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Suffolk BS enhances expat and buy-to-let criteria

Suffolk Building Society has announced a series of product and criteria changes to help brokers place more complex cases for their landlord and expat clients.

Expats and non-UK nationals

Suffolk Building Society will accept applications from first-time buyer expat landlords who are working and residing abroad and who have not owned a property before but who wish to purchase a rental property in the UK.

The Society will no longer require returning expats to spend a set amount of time in the UK before applying for a mortgage. It’s common for lenders to require anything up to two years on home soil but this change allows expats to apply as soon as they return. This applies to both employed and retired applicants.

Non-UK nationals will also be accepted on a joint application where one applicant is a UK national. This means that the non-UK partner can now be named on the mortgage. However, brokers should be aware that affordability will be based solely on the UK national applicant’s income only and they will be required to meet all relevant criteria.

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Support for UK landlords

As well as accepting first time-buyer expat landlords, Suffolk Building Society will now consider applications for first-time buyer buy-to-let properties in England and Wales. Full buy-to-let criteria will be applied including interest cover ratio (ICR) and minimum income. The Society will also run a background affordability assessment.

Landlords wishing to purchase or remortgage their own residential property will now be considered regardless of how many buy-to-let properties they have in the background, as long as the buy-to-let portfolio is self-financing. Previously, the Society had a limit of 10 buy-to-lets in the background but this criterion has now been removed to help landlords.

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Charlotte Grimshaw, head of intermediary relations at Suffolk Building Society, said: “We know our niches extremely well and have a very good understanding of the issues facing brokers in these markets at the moment. It matters to us that we’re there to support those whose circumstances means they need a specialist lender on their side – particularly as everyone faces the uncertainty of the current economic climate.”

By ROZI JONES

Source: Financial Reporter

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Four-day week ‘would not work for mortgage market’ ‒ analysis

A four-day working week is a good idea in theory, but not really compatible with the workload of a typical mortgage broker, according to intermediaries.

Last week saw the publication of the results of a trial into a four-day week, with the majority of firms stating that not only had it improved performance but that they were continuing with the structure.

However, when quizzed by Mortgage Solutions, mortgage brokers were split on the idea of a four-day working week. Advocates argued it had helped them to be more productive, working smarter during the week, though there was scepticism about the impact it could have on delivering adequate service to clients.

Boosting productivity

One mortgage broker who is already working a four-day week is Samantha Bickford, mortgage and equity release specialist at Clarity Wealth Management.

She said that since going self-employed, she has worked on the basis of usually having Frdays off, arguing that it leads to a healthier work/life balance.

“This encourages me to be more productive, work harder and smarter during the week, knowing I am taking a day or even an afternoon or few hours for myself at the end of the week. Especially with those dedicating their weekends to their children and family time, this means you have a day for yourself and your own mental health,” she explained.

Gary Boakes, director of Verve Financial, said that he too had been working a four-day week until recently, noting that he “felt I needed the extra time during the day to work on the business rather than in the evening”.

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Maintaining service levels

Stuart Powell, managing director of Ocean Equity Release, said that while he was all for a four-day working week in theory, it presented a challenge for smaller firms in ensuring such a structure did not impact their customer service levels.

“Many firms give people different days off, however for firms with less than five staff, this may reduce coverage for clients and be an issue in holiday times,” he added.

Bickford agreed that fitting in with client expectations and lender service challenges can make picking working hours more challenging.

She said: “If the working week dictates I need to work on a Friday ‒ for example, if this is most convenient for the client or if the week is so busy it is not possible to take the Friday off ‒ I will of course, but in general I believe a four-day week encourages productivity. I have no qualms about working slightly longer days during the week to have this balance.”

Are we working at capacity?

However, not all brokers believe it is a workable option.

There is “no way” a business that interacts directly with the public could succeed with a four-day week, according to Craig Fish, director of Lodestone Mortgages & Protection, who noted that there are times when even not working on a weekend will have an impact on a broker’s business.

He added: “Lenders could make things easier by improving their systems, but the costs involved to do this are likely prohibitive, so I fear that brokers will find themselves working ever longer hours to ensure that the client is getting a first-class service.”

If advisers are able to do the same amount of work in four days that they were doing in five, then they are not working close to their capacity, suggested Andy Wilson, director of Andy Wilson Financial Services.

He added: “I believe most brokers will work quite long and unsociable hours if they want to meet their own and the business’s targets. I also feel most would exceed the four days just to get jobs done and get cases through more quickly.”

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It might work for other industries, but not mortgages

Dominik Lipnicki, director of Your Mortgage Decisions, said that he was sceptical of how practical a four-day week would be for most businesses, noting that while he was a fan of flexible hours, “our clients would rightly expect to be able to be assisted at the very least five days per week”.

He continued: “I am not sure that many mortgage businesses would be able to afford to hire more staff to cover the extra day and if they did, surely, it is the clients who ultimately pay? I think that for some businesses, a four day week might work but that would very much be driven by the type of business that it is.”

This was echoed by Benjamin Blyth, director of Houz Mortgages, who suggested a four-day week does not really suit the mortgage industry as a whole. “We need the engine running seven days a week, but if a four-day week can be scheduled into rotas, it’s great for staff. I can never tie myself to four days because client demand will always vary across the seven days in a week.”

Working smarter, not harder

While many brokers were unconvinced about the merits of a four-day week, there was near consensus that technological developments had given them more control over the actual hours worked.

Chris Barker, managing director of Manchester Money, said that technology today means brokers can “pretty much work what hours they want, and from wherever they want to be, as long as it fits with their clients’ needs”.

Paul Seed, mortgage and insurance adviser at Mortgages 4 U, noted that meeting client expectations was now more about the response times rather than the hours or days worked.

He continued: “Speed of response, especially with live applications, is increasingly critical to maintain a client’s trust. People want to know that they are in safe and responsive hands.”

Embracing the benefits of flexible working can also deliver a better standard of service, too, some suggested. For example, Kylie-Ann Gatecliffe, director at KAG Financial, said that her firm is smarter now in working around clients, removing the need to pull 70-hour weeks.

She continued: “We actually produce higher results, coming in feeling fresh and motivated. Whilst clients can still have appointments on an evening and on a weekend when required, we plan our diaries so the whole team have a balanced week, rather than everyone being stressed and under pressure trying to juggle life/work balance.”

By John Fitzsimons

Source: Mortgage Solutions

UK house prices
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Capricorn’s Jeremy Law on overseas investment in the UK property market

Following a turbulent 2022, it is reassuring that an upward turn is already being evidenced this year, with many indications that we are getting back on track. But what of international interest in UK property?

The good news is that current market conditions mean there’s a lot to be optimistic about on that front, too.

The UK’s economic struggles continue to see many face a challenging time – but the weaker pound makes UK property investment a particularly attractive prospect. This is especially the case when considering the ability to purchase ‘forward contracts’, enabling buyers to secure a future sum at today’s exchange rate. Indeed, international investors can capitalise on current exchange rates, using currency to their advantage to make the cost of a deposit far lower than at other times.

Added to this, with some domestically choosing to defer a property purchase until we are sailing in calmer economic waters, rental yields are on the rise. Suggestions are that rents are up 15% to 20% year on year, which makes for a good investment case when buying to let from abroad. It is true that mortgage costs may have gone up – but these are being more than balanced out by higher rents, meaning earning potential in this area is now considerable.

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Meanwhile, November marked a turning point for fixed mortgage rates, which began to fall. This is not to say they are back at the levels enjoyed before, but they are moving in that direction. The market is normalising, meaning rates will go up and down, and we are back in a position where buyers can take advantage of current offers, which remain lower than historic averages.

Another advantage of the unprecedented events of last year is that some lenders have reduced the margin on their tracker products, making them a more attractive long-term play. In general, lenders have been forced to innovate and there are now a variety of options in terms of mortgage deals to suit different needs, with brokers playing an increasingly important role in helping customers find the best products for them – especially when looking from abroad, where the right lender options can be more challenging to find.

Added to this is the fact that there are many more lenders in the market than there were just a year ago. This has the effect of keeping competition healthy, encouraging further innovation of products and policies – including, for example, offset products and products that offer greater flexibility. There is also an additional incentive for lenders to keep prices low (or at least lower than the competition).

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There are a number of factors that mean international interest in UK property is on the rise – a final one being that lenders are marketing to Chinese buyers again. With China opening up again following its zero-Covid policy, more Chinese property investors are likely to be able to travel to the UK to visit properties, along with their Far East neighbours – naturally increasing potential for investment.

There is no doubt that the last 12 months have been something of a rollercoaster ride for the market – but the fallout has undoubtedly created fertile ground for overseas investment in UK property, and this is a reason for positivity.

By Jeremy Law

Source: Property Week

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The Perfect Rental Storm Continues for UK Expat and Foreign National Investors

A shortage of rental homes and huge numbers of renters in the market are combining to create the perfect rental storm for UK Expat Investors.

The ‘Perfect Rental Storm’ continues for UK expat and foreign national investors in 2023 as a shortage of rental homes combine with huge numbers in the rental market to make for a very profitable rental landscape.

Shortage of Rental Homes

There are currently less than half the normal number of homes available to rent at the moment and this is contributing to fast-rising rents. This equates to the typical estate agent having only 8 available rental properties. The pre-pandemic average was 16, which shows how much rental availability has suffered in recent years.

The low number of rental homes is being driven by high consumer demand and high mortgage rates, which mean that prospective buyers are struggling to get onto the property ladder and are consequently stuck in the rental market. This situation means that rental prices are rising quickly amidst fierce competition. In practice, the average rents for those starting a new tenancy have risen by 12% in the last year.

With cities proving even more popular in the rental market, places like Manchester, Birmingham, and Cardiff have risen as much as 15%. Even renters who are choosing to stay put are facing increases of around 4%. This is largely because many existing renters are in fixed-period rental contracts and landlords aren’t looking to increase prices in a bid to maintain tenancies. Because of the much lower price-increases for renters who stay put, many renters are choosing to stay where they are to avoid risking higher rents. According to data from the English Housing Survey, the average length a renter stays in a property has now risen to 4.4 years, which is up from only 2.7 years in 2012. This means that the flow of available homes into the market is very slow and is further exasperating supply constraints.

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Sky High Rental Numbers

In addition to the shortage of rental homes, there are also sky high numbers of people in the rental market, with the proportion of people in the private rental sector jumping by 28% in the last ten years. According to the government’s latest housing census, 5 million households are now renting their home in the private sector. This is likely a result of affordability constraints caused by house price growth and lower first-time buyer numbers, as well as many of the factors mentioned above. Crucially, the number of households has also increased, with the number of new properties being built not matching this increase.

The huge numbers of households renting at the moment is good news for UK expat and foreign national investors, as the shortage of rental homes is being further exasperated by ever-increasing numbers of renters. These factors will both contribute to constant increases in rental incomes and rental yields, meaning big profits for UK expat and foreign national investors with the right property.

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What Does This Mean for UK Expat and Foreign National Investors?

‘The problem of high rents and low rental availability is unlikely to go anywhere as a huge increase in rental supply will be difficult as a result of higher borrowing costs and regulatory changes’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘But for those who do manage to invest in property, the rewards are likely to be huge. The number of households in the rental market has grown massively over the last ten years and it’s likely to keep growing, with the number of new homes being built continually falling short. Rental demand is consequently bound to stay high, and this will feed big profits for UK expat and foreign national landlords.’

‘Competition is also lower for UK expat and foreign national landlords who choose to invest in UK property now. This is due to new tax and regulatory changes in the buy-to-let sector which have impacted landlords’ bottom lines and contributed to lower levels of investment into the rental sector. In turn, this has contributed to landlords selling their existing rental properties as investors look to cash in on capital growth profits, especially given the massive price rises in the last few years.’

‘While there are obvious difficulties for UK expat and foreign national investors to navigate when investing in UK property, things are not as difficult as they once were’ says Stuart Marshall. ‘The advent of specialist UK expat and foreign national mortgage brokers has been a hugely positive change for many UK expat and foreign national investors as these brokers can help investors to navigate the inherent difficulties of investing in UK property. Not only will they help to smooth the process and make completion as quick as possible, but they can also help to advise UK expat and foreign national investors in the process of choosing a property for their specific investment goals.’

To maximise the quality of the investment, UK expat and foreign national investors should keep abreast of the popular types of property and what is appealing to renters at the moment. In the most recent housing census, it’s clear that the popularity of flats has seen a huge increase over the last few years, with 500,000 more households living in flats compared to ten years ago. This demand for flats also lines up with the popular properties for UK expat and foreign national investors at the moment. Namely, energy efficient properties with lower management and running costs because they can assure a stability of rental income. In fact, much of the recent focus for UK expat and foreign national investors is shifting away from capital growth and back to solid rental incomes. This is because the rental market is booming but huge rises in property value over the last few years have contributed to low capital growth potential. City centres have also become incredibly popular for renters, which again favours flats in the rental market. Flats are also highly mortgageable, which is good news for UK expat and foreign national investors, as there are a range of excellent UK expat and foreign national mortgage products available at the moment.

Source: EIN News

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Overseas buyers are flocking to London due to dollar strength, says agent

Carter Jonas predicts that 2023 will be an exceptional year for the prime central London (PCL) market following a recent spike in the number of cash buyers registering to purchase property in the heart of the capital.

Most recently, the Marylebone and Mayfair office has seen all cash buyers, many of whom are dollar buyers utilising the good exchange rates to purchase in prime central London, Next year is expected to continue on this trajectory, the estate agency says.

Carter Jonas predicts that the prime central London property market is set to out-perform the rest of London – and the country – in the coming months as overseas Dollar buyers from the US, Middle East and Asia flocking to the Capital to take advantage of the weak pound.

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Samuel Richardson, head of sales at Carter Jonas in Marylebone and Mayfair, commented: “We are anticipating that 2023 will be a very good year for the prime London property market. At the end of September this year, UK property was 25% less expensive for these buyers than in June 2021 and this is a trend we expect to continue. 80% of those that purchased via our Marylebone office in prime central London in the last quarter of 2022 have been from overseas. 50% have been Dollar buyers, the majority from America, followed by those from the Middle East and Singapore. Interestingly, 90% of American buyers were Californian.

“The major prime central London boroughs will remain desirable investment locations next year. Mayfair, Marylebone, Kensington and Chelsea are set to outperform all London markets as these buyers are purchasing in cash for purely investment purposes.

“Areas such as southwest London will likely be more heavily impacted, as those who bought there in recent years will be affected by the rising interest rates. This could see a drop in property values, as many people may sell up.”

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Richardson added: “I am almost certain that prime central London will outperform all other London areas in 2023. Despite there still being high demand and lack of supply, the soaring rental market will see the return of the investor as they take advantage of better rental yields. Savvy investors are also taking advantage of discounts from developers who are selling remaining units in new build developments and are happy to discount to cash buyers.

“Buyer demographics are varied from international and domestic professionals buying pied-a-terres in convenient, high traffic areas, to those purchasing short-term investments or properties for children whilst studying in London. We’re also seeing many families looking for a more permanent and long-term abode. These buyers are spending anywhere from £800,000 to upwards of £70m.

“If the dollar remains strong, I believe that prime central London will outperform the rest of London next year. The reason for this is due to high demand and a soaring rental market which will appeal to investors taking advantage of the good exchange rates.”

By Marc Da Silva

Source: Property Industry Eye

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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

BoE
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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