national mortgage.’

North West.

‘The North West is another area that we recommend to many UK expat and foreign national investors looking to buy in the UK. For those that are unsure about where to buy, the North West presents a proposition that’s hard to resist.’

One area in the North West that is of particular interest is Manchester. In recent studies, it’s been found that the number of properties available to rent in Manchester has fallen below 500. For a population of 500,000, this means that securing a rental property is incredibly competitive – a good thing for UK expat and foreign national investors who own a rental property in Manchester. As a consequence of the low stock, properties in Manchester are renting thick and fast. In the third quarter of 2021, there were more than 2750 lettings agreed in Manchester, 10.3% higher than we saw in the same period of 2019.

‘There is a great opportunity for UK expat and foreign national investors in Manchester at the minute. Zoopla is reporting that the average rental price in Manchester city centre currently sits at £1,505pcm, around £500 higher than the UK average. Average rents for studio and two-bed apartments have risen 6% in the last 3 months as a result of the constraint on supply. The average rental yield in Manchester now sits at 8.55%, more than double the UK average.’

The figures in Manchester speak for themselves so it’s no surprise that many UK expats and foreign nationals are making enquiries about mortgages for properties in Manchester and the rest of the North West. With so many UK expats and foreign nationals looking to invest in the UK with a UK expat or foreign national mortgage at the moment, it’s important to be aware of the areas that are most in demand in order to maximise the profitability of your investment and ensure financial stability for years to come.

Source: EIN News

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London’s luxury hotspots a magnet for property buyers as travel rules ease

A sudden spike in interest in the prime central London property market is being reported by a leading high-end developer, which has seen a dramatic uplift in sales at its showcase luxury development in the UK capital.

Trends that unfolded during the pandemic have seemingly shifted into reverse with the centre of the city re-emerging as a magnet, as investors look to hedge against an expected surge in British inflation.

“If people want to know what’s going on right now in prime central London property, it is chaos”, Gabriel York, the chief executive of luxury developer Lodha UK, tells The National.

“It is selling, and it’s selling fast. We’ve gone from 30 per cent committed to 65 per cent, in just a matter of weeks, and I think it will continue.”

Mr York was referring to sales at No. 1 Grosvenor Square, the company’s flagship luxury development in the heart of Mayfair, just a stone’s throw from Bond Street and Oxford Street’s Selfridges department store.

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With just 44 apartments on offer, the building was formerly the US embassy, with notable ambassador Joseph P Kennedy, the father of JFK himself, a former resident, once installing a replica of the Oval Office in the building. The remnants of that work are now clearly visible in the property’s ornate central lobby.

It later became the Canadian High Commission from 1961 to 2014, until Lodha UK, a subsidiary of India’s Lodha Group, purchased the building for a reported £308 million ($419m) and dismantled it brick by brick, before restoring its facade with the original materials and raising the ceiling height to 4.2 metres to accommodate modern tastes.

The result is a hyper-luxury development with apartments starting from £8.65 million, and luxury additions such as a Residents’ Club & Spa with private gym, swimming pool, spa and cinema, as well as private lifts, a personalised concierge service and a secure private entrance for cars. While the “race for space” has seen many buyers exit London to buy homes outside the UK capital, the developer said the reverse is suddenly true.

Surge in buyers from the GCC

With more homes sold at the development in the past four weeks than in any 12-month period, Mr York says a number of factors have triggered this radical shift in market activity, with one of them a change in the type of buyer.

While the early buyers all lived within 150 metres of the development and included chief executives or chairmen of FTSE 350 companies, 25 per cent of customers heading through the doors over the past six weeks are families from the GCC, “particularly from the UAE”.

“That can be everything from royal families to large business families and trading names,” says Mr York, who noticed a ramp up in interest from the region in September when the UAE and UK signed a Strategic Investment Partnership.

While the most expensive apartment remaining costs £40m, for a five-bedroom home, average deals now hover between £20m and £25m, with 30 per cent of the project now sold and handed over, 20 per cent pending completion and a further 12 to 15 per cent agreed.

The surge in GCC buyers is partly follows the easing of travel restrictions over the summer, says Mr York, but there is also “something different about what our Middle East customers are seeking”.

“Often it’s about a larger family, so we’ve had offers for multiple apartments for different family members, such as brothers wanting to live side by side and parents and children wanting to be close but not together,” he says.

Privacy and security are also very important, with the building’s proximity to the Italian Embassy a plus, along with a covered entrance for cars, with owners’ vehicles parked using “The Vault”, reportedly the largest and fastest automated parking system in the UK.

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The service offering is also key, with services provided by Lodha UK’s private management company Saint Amand, a team of 30 hospitality professionals who not only manage the residence but also make travel arrangements or book shows and restaurants across London.

Rather than tie up with a hotel brand, Lodha UK wanted an offering that worked for residents rather than tourists at both the Grosvenor Square location and Lodha UK’s sister development Lincoln Square, just 10 minutes from St Paul’s Cathedral.

Three apartments sold for £147m in April 2020

While No.1 Grosvenor Square started out as 48 apartments, there are now only 44 after some buyers amalgamated several residences into single homes.

One of the biggest deals started in April 2020 — completing in October last year — just as the pandemic was taking hold, with a penthouse and two apartments purchased for £147m.

The buyer was a UK-based technology entrepreneur who wanted the combined 17,000 square feet of space as his primary home.

“I went to his country home to visit him and said ‘what are you doing buying in central London in the middle of a pandemic when everyone’s moving to the country’,” says Mr York, a former army officer.

“He looked at me and said ‘are you crazy, I can do two days here in the countryside and then I’ve got to be back in London. I’m a city boy’. So the pandemic wasn’t a time to panic because that was a major transaction,” says Mr York.

However, the picture became very bleak towards the end of last year when London entered its third lockdown.

“The market froze for us”, says Mr York. “Across both our projects, in December, January and February the market just went. It was winter and people were locked up.”

Add in Mr York, his chief financial officer and other members of the team contracting Covid-19, and it must have been a challenging time.

However, Mr York describes that period as “dispiriting”, particularly as the slowdown came just after the company had received its first Middle East offer on an apartment in November.

“It was a really big moment and then lockdown swept the legs from under us, so it was a difficult few months not knowing how long it would last for.”

Market has transformed since grinding to a halt in lockdown three

What has happened since April, however, has been “quite extraordinary”, says Mr York.

The change was the emergence of an “entirely new wave of buyers” for Lincoln Square, where prices start at £2m to £3m, with one of the first buyers a doctor based in Devon.

“We started to have more curious cases like this. Normally with central London [the buyer] is going to be in financial services … people in private equity, hedge funds, running banks, and then this doctor bought,” says Mr York.

Soon after, more country dwellers snapped up homes at Lincoln Square, as they looked for a better balance between their rural and city lives.

The shift was far cry from the endless media reports of the “great exodus from London”, says Mr York. Instead people that had lived outside of London for a long time were hunting for a second home to avoid the commute or a hotel stay.

Then, in August and September, sales “ just took off”, with just five apartments of Lincoln Square’s 221 now left, a huge shift from the 65 that were unsold when the company entered the pandemic in March last year.

“In the last three months, the total amount of sales we’ve done across both projects is more than we’ve done in a whole year ever before — so the sales in that period exceed the maximum annual sales we’ve ever done in London,” says Mr York.

House prices in prime central London hit a turning point

For a company that has only been selling since 2016, it shows how quickly the market has shifted away from the suppressed prices seen in the prime central London market in recent years.

Earlier this month, consultancy Savills said prices had finally reached a “turning point”, rising for the first time since September 2014 despite the absence of international buyers.

Easing lockdown restrictions and the return of office workers to the UK capital resulted in annual house price growth of 1.4 per cent in the third quarter, the second three-month period of growth in a row, Savills said, after prices for the central London market bottomed out when international buyers were absent.

However, Mr York has certainly seen a resurgence in overseas buyers, particularly form the GCC, a market the company had barely worked with before.

The change came after Lincoln Square completed and the company noticed a change in the profile of tenants in the building, where rents cost £750 a week for a one bedroom and between £1,000 to £1,500 for a two-bed.

“There were people in their 20s from the GCC, choosing this part of London because they might be studying or at an early stage in their career. In some cases the parents owned somewhere in Knightsbridge,” Mr York says.

Four people from the GCC are currently buying in Lincoln Square, with one buyer purchasing a three- bedroom apartment to visit London and see his children who are at university in central London.

There is also a GCC buyer at Grosvenor Square, where demand has ramped up so much there are now multiple bidders on each apartment — another first for Lodha UK.

If the pace continues, Grosvenor Square could beat its sale completion target in 2024 by 18 months.

Home ownership set to surge over the next 10 years

Looking ahead, Mr York says the market is entering a five- to 10-year period where people are choosing ownership over staying in a hotel or rental to gain back control, in case the government imposes travel restrictions again.

“Ownership levels are going to increase, not just the percentage of people that own a property, but the average number of properties owned per person. And that’s going to happen across all asset classes,” says Mr York, who is a fluent Arabic speaker and plans a series of promotional videos about Grosvenor Square in the language.

“We’re going to see outrageous asset price inflation in holiday destinations and heavily visited cities such as London, Paris and Bangkok,” he adds.

“What we’ve gone through the last couple of months with car prices, gas prices and petrol prices going up as well as lorry drivers being paid more … in six months time it will have gone that way in every asset class category. We are at the cusp of a very high level of inflation and it will be property prices that go up at the fastest rate.”

Lodha UK’s’ next project, Holland Park Gate, will launch within weeks with 71 off-plan apartments. The company is raising capital for a £250m fund after customers asked to invest in future projects, though Lodha UK will be contributing up to 50 per cent of the capital.

While Savills is expecting 25 per cent growth in prime central London over the next five years Mr York says once you build in the inflation, that growth will “considerably higher”.

“If we are going into a higher inflation environment then I would not be surprised if it’s probably somewhere between 30 and 60 per cent,” he says.

“Has everybody been chasing central London property in the last six months? No, absolutely not. But right now they are. The people buying at the moment are getting ahead and positioning themselves as early as they can.”

By Alice Haine

Source: The National News

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Foreign investment drives rise in real estate deals

Overseas investors significantly contributed to a sharp rise in investment in Scottish commercial property in the first half, according to analysis from Knight Frank.

There was a 35% surge in deals to £688 million in the six months to the end of June, against £510m in the same period of 2020 – the height of the UK’s first lockdown.

Overseas investors have remained the biggest buyers of Scottish commercial property so far in 2021, making acquisitions totalling more than £300m.

Privately held property companies were involved in £115m of deals, while UK institutions accounted for another £60m.

According to Knight Frank, investment fell 15% between the first and second quarters of 2021, from £371m to £317m.

However, this does not include deals with undisclosed values, such as the sale of Neptune Energy’s Aberdeen headquarters in May – the biggest investment deal in the city since the pandemic began.

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Colliers’ Scotland’s snapshot for the second quarter of 2021 puts second quarter deals higher than the first – at more than £400m – though it says investment was about 20% below the five-year quarterly average of £528m, as the effects of the Covid-19 continue to be felt.

It says investment volumes over the first half were up by more than 50% on the same time in 2020.

Colliers says the four largest office deals in the second quarter were all recorded in Edinburgh, led by Rockstar Games buying its 75,000 sq ft building on Holyrood Road – the former headquarters of The Scotsman newspaper – for £31m, and the adjoining Holyrood Park House, home to Citigroup, for £17m.

Knight Frank lists alternatives and mixed-use schemes as the most popular asset classes in terms of investment volumes – including the £80m of funding for Moda’s Holland Park build-to-rent development in Glasgow – followed by offices and industrials.

Both agencies predict that, with a range of high-quality stock still being marketed, a flurry of deals could complete after the summer.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Scotland’s commercial property investment market is still recovering from the effects of the pandemic, but there are signs we are heading in the right direction as the economy re-opens.

Oliver Kolodseike, Deputy UK Chief Economist, Research and Forecasting, at Colliers, said: “There is pent-up capital waiting to be deployed in Scotland. A number of deals are currently under offer and should complete in the coming weeks and months.

“We expect a further boost with remaining restrictions due to be eased in Scotland on 9 August and we should return to some form of normality.”

In the office market, Colliers expects a strong rebound in the second half of the year as lockdown restrictions ease further. In one of the largest leasing deals of the second quarter, BT signed a pre-let for 80,000 sq ft at Dundee’s West Marketgait scheme.

Elliot Cassels, director, national capital markets in Edinburgh, added: “There has been strong investor demand for Edinburgh offices, with keen prices having been paid. Footfall in city centres still remains low and investor appetite thin for high street retail and leisure.”

In the retail sector, which has been hard hit by the fallout from Covid, around £60m was invested in the second quarter.

Although this was double the first-quarter figure, it is less than half the five-year average of £130m. The largest retail deal was the sale of a B&Q warehouse in East Kilbride to an American real estate investment trust for £19m.

The industrial sector saw £70m invested in the second quarter, against £52m in Q1, and about 10% above the five-year quarterly average of £62m. The largest deal was DataVita’s acquisition of the Fortis data centre at Strathclyde Business Park for £45m.

By Terry Murden

Source: Daily Business

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Overseas investors find UK regional property a safe bet

British homeowners are not the only ones feeling left out of London after a year of sharply rising house prices. Overseas investors from Saudi Arabia to Hong Kong were placing ever-increasing bets on the British regions, building houses there and making huge profits.

For three decades, overseas money flowed mainly into the capital, attracted by a booming economy and sharply rising house prices.

When the Saudi conglomerate AIMS Holdings rated the UK in 2019, it quickly came to the conclusion that people like Manchester, Newcastle and Leeds offer better value for money.

‘When we first wanted to invest in the UK, we looked at London. Then we see there are many more opportunities elsewhere. It was a real eye-opener, ‘said Abdulaziz Albassam, CEO of AIMS Investments, its wealth management arm.

The timing was perfect.

The average house price in England, the year to April 2021 increased by 8.9 percent. But in London, the rise was just 3.3 per cent, compared with 16.9 per cent in north-east England. In Scotland, the average house price rose by 6.3 per cent during the year to April.

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House prices in London is double that of the national average and the coronavirus pandemic has defended its attractions. Families are looking for larger homes with gardens outside the city, and many workers are no longer forced to commute daily to the office.

Meanwhile, employers are relocating jobs to local cities, where they can attract graduates by providing a better quality of life. Goldman Sachs announced in April a new technology center in Birmingham employing several hundred people, which is part of a growing trend.

The bulk of the investment flows into private houses for rent, mainly apartments for young professionals. The developer retains the asset or sells it to individuals, usually in Asia. They continue to manage the development for a fee and ensure that it retains value.

Savills, the advisory firm, said investment in the private rental sector in Manchester, Birmingham and Leeds together rose £ 1bn in 2020, up from £ 361m in 2018. Jacqui Daly, director of Savills for residential research, said ” The demand for investment is strong with lots of new entrants, both internally and internationally, and better returns mean that the regional market for urban and suburban buildings for rent attracts those who consider it long-term. ”

AIMS has acquired a majority stake in Beech Holdings, a Manchester developer that has started building dedicated student accommodation.

Wasim Choudhury, director of Beech Holdings, said he expects 20-25 percent capital growth between 2020 and 2025. “Covid has accelerated our thesis,” Choudhury said. ‘Seven or eight UK cities have become acceptable to institutional investors. The yield is higher than in the capital. ”

Beech is building more than 1,000 apartments and houses with a gross development value of around £ 350 million in Manchester and Newcastle, and is looking at Sheffield, Leeds and Birmingham. It uses old office buildings and repairs contaminated sites.

Founder Stephen Beech said the British chronic housing shortage without overseas investors would be even worse. ‘British banks are not interested in revival. This is too risky. An early scheme, Basil House, a converted 19th-century office building in central Manchester, now recommends renting £ 2,000 a month for a two-bedroom apartment, all bills included. “Students who rent from us want to stay when they get their first job.”

Beech is now concentrating on family homes to diversify its income mix.

Manchester City Council has defrauded investments and in 2014 partnered with Sheikh Mansour bin Zayed Al Nahyan, part of the ruling family of Abu Dhabi and owner of Manchester City Football Club. Together they build almost 1,500 houses that are mostly private houses.

The council also has a joint venture with Far East Consortium, a listed Hong Kong conglomerate that has been operating in London since 2011 but which began operating in Manchester in 2017.

They will build up to 15,000 new homes across North Manchester over the next 15-20 years. A fifth of them are ‘affordable’ or meet the needs that would not otherwise be met by the market, as defined by the government.

Gavin Taylor, FEC director in Manchester, said the range of blue-chip employers such as Amazon, the BBC and TalkTalk moves to the city coupled with business-friendly local leadership, it has made it an attractive place to invest.

FEC, with a £ 600m investment in the UK, is now looking at Bristol and Birmingham. It also shifts the focus from apartments to family homes. ‘Covid caused a reassessment of life. If someone closes their eyes and imagines their dream home, it has four walls and a garden. “It is very expensive in London,” he said.

Alasdair Nicholls, CEO of Native Land, a major UK residential property developer who regularly works with international investors, said their growing presence in areas outside London reflects their experience in the market.

‘[For a] ‘a new investor deciding to enter the UK market is the obvious first point in London,’ Nicholls said. ‘But we’re now at a point where it’s done, and it’s’ OK, well, we can leave for anywhere, Edinburgh, Manchester, Birmingham’. “

Native Land markets its first project outside London, a joint venture with US asset manager Nuveen of 152 luxury homes in the new St James Quarter Complex in Edinburgh city center, which he says is worth a total of around £ 100 million.

Native Land, which last year acquired a former department store in Guildford for redevelopment, sees other cities and towns in the UK following Edinburgh and Manchester to make their central areas desirable.

Nicholls said he expects international capital to buy into these opportunities. “I think it’s going to be a big piece of what we and others will do in the future,” he said.

Source: afegames

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Hong Kong buyers rush for properties in the capital

There has been significant increase in the number of people from Hong Kong purchasing homes in the capital since the UK government announced a new visa welcoming residents from the former British colony, earlier this year.

According to new figures from Chestertons, which has 31 branches across London, sales enquiries from Hong Kong buyers have risen by 20% over the past 18 months whilst demand for rental properties is expected to increase ahead of September, when students head to London’s universities.

Transactions by Hong Kong buyers have risen by 115% in London since May last year, the agency said.

Chestertons expects the uplift in Hong Kong investors to continue following the UK government’s recent visa offering to the 2.9 million Hongkongers with British National Overseas (BNO) status.

Guy Gittins, CEO of Chestertons, said: “Historically, the UK has always had a strong bond with Hong Kong, and London has been a key destination for Hong Kong property investors.

“Whilst the number of foreign investors in London fell dramatically during the height of the pandemic, the new visa regulations and imminent easing of travel restrictions has revived London’s appeal as an investment and lifestyle hotspot.”

A visa scheme to allow Hong Kong residents to come to the UK opened earlier tis year, with some 300,000 people expected to apply.

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The visa, which is open to holders of a British National (Overseas) passport and their immediate dependents, will offer a fast track to UK citizenship.

The UK launched the new visa after China imposed a new security law.

Those who apply and secure the visa will be able to apply for settlement after five years and then British citizenship after a further 12 months.

Richard Davies, head of lettings at Chestertons, commented: “A significant proportion of tenants in city centres are international students and corporate tenants. However, due to Covid-related travel bans, the number of these sorts of tenants declined considerably last year but we are now witnessing a clear increase.

“Inevitably, the return of renters from Hong Kong and other countries will drive rental prices across the capital. Areas such as Canary Wharf, Kensington, Covent Garden and Mayfair are likely to benefit the most, as they are especially popular with our international clientele.”

By MARC DA SILVA

Source: Property Industry Eye

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Chinese investors – will there be a drop in buying after the stamp duty holiday?

The stamp duty holiday – which began in July last year and will continue in its current format until the end of June, before applying to lower-priced properties until September 30 2021 – triggered significant activity last year among Chinese residential buyers in the UK.

Such activity has continued through into this year, with Chinese buyers still having a major influence on some areas of the UK property market. In 2019, spending reached £7.7 billion in London alone, according to the Office of National Statistics.

And, despite the Covid-related restrictions on travel out of China for much of the last year, the stamp duty holiday has helped to keep demand and investment high.

But, according to Domenica Di Lieto – chief executive of Chinese planning and marketing consultancy, Emerging Communications – there remains the question of whether we are seeing the best of Chinese buying, or could it simply be the tip of the iceberg?

“There is no shortage of research highlighting the enormous personal investment wealth held by China’s successful middle class,” she said. “According to Tsangs Group, there are currently 2.3 million HNWIs in China, and more than 26,000 Ultra HNWIs with £25 million or more in investable finance.”

She added: “The Hurun Report states that 61% of HNWIs invest through international residential property. This is a similar finding to previous annual reports, and is mirrored by findings in research by Juwai, Asia’s largest real estate technology company. In addition, most UHNWIs and HNWIs intend to live overseas, with 37% intending to make an international home their primary residence.”

Previously, Di Lieto states, the US was the preferred destination for private property acquisition, but the UK – and London in particular – is now the primary choice ‘for several reasons’.

“The key attractions are a stable and well-regulated housing market that offers good returns, plus high yield from rent. These factors are accompanied by the weak pound, and relatively low stamp duty compared to other locations,” she explained.

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“In the case of UHNWIs alone, investable wealth amounts to £396.5 trillion. Given that the UK residential property market is the single most popular option for investment indicates that Chinese buying so far is potentially the beginning of much greater acquisition to follow.”

She believes that not only is the potential of Chinese buying significant now, but it will grow. “China is the only major economy that has got bigger during Covid, and is due to become the largest in the world by 2027. The major beneficiary of growth will be the Chinese middle class,” she said.

“The existing property buying demographic will acquire more income, but the actual numbers of HNWIs will also grow in size considerably within the next decade.”

Until now, Di Lieto says, it has primarily been those living in Tier 1 cities such as Shanghai and Beijing that have purchased in the UK. But China’s fastest economic growth is taking place in Tier 2, 3 and 4 cities, she argues, creating a new cohort of wealth.

“What’s more, they show every sign of sharing the same motivations to purchase UK property,” she added.

A key element of this is supporting the education of children studying abroad, which is the single biggest driver of residential buying interest for the Chinese.

According to Juwai research, some 83% of HNWIs intend to educate their children overseas. Di Lieto says that, as an international higher education destination, the UK is now the most popular, and increases its lead every year.

“The US trade war with China along with visa restrictions, has seen Chinese student enrolments in America plummet in favour of UK universities,” she said. “But other formerly popular countries for study have damaging disputes with China. Canada, New Zealand and Australia have worsening relations, which have seen student numbers diverted towards the UK. Within China’s border, the popular favour of study in Hong Kong has waned, and with it diversion to these shores.”

That said, Covid has inevitably had an impact on the numbers of new Chinese students in the UK. Last year, many yet to start their studies took a gap year at home in anticipation of the pandemic becoming more controlled.

“This has resulted in two years of normal Chinese student intake wanting to join UK universities in September this year, and the success of the UK’s vaccination programme is helping to drive demand,” Di Lieto said.

“There is another positive to higher education-driven property purchase. Traditionally, Chinese students learning abroad have come overwhelmingly from Tier 1 cities, but economic expansion outside these areas means new student catchment areas are growing at an increasing rate.”

Indicative of increased Chinese interest in university towns is Jawai’s annual report on the towns and cities prospective buyers find of most interest. Cambridge – world renowned for its university and status as a growing tech hub – has now become the UK’s fourth most popular location.

“Aside from HNWIs and the parents of students, there is another major group from China that buys UK property. Chinese alumni of the British higher education system often acquire housing as an investment,” Di Lieto explained.

“Having lived in the UK, they have a high degree of confidence as buyers, and it is not unusual for them to purchase sight unseen, particularly if there is recommendation from friends or family. This group is also growing in number and wealth.”

Another positive for developers and agents, according to Di Lieto, is that investors in China make their own financial decisions. According to a paper by BVI Finance, the Chinese wealthy middle classes manage their own investment finances, a behaviour driven by a culture of self-sufficiency. Individuals and families make their own decisions, resulting in clear pathways for selling.

“However, the majority of agents and developers do not pay enough attention to understanding Chinese buyers, or invest sufficiently in communicating with prospects,” Di Lieto claimed.

“In particular, there is a failure to create effective sales journeys, and crude use of Chinese social media. For example, unlike counterparts elsewhere, no UK agents or developers utilise the benefits of WeChat mini programmes, which is China’s most popular social media sales format. This presents a significant barrier to unlocking the real potential of the market.”

She concluded: “There is strong desire in China, and among Chinese expats, to buy residential property in the UK, but buyers have yet to be met on their terms.”

By Matthew Lane

Source: Property Investor Today

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London homes of the rich and famous draw Hong Kong buyers

Hongkongers are among the keenest buyers of homes that have been owned or rented by Hollywood actors, pop stars and tycoons, seeing them as a sound investment whose resale value is likely to be boosted by their celebrity associations, according to a London-based luxury property agency.

“Hong Kong and mainland Chinese buyers love buying prestigious homes, and if a mansion, penthouse or house in London has a famous or prestigious former owner or tenant, it does attract their attention,” said Mark Pollack, co-founding director of Aston Chase. His agency has completed more than £25 million (US$35 million) worth of sales to Hong Kong buyers, many of whom bought celebrity-owned or high-profile London homes.

A-list celebrities lend the most cachet to a property and can lift the asking price by up to 10 per cent. Their association can also generate worldwide exposure in the media.

Such luxury homes are typically already decked out with the most sought-after features by wealthy buyers, including total privacy, gymnasiums, spas, swimming pools and concierge services. But an association with a movie or pop star, especially one adored by the public, gives agents another selling point.

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Over the last five years there has been a shift in attitudes in sync with the popularity of social media that has paved the way for some celebrities to collaborate with agents instructed to market their properties, according to Aston Chase. The open manner in which the ownership of properties has to be registered both in the UK and overseas also means the rich and famous had become more relaxed about helping advertise their houses.
Aston Chase recently sold a Hong Kong buyer a top floor residence at the Corinthia Hotel, which has been used over the years for exclusive events and stays by guests including American music stars Jay-Z and Rihanna. The £10.75 million penthouse flat has a floor area of 3,703 square feet and is part of the Corinthia Residences, which connects directly to the hotel in the Whitehall area of London.

A newly refurbished three-bedroom duplex residence at Portland Place that was formerly the London residence of Sir Carl Meyer, chairman of De Beers diamonds and jewellers, was also sold to a Hong Kong family for £4.4 million, the agency said.

“We have had several inquiries from Hong Kong buyers for Eglon House,” said Howard Kayman, associate director at Aston Chase. “All of them have been families with several children, with the buyers wanting a large family house with plenty of bedroom suites, and also facilities, which Eglon House offers, where the head of the family can work from home and run their business.”
A penthouse in the prestigious One Hyde Park in Knightsbridge owned by Nick Candy is on the market with Knight Frank and Savills for £175 million. The 18,000 sq ft property with five bedrooms including the master suite is the flagship penthouse of the property tycoon.
It has a private spa and temperature-controlled wine room for 750 bottles.
“The Candy brand is recognised globally for its world-leading luxury interior design and unparalleled attention to detail,” Candy said in an emailed response to the Post. “This level of luxury and specification has always appealed to ultra-high net worth Hong Kong and Chinese buyers who want the very best.”

By Cheryl Arcibal

Source: SCMP

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Overseas landlords set a new five-year record during the pandemic

An increase of 19% will now see the number of overseas landlords hit a five-year high of 184,000. Despite the implications of Brexit, the COVID-19 pandemic and recent tax changes preventing such moves from happening in the first place, the UK property market has thrived. And, these factors have not been a deterrent for foreign investors at all.

The UK has been a go-to destination for foreign investors for many years now. Those out of the 184,000 overseas landlords are potentially on track or have already experienced projected capital growth and favourable exchange rates due to their investments. Increased tax changes, such as the 2% stamp duty surcharge introduced to overseas investors at the start of this month, are trumped by the long-term prospects UK properties currently have.

The most noticeable increase has been seen from Hong Kong investors following the new British National Overseas (BNO) visa launched at the end of January. Locations such as London have seen a high level of interest from this group of foreign investors. At the same time, northern cities such as Liverpool and Manchester have also been popular due to the more affordable properties and living costs compared to the former.

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A Senior Director of Global Sales and Marketing, Cauvery Nanaiah, has commented that these overseas buyers transact in the Hong Kong Dollar and Chinese yuan due to the pound sterling being so low, therefore getting value for their money. “Interestingly now, the focus is moving away from zones 1 and 2, towards regeneration areas with better yields, such as Luton, Harlow and Hounslow,” she added.

The fact that overseas investors are continuing to invest within the UK property market is an extremely positive sign for the market’s future. The value of UK property is soaring even off the back of a global pandemic. The quality of life the UK offers is also seen as a bonus to overseas investors. The reputation of schools and universities here in the UK help to attract foreign investment and encourage overseas landlords to invest. Many decide to purchase buy-to-let properties, which will also help provide accommodation for their children studying in the UK.

The number of overseas property investors is expected to soar, as the UK government predicts at least 300,000 Hong Kongers will arrive in the next five years. Around 7,000 people from the former British colony have already been allowed to settle in the UK. These numbers do not consider the number of overseas investors from other countries either, which could see the 19% rise even higher than anticipated.

Investing in UK property has never been as popular for overseas landlords. The properties they purchase should also see them make capital growth due to the value of the sterling, which should only ever rise. Therefore, domestic investors should note these changing statistics and increased competitions, as they could miss out on capital growth post-pandemic. If you’re searching for your next property to invest in, read our blog on where tenants want to live as we enter the new ‘normal.’

Written by Nicholas Wallwork

Source: Property Forum

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Overseas Investors: Will UK property remain a long-term investment choice?

UK property has long been a ‘safe haven’ for overseas investors, with the market’s robust performance throughout the pandemic highlighting its resilience as an investment asset.

Driven by the Stamp Duty holiday, this generous discount has not only benefited UK buyers but acted as an additional incentive for overseas investors.

With this in mind, it is no surprise that the number of overseas landlords is at a five year high, now surpassing 184,000. This climbing amount of investment is a significant driver behind UK property prices, which have surpassed £300,000 for the first time in history.

However, all good things must come to an end, and with the Stamp Duty holiday concluding in September, will the recent surcharge change perspectives amongst overseas investors?

What is the Surcharge?

Since April 2016, on top of standard Stamp Duty Land Tax (SDLT), investors have been required to pay a further flat 3% Stamp Duty on the full value of all additional properties worth more than £40,000.

However, the UK government has also implemented a 2% surcharge for overseas investors. This surcharge will be in addition to the current Stamp Duty rates and will be applicable for the majority of international buyers, including both overseas investors and international companies. The government has been clear as to who will be exempt from the surcharge, predominantly those involved in Real Estate Investment Trusts and other collective investment vehicles.

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The surcharge is largely being introduced in response to UK property’s upward trajectory for the past 20 years, the majority of which has been underpinned by international investment. This level of growth – bar momentary dips – has made it increasingly challenging for first-time buyers in the UK to get on the property ladder, hence the surcharge.

What does this mean for overseas investors?

When this additional surcharge was announced in 2016, many experts anticipated a surge in overseas buyers investing in UK Buy-to-Let property, followed by a sharp fall. While international investment remained strong in the years leading up to 2020, the additional uncertainty surrounding Brexit and the pandemic was almost guaranteed to discourage overseas investors.

However, the Stamp Duty Holiday has not only propelled the UK property market but also dissolved the majority of concerns surrounding Brexit. With the relatively positive results we’re seeing across post-Brexit Britain, combined with the continued growth arising from the Stamp Duty Holiday, the potential growth of UK property could significantly outweigh the overseas Stamp Duty surcharge.

But as government incentives end and the full effects of the Stamp Duty surcharge are felt in full effect, will UK property remain a long-term investment choice for overseas investors?

Andy Foote, director at SevenCapital, comments: “Although we’ve known about the surcharge since 2016, the whirlwind of 2020 overshadowed it to some extent. But now it is in full swing, investing in UK property will inevitably be more expensive for non-UK investors.

“Considering the standard rate, combined with the surcharge, overseas investors could face extra payments they hadn’t considered within their property investment planning.

“That said, the performance of the property market over the past year, combined with its forecasted growth, still positions the UK as a high-performing, affordable property hotspot in comparison to alternative countries.

“Not only has the average property price surpassed £300,000, but rental yields are creeping up across the country. While the average UK rental yield currently sits at 3.53%, emerging areas, such as Bracknell, are reaching 4.80% for two-bed apartments.

“Offering a passive income of up to £1,103 a month and £13,236 annually, it’s unlikely that this Stamp Duty surcharge will deter overseas investors, with the potential for 14.5% growth in prices by 2025 only offering more incentive to invest in UK property.”

Between Brexit, a global pandemic and extensive tax changes, the UK property industry has seen it all. The market’s resilience alone offers investors the reassurance that property is a sturdy investment, and with this growth forecast to continue, the Stamp Duty surcharge is seemingly a small price to pay for a potentially lucrative asset.

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