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Hong Kong Buyers Rushing to Buy UK Property

There are increasing numbers of Hong Kong residents who are looking to buy UK property. This is largely as a result of the evolving political situation in Hong Kong. Many Hong Kongers seeking UK property are taking advantage of the UK’s visa scheme for BNO passport holders, which was introduced in 2021. The visa programme provides a fast-track to British citizenship and was announced as a reaction to Beijing’s newly imposed national security laws which were seen to breach the 1984 Sino-British declaration which guaranteed certain freedoms to Hong Kong citizens for 50 years.

Between June 2021 and 2022 alone, Hong Kong has seen 121,500 people leave, with many of these taking the UK government up on its offer of fast-tracked British citizenship. In fact, the UK government has received 140,500 applications already.

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Hong Kong Buyers Looking to the UK
‘The UK has been a popular location for Hong Kong investors for a while. This is because it’s extremely affordable for most Hong Kong buyers compared to their expensive domestic market. The exchange rate from Hong Kong dollars to British Sterling also makes this a favourable purchase, especially given the current state of the Great British Pound. Strong rental yields and capital growth offered by UK property have also served to compound the attractive nature of UK property for Hong Kong buyers. But with so many Hong Kong residents looking to move to the UK, at least on a temporary basis, the demand for UK property from Hong Kong has grown even more’ says Stuart Marshall of Liquid Expat Mortgages.

‘We’ve seen a huge increase in enquiries from Hong Kong. But there are a number of common issues that Hong Kong buyers encounter. One of the most common early hurdles that Hong Kong buyers come across is that they are trying to use a high street lender. Such lenders are usually not equipped to properly serve a borrower from Hong Kong. A specialist mortgage broker, on the other hand, will have the infrastructure to put Hong Kong borrowers in touch with specialist lenders who have foreign national – and, in some cases, Hong Kong – specific deals.’

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Mortgage Deals Available for Hong Kong Buyers
A positive for Hong Kong investors in the UK is that, because of the demand at the moment, lenders are creating deals specifically for Hong Kong investors to satisfy the need for specialised products in the marketplace. ‘Lenders have been working with brokers to understand the specific needs of Hong Kong borrowers and work on crafting products that meet these needs. These products are available for a wide variety of uses on both residential and buy-to-let properties, new purchases and re-mortgages.’

Source: EIN News

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Truss to announce stamp duty cut – report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Michele Maatouk

Source: Sharecast

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Bank of England to suspend market operations for State funeral

The BoE said CHAPS will be closed on 19th September, in line with its normal bank holiday arrangements.

CHAPS handled around 174,000 payments each day, in the year to February 2021, with an average payment value of £2.1m. That works out at around £367bn each working day.

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CHAPS is used by banks and large corporations to settle high-value money market and foreign exchange transactions, by companies to pay taxes, and by solicitors and conveyancers to settle property transactions.

The Bank’s Real Time Gross Settlement (RTGS) service, which underpins large transfers between bank accounts, will also be closed.

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Back in 2014, RTGS collapsed for most of a day, putting thousands of housing market transactions on hold.

Last week the BoE said the sale of corporate bonds held by the Asset Purchase Facility will be delayed by a week, to 26 September, following its decision to delay its next interest rate decision by a week (to 22nd September).

Source: London Loves Business

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I could have fixed my mortgage rate for years longer. I’m a fool

I have been having flashbacks. Not the kind I used to have, of when I went hiking in Yosemite National Park without a map and ended up sliding down a bear-infested trail on my backside in the dark. No, these flashbacks relate to a time in my more recent life, and an ill-fated conversation with my mortgage broker in July last year that led to a severe financial misjudgment.

My wife and I had just sold our house while juggling careers and three small children, and it was time to choose a mortgage for the new one. Should we take a two-year fixed-rate deal or a five-year one?

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The five-year mortgage was with Santander, and the two-year with the West Brom building society. Both had interest rates of just over 1.2 per cent, and our broker pushed for the two-year deal. The Bank of England base rate was 0.1 per cent, and he said he would be stunned if the base rate or mortgage prices went up significantly by summer 2023, when we’d be due to renew. Plus (and after this week’s 0.5 percentage point rate rise, this is makes me squirm the most) he reckoned being stuck with a five-year deal and its hefty early repayment charge was the riskier option.

The clincher was that the West Brom would lend us £40,000 more than Santander would because it had a more relaxed affordability calculation, and we wanted that money — the place needed some work. It was an interest-only mortgage, which appealed because the repayments would be low while my wife was temporarily out of work. The two-year deal it was.

Fast forward a year and . . . yes, I know, I’m an idiot.

Since we took out our mortgage the base rate has risen six times, now sitting at 1.75 per cent. It is heading in only one direction, and could be as high as 3 per cent when our two-year fix term ends.

Lenders, of course, follow the base rate when setting their rates. According to the data firm Moneyfacts, the average two-year fixed-rate deal has gone from 2.55 per cent to 3.74 per cent since we took out our loan, and the average five-year fixed rate is up from 2.78 per cent to 3.89 per cent. Next summer we may be offered 4 per cent, which could mean paying £1,000 more each month than we do now.

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So what can we do about it? Work is about to begin on the downstairs of our house, and it’s becoming ever more expensive because of inflation — we’ve now scaled back our plans and are leaving a tumbledown garage in place. We’ll mitigate the impact of our bigger future mortgage payments by setting aside money each month, and perhaps overpaying on our existing deal. We’ll burn through our savings.

However, for many borrowers coming off fixed rates next year, the prospect of a deal at a much higher rate is going to trigger a “payment shock”, as the broker Andrew Montlake puts it. Of course, at this time of pandemic, war, rising inflation and heatwaves, planning anything is difficult — from when to remortgage to how often to water the garden. I’ll be far from alone in facing nasty flashbacks over the coming months.

By DAVID BYERS

Source: The Times

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Will new disclosure rules deter foreign buyers?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By EYE CORRESPONDENT

Source: Property Industry Eye

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

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

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

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

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

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

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

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

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

By MARC DA SILVA

Source: Property Industry Eye

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UK Expat Buy-To-Let Mortgage Market Review

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: MENAFN

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Property market investment is crucial to economic recovery

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jamie Johnson is chief executive of FJP Investment

By Jamie Johnson

Source FT Adviser

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Overseas buyers’ interest in UK housing market rising

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

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

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

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

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

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

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

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

By Gary Adams

Source: Mortgage Strategy

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UK property market still attractive to overseas investors

UK property has long been seen as a stable store of value, providing attractive yields in a politically stable environment.

Foreign ownership of properties in England and Wales has trebled since 2010 to around 250,000, with 8,500 properties purchased in 2021 according to the Centre for Public Data. This demonstrates the continuing attraction of UK property ownership. Buyers were spread across 20 different countries with individuals from South East Asia and the Middle East especially active. With house prices continuing to rise, the UK property market continues to provide attractive investment opportunities.

London has traditionally been targeted by non-residents looking to invest. Despite London’s price growth being at a 13-year low, the average property price has increased by 67 per cent since 2010.

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However, the focus is evolving as non-residents look for alternative British cities to invest in. Large scale developments in cities such as Liverpool, Manchester and Leeds have significantly increased non-resident ownership in these areas with attractive yields available.

Buyer behaviour

When individuals are looking to purchase UK property from overseas, there are some key things to consider:

Firstly, location remains critically important with considerations around transport, future investment and development, and the potential for this to drive capital appreciation.

Secondly, property type is a vital factor, paying particular attention to matters such as cladding and the remaining years left on a lease. Buyers are asking themselves important questions like how the transaction will be funded; will finance from an international bank be required? What are the likely fees and costs to consider?

Thirdly, non-residents are taking time to select appropriate professional advice. They want to keep it simple, staying clear on investment objectives and remaining focused on these goals throughout the purchasing decision.

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Brokers’ considerations

Brokers also have a lot to think about when choosing lenders to work with when selling to overseas buyers, such as maintaining high levels of due diligence, given various regulatory developments over recent years. For example, Know Your Customer criteria can vary. Additionally, clients have to provide higher deposits, typically 25 to 50 per cent, depending on the client’s circumstances. Most lenders also require an account to be opened alongside the mortgage to facilitate the monthly payments and receive rental income for buy-to-let properties.

The changing landscape

There have been significant political and economic changes that could impact overseas buyers over the coming years: The introduction of the two per cent stamp duty surcharge from 1 April 2021 and a register to identify overseas property owners. Then, in January 2021, there were changes to the visa application process for British National Overseas (BNO) passport owners in Hong Kong.

So far, 2022 has seen continued interest from foreign buyers. As interest rates and political pressure to regulate or restrict purchases from foreign investors remain low, this trend to buy UK property is likely to continue for the foreseeable future.

By: Gareth Morgan

Source: Mortgage Solutions