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

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

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

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

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

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Decline and recovery

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

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

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

The Birmingham Bounce

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

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

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

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

Are UK mortgage rates going up or down?

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

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

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

By Kaur Harsharan

Source: Expat Living

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Tumultuous year for UK property market presents opportunity for foreign buyers

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

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

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

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

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UNDER PRESSURE

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

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

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

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

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

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

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THE BUYERS FROM ABROAD

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

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

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

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

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

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

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

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

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

By Fabian Koh

Source: CNA

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Weak Pound Encouraging Overseas Investors To Buy UK Property

When the mini-budget tanked the pound to record lows against the dollar, overseas buyers again began circling UK property in increasing numbers.

While many overseas investors are better off when buying UK property compared to the start of 2022, the same is not true for domestic buyers who are contending with a number of difficulties including energy prices, high inflation and heightened interest rates.

For those foreign nationals paying in US Dollars, the average UK home now costs 14.8% less, with the average London property costing 16.5% less.

The huge savings UK expat and foreign national investors are making because of a weak pound are doing a great deal to offset the rising mortgage rates.

A weak pound is encouraging overseas investors to buy UK property for comparatively cheaper prices as domestic buyer competition wanes.

Domestic investors will be forced to watch on as house prices continue to climb while the weakening pound is presenting excellent investment opportunities for UK expat and foreign national investors.

Economic and political turbulence has continually contributed to a weaker pound in recent times. When the mini-budget tanked the pound to record lows against the dollar, overseas buyers again began circling in increasing numbers. And though the turbulence seems to be stabilising somewhat, international buyers are still keen to purchase UK property. Here’s why it’s important for UK expat and foreign national investors.

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What Does a Weak Pound Mean for Overseas Investors?

For those foreign nationals paying in US Dollars, the average UK home now costs 14.8% less, with the average London property costing 16.5% less. ‘This is the kind of difference that currency fluctuations can make’ says Stuart Marshall of Liquid Expat Mortgages. ‘While domestic buyers will feel the effects of a weak pound across the board on any imported item them buy, a weak pound is leaving property comparatively cheaper despite house price growth. For example, in London, prices have risen by 4.9% so far in 2022. However, foreign nationals buying in US dollars are paying a sixth less than at the start of 2022. Buyers in the UAE are benefitting to almost the same degree saving 14.5% on the average UK property and 16.2% on the average London property, while buyers are saving 13.9% and 15.6% in their native currency.’

What Does a Weak Pound Mean for Domestic Buyers?

Domestic investors will be forced to watch on as house prices continue to climb while the weakening pound is presenting excellent investment opportunities for UK expat and foreign national investors. While many overseas investors are better off when buying UK property compared to the start of 2022, the same is not true for domestic buyers who are contending with a number of difficulties including energy prices, high inflation, heightened interest rates and low confidence in the economy and housing market.

Domestic buyers will see their buying power reduced further, as their day to day lives become more expensive since the weak pound will mean that imports cost more. This, in turn, pushes up inflation and is likely to cause interest rates to be raised again in an effort to curb soaring inflation.

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The Bigger Picture.

‘Of course, currency rates are not the be-all-end-all, but they are certainly a big win for UK expat and foreign national investors. However, the huge savings they are making because of a weak pound are doing a great deal to offset the rising mortgage rates. And while the higher mortgage rates are adding to the cost of investment, rental profits are also incredibly high due to the large numbers in the rental market. In fact, each property available to rent currently has 11 prospective renters trying to secure tenancy on the property. This competition is pushing up rental prices and rental profits for discerning investors and these higher yields are also lessening the effects of the higher mortgage rates.’

‘Because of the dampened domestic market, UK expat and foreign national investors are also finding it easier to pick up a bargain as the number of properties on the market has been growing over the spring and summer, leading to greater choice, slower sales, and an increased number of price reductions. Further, though house price appreciation over the pandemic is translating to affordability constraints now for domestic buyers, the types of properties that are popular for UK expat and foreign national investors are quite different. Namely, many UK expats and foreign nationals have been opting to invest in city centre flats, as these properties are particularly popular in the rental market. This is good news, considering the fact that the average house price has grown five times more than the average cost of a flat since 2020.’

‘Lastly, it’s worth mentioning that UK expat and foreign national investors will be shopping in a different mortgage market than domestic investors. While domestic buyers saw a third of all mortgage products removed from the market after the mini-budget, the UK expat and foreign national mortgage market is constantly trying to introduce new products to meet specific customer demand. With the weak pound lending strength to overseas buyers, it’s likely that lenders will be trying to introduce new products to entice business from this lucrative sector. This means that UK expat and foreign national investors will frequently see lower rates and better deals, compared to domestic investors.’

‘Investing in UK property is one of the best financial decisions that UK expat and foreign national investors can make – and the enduring popularity of this form of investment is testament to this. The weak pound is only making this proposition more inviting and, along with a competitive UK expat and foreign national mortgage market, is doing a lot to offset the damage done by house prices and mortgage rates. For canny UK expat and foreign national investors, it’s important to keep track of the market developments as things are changing every day, and the turbulent political scene is influencing a lot. For example, the recently announced stamp duty break is good news for first-time UK expat and foreign national investors and will further add fuel to the investment fire. A specialist UK expat or foreign national mortgage broker can help their clients to keep abreast of this situation and invest at the perfect time for them.’

Source: MENAFN

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2022 Outlook for Expats & Foreign Investors Buying UK Property

There have been a lot of new factors that have impacted the UK property market in recent years, from Brexit and tax changes to the ongoing consequences of the COVID-19 pandemic. For Expats and Foreign Property Investors, the UK still presents some profitable investment opportunities, as long as you are able to find the right types of investment.

From April 2021, overseas buyers have been required to pay a 2% stamp duty surcharge, which affected many property investment strategies. However, there are still many benefits of investing in the UK compared to other parts of the world, such as relatively low house prices, attractive interest rates and a very healthy property capital growth.

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The impact of COVID-19 on UK Property Market

The UK property market has remained strong, largely due to the stamp duty tax holiday that the UK government introduced. House prices have increased significantly, with the average house price having now increased by approximately £34,000 from the beginning of the pandemic. House price increases are expected to slow down in 2022, with the average UK House Price standing at £276,091 as of December 2021 (source: Halifax).

People want more space

Another major factor impacting property investment is the change in demand for housing stock that has more space. After spending so much time indoors during lockdown, many homeowners and renters decided that they wanted to find property that is in rural areas and has more space both indoors and outdoors.

Influence of Homeworking

London, which was always a highly popular place to live, saw record numbers of homeowners leaving to buy property outside of the capital in 2021. With more people working from home and less need to travel into the city for work, the trend for buying property with gardens and home offices emerged and is expected to only continue in 2022.

North of England continues as a Hotspot

Many other cities across the UK saw similar patterns and the North of England saw higher interest in properties, with areas such as Manchester and Liverpool becoming ever more popular for Property Investors & Landlords. The high rental prospects in the North, combined with the excellent capital growth have ensured that the North of England has become a hotspot for Property Investors.

The average rental yield in the Northwest was 7.8% in 2021 and the area saw a 12% regional increase in value, so going into 2022, we expect Property investors will increasingly be looking at buying in this part of the UK.

Student Accommodation in high demand

The large student populations in northern cities are keeping rental demand high and with large numbers of foreign students requiring student accommodation that is of a higher specification, this gives investors the opportunity to charge higher rental yields.

Many expats and foreign Property investors are seeing the great investment potential of buying student accommodation to rent in areas where there are numerous universities and where the average property value has grown significantly in recent years.

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Green efficiency requirements

As well as the additional 2% stamp duty surcharge, foreign Property Investors looking to buy property in the UK will also need to be aware of the new green efficiency requirements. From 2025, rental properties must have an EPC rating of C or above, or they will not be able to accept new tenants. 

This has resulted in many existing landlords spending money in home improvements such as installing new windows and replacing older boilers with new, more energy efficient ones. For foreign investors with existing properties in the UK, improving the EPC rating of properties will impact profits and investors looking to buy new property may have to pay more for properties that have a higher energy efficiency rating.

Around 13 million UK homes have an EPC of D or below, so this will be a significant factor to consider for foreign investors and expats buying in the UK property market.

Expats heading back to the UK

Since Brexit and the red tape involved in obtaining EU Settled Status became a problem, there has been a huge uplift in the number of expats returning to the UK, with people giving up on their lifelong dreams of retiring to live in a warmer part of the EU.

Some expats have been exploring the idea of buying property in the UK to rent out for periods of the year that they are not in the UK and living there themselves. With the new ruling that British citizens cannot stay in the EU for more than 90 days in any 180-day period, this has changed the needs for having somewhere to live in the UK, that can also be rented out if necessary.

Conclusion

In 2022, there will still be very attractive mortgage deals available for foreign Property Investors and expats buying property in the UK. Although house price growth is predicted to be much slower in 2022 compared to 2021, the many other benefits of buying UK property will ensure that foreign investors are still able to get a good return on investments in the UK by identifying the most profitable investments.

Get in Touch

If as either an Expat or Foreign Property Investor you are considering buying a new UK home, or even remortgaging your existing property in 2022, contact us today for free and independent mortgage advice. Call us now on +44 1494 622 555. Alternatively, you can complete this short online form now to request a call back from one of our Team of highly experienced Expat Mortgage Advisors who will gladly assist you with all your Expat and Foreign Property Investor mortgage needs.

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UK Expat Buy-to-Let Investors Look North

In the search for higher returns, UK expat buy-to-let investors need to look beyond the capital to offset the impact of profit-eroding legislation.

Buy-to-let UK property has long been seen as a lucrative investment, often used to provide an inheritance for the investor’s children, as a pension alternative, or as an ancillary form of income. Buy-to-let investors are looking North. And UK expat buy-to-let investors need to be looking North too! There’s also been a clear growth in the number of buy-to-let landlords operating as a limited company compared to last year.

According to research from the BVA BDRC Landlord Panel for Q1 2021, this is the first time in over 4 years that a higher proportion of landlords are intending to expand their portfolio rather than reduce it (19% vs. 17%). The same research has also shown that 61% of landlords plan to use a buy-to-let mortgage to fund their next purchase and 29% of buy-to-let borrowers intend to remortgage in the next 12 months.

The Need for Higher Returns.

Due to legislative tax changes in the last few years, landlords are having to seek out areas that offer higher returns. In 2016, a 3% stamp duty surcharge was introduced for the purchase of second homes. In April 2020, it was announced that landlords could no longer claim mortgage interest as a tax expense. These changes have slowly eroded some of the profitability for UK expat and foreign national landlords. Despite this, landlord optimism in the near-term prospects for capital gains and rental yields has significantly increased year-on-year, by 26% and 24% respectively.

Landlords operating in London are most likely to have seen a fall in tenant demand in Q1 2020 and Q1 2021. So, where are UK expats and foreign national property buyers now looking? The answer is in so called ‘UK hotspots’ where higher returns offset the impact of the changing legislation and price entry points are a lot lower than some of the more traditional buy-to-let property areas.

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London Investors Looking Outside the Capital.

Between January and July 2021, 12% of UK property purchases were by investors. This was the highest since 2016 and is testament to the strength of UK property investment. ‘As a UK expat or overseas investor, it’s vital to see where investments are being made’ says Stuart Marshall. ‘Keeping track of these trends will help you to recognise where the most profitable areas will be when looking to invest.’

So, where should potential UK expat and overseas buy-to-let investors keep an eye on?

‘What’s really interesting to see’, continues Stuart Marshall, ‘is where the capital’s property investors are putting their money. 63% of homes bought by London-based property investors in 2021 have been bought outside the capital. This figure has been steadily rising for years – more than doubling from the 26% we saw ten years ago in 2011. The main driver for buying outside of London is obvious – the returns are higher elsewhere!’

Although a rental recovery is happening in the capital, it’s not enough to keep London-based investors there. Only 35% of investors who bought in London this year are seeing rental yields above 5%. Further, as of June 2021, rents in London were 16.5% lower than the same time a year ago, meaning investors who purchase in the capital are losing out on rental earnings. Though this has recovered from the 20.4% depression that we were seeing in April, it’s still not enough to keep UK expat and foreign national investors from looking elsewhere. For example, the average yield in cities across the rest of the UK is 6.2%. This figure is also the same for the average rental yield in areas outside of cities across the UK. So, London is falling far behind other areas of the UK and it’s forcing UK expat and foreign national investors to look elsewhere in the search for higher returns.

Where to Look for UK Expat and Foreign National Investors.

One area of interest, particularly when charting the behaviour of capital-based investors, is the North East. Here, landlords were responsible for almost a quarter of all purchases between January and July this year. ‘Both rental yields and capital growth in London are being far surpassed by Northern regions. And, increasingly, London’s investors are looking toward these areas for greater returns. For UK expats and foreign nationals looking to invest, taking note of this trend is important as it’s a strong indicator for where the best rental yields are going to be found. For example, in Middlesbrough and County Durham, London’s investors bought 28% and 25% of properties sold respectively in those areas in the last year. It’s clear to see why these areas have garnered such recent popularity with Middlesbrough and County Durham earning yields of 9.2% and 9.6% respectively.’

North West.

The North West continues to perform strongly when it comes to buy-to-let property investment. Though the average rental yield in the North West is currently lower than the North East – 7.8% compared to 9.1% – the North West is still a consistent favourite for UK expat and foreign national investors. ‘This may be to do with the incredible regional growth that we see in the North West’ muses Stuart Marshall. ‘In fact, the North West has the highest level of regional growth of anywhere in the UK. Regional growth in the last year has reached almost 12% in the North West, compared to the North East’s 9%. So, many UK expat and foreign national investors are favouring the North West because, in effect, you’re earning twice on your investment – once from the rental yield and once from the capital growth. As always, the best thing to do when looking to take out a UK expat buy-to-let mortgage is to talk to a specialist who can help to point you in the right direction and navigate some of the pitfalls.’

Source: EIN 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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Rising numbers of expats and foreign buyers eye UK property market’s opportunities

Mortgage brokers, banks and property market professionals have reported rising interest from foreign buyers and expats looking to snap up homes here in the UK.

UK nationals living or working abroad and foreign investors from the US, Canada and East Asian countries are cashing on a weaker pound, a price slump in London’s new-build market and renewed confidence in the UK’s economy and vaccine programme.

Meanwhile political turbulence in China and the UK government’s new Visa scheme, open to holders of British National Overseas (BNO) passports in Hong Kong giving citizens the chance to relocate, has also driven up overseas interest in UK property.

Since the start of the year, bank’s say they have seen foreign income mortgage business rise.

Skipton International reported a trebling of mortgage completions from Hong Kong residents purchasing buy-to-let properties in the first quarter of 2021. Furthermore, between January to May the bank saw a 34 per cent increase in enquiries from residents in the EU compared to August to December 2020.

For Hong Kong buyers, both London and the South East of England were the most popular locations closely followed by the North West and Midlands.

Roger Hughes, Skipton International’s business development manager, said investors saw the UK as a “solid and stable jurisdiction”.

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Mortgage brokers have also reported more interest from overseas buyers.

Richard Campo said between March and April he saw a 137 per cent rise in enquiries about foreign income mortgages.

“We noticed a huge spike in enquiries from buyers living abroad wanting more information about getting a mortgage supported by foreign income, way above what we have seen elsewhere in the business,” he said.

“It’s logical as lockdown restrictions ease and pent up demand is released coupled with the vaccine roll-out going well. What’s interesting though is that they are not super-high-end buyers. We’re seeing a lot of expats and new buyers looking around the £500,000 mark.”

East Asian interest

New-build snagging and property management firm BuildScan said in May it saw an 18 per cent year-on-year rise in enquiries from East Asian buyers who had recently purchased new-build properties in London.

According to the firm’s analysis, the impact of a weaker pound and lower new-build property prices dampened by the pandemic offered opportunities for East Asian investors.

Between January 2020 and December, the health crisis caused new-build property prices in the Capital to fall by 3.4 per cent to £488,371.

But fluctuating exchange rates meant South Korean homebuyers would have benefitted from a 6.8 per cent fall in prices when compared to the average price at the start of the year. Chinese buyers saw a 6.2 per cent drop and Japanese buyers a decline of 5.6 per cent.

Homebuyers from Thailand, Malaysia and Hong Kong would have secured smaller discounts of between 0.9 per cent and 1.8 per cent.

Harry Yates, founder and managing director of BuildScan, said: “Despite the problems posed by the pandemic, we’ve continued to see a high degree of interest in the London market from East Asia.

“This has been driven, in part, by factors such as BNO visa availability for those relocating from Hong Kong, as well as the opportunity to cash in on a stamp duty saving.

“Fluctuating exchange rates have also boosted the affordability of London new-build homes which has also caused many savvy investors to act sooner rather than later. Although the pound has rallied of late, the London market remains an area of focus for many foreign buyers.”

Oxford estate agent Wallers has also reported a rise in enquiries in non-European overseas buyers over the past six to nine months, particularly from the Far East. He also noted a significant proportion of the enquiries were from families from Hong Kong who want to relocate to a different part of the world because of political troubles.

He added: “We have also seen more enquiries than normal from buyers in the USA and Canada, and there has been a sense that they are seeing the UK in more attractive terms now that it is out of the EU, which has been contrary to my own preconceived ideas about what Brexit might do to our property market.”

Safe bet

David Baker said his firm was being contacted by UK nationals who work or live overseas in the US and Dubai and they want to buy in the UK either for a family member or to rent it out. He is also seeing interest around the £500,000 price point. They have also had enquiries from British citizens working in Paris and Germany.

“We’re seeing lots of business from people not paid in sterling who want to buy in the UK,” said Baker. “I’m doing more of this type of business than ever before.

“The feeling is that the UK is a good place to have your money, and London is a safe bet.”

Baker said while there was a lot of interest in houses with gardens, he was seeing a gradual shift towards flats, which fell out of favour during the height of the pandemic.

He added: “Buyers are seeing the potential for deals to be had because they are not as popular as they once were. And those who are buying to rent out aren’t as concerned about garden space.”

By Samantha Partington

Source: Mortgage Solutions

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London will remain “extremely attractive” despite 2% SDLT surcharge

Non-UK residents are now required to pay a 2% Stamp Duty Land Tax (SDLT) surcharge, but demand in Central London is unlikely to dampen.

UK resident companies that are controlled by non-UK residents may be required to pay, and the surcharge applies to freehold and leasehold purchases and on rents on the grant of a new lease.

The implementation will also see buyers who intend to live in the property required to pay the surcharge.

Under the new guidelines, individual buyers can have the surcharge refunded if they are in the UK for at least 183 days during any continuous 365-day period within two years referenced by the date of transaction.

Harry Buchanan said: “Despite the introduction of the additional stamp duty surcharge for foreign buyers today, we expect prime central London to remain an extremely attractive prospect for international buyers.

“In fact, we anticipate many more overseas buyers will return to the market once international travel restrictions are lifted.

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“We therefore expect demand to remain strong going forward, especially as the UK continues to roll out one of the world’s fastest vaccination programmes, which will boost economic activity in the coming months.

“We are already starting to see pent up demand from overseas buyers starting to build. Over the past two months, numbers of buyers visiting our website from the UAE have increased by 31%, while website searches from Hong Kong have gone up 33%.

“In particular, more buyers from Hong Kong are getting in touch following the UK’s offer of an easier path to citizenship for Hongkongers with British National (Overseas) passports.

“These buyers are specifically looking to become owner occupiers, and are particularly keen to be close to good schooling.

“The increasing demand we are seeing gives us a strong indication that interest in prime central London will continue to be high, especially for turn key properties that can double up as a lock and leave which we know tend to be most sought after by foreign buyers, as well as properties close to transport hubs.”

By Jake Carter

Source: Mortgage Introducer

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Where overseas investors own most properties

The London boroughs of Westminster, Kensington & Chelsea and Camden are some of the most popular with foreign owners.

Pure Property Finance analysed data from the Land Registry on overseas companies that own property in England and Wales.

There were 10,938 in the City of Westminster, 5,847 in Kensington and Chelsea, and 2,363 in Camden.

In terms of areas outside London, 1,770 were in Manchester and 1,516 were in Liverpool.

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Ben Lloyd, managing director of Pure Property Finance, said: “Since we set up Pure in 2013, we have worked with clients across the UK and abroad to secure bespoke property finance that suits their specific project needs.

“In this time, we have definitely seen some ‘hotspots’ for investment, particularly in London and the South East, along the M4 corridor, as well as cities in the North West.

“Some of these areas are now becoming oversaturated and do not provide the opportunities they once did. However, others remain in high demand; high value locations will almost always hold their value and bring a solid long-term return on investment.”

Overseas investors will be charged a stamp duty surcharge of 2% from April next year.

BY RYAN BEMBRIDGE

Source: Property Wire

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Benham and Reeves: Foreign buyers should invest in UK property now

With the temporary changes to the stamp duty threshold in place until March 2021, and a 2% surcharge for foreign buyers set to come in from April, now is the time for overseas buyers to invest in UK property, according to Benham and Reeves.

The current stamp duty holiday means that foreign buyers are able to save £14,573 on the average London property purchase.

The April 2021 surcharge will take the average the cost of stamp duty up to £38,579.

For foreign buyers making their move now, this means an additional £24,006 saved in addition to the sum already wiped off by the stamp duty holiday.

Kensington and Chelsea offers the most significant additional saving for foreign buyers transacting at the moment; the cost of stamp duty on a current purchase has reduced from £125,243 to £110,243, a saving of £15,000.

Come April next year, this stamp duty requirement will climb to £153,165 with the additional foreign buyer surcharge, so international buyers transacting before this are saving a further £42,922.

Similarly, foreign buyers looking to buy in Westminster can save £36,699 by transacting now, while Camden (£32,621), Hammersmith and Fulham (£29,943) and Hackney (£27,773) were also found to offer some of the best savings.

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In the last year, house prices in the City of London have fallen by £60,868 on average; combined with the £30,851 stamp duty saving made by buying now, foreign buyers would be £91,720 better off on average at present.

In Brent, a £28,463 reduction in property prices coupled with a £21,287 stamp duty saving means that foreign buyers would be £49,750 better off buying now.

Richmond has also seen property prices decline by £12,875 in the last year; with the addition of a stamp duty saving of £27,670 ahead of April’s surcharge, foreign buyers would be £40,545 better off on average as a result of buying now.

Marc von Grundherr, director of Benham and Reeves, said: “The recently implemented stamp duty holiday has not only rejuvenated domestic buyer demand, but we’re also seeing foreign buyers starting to return to the capital in their numbers. In fact, the vast majority of our buyer interest coming from Asia has only been concerned with homes falling under the £500,000 threshold.

“This has been intensified due to the sour taste of a two per cent stamp duty surcharge on the horizon as the government continues to dampen what is a vital sector of the London property market.

“In any case, the stamp duty savings currently on offer have been heavily bolstered by the additional saving made in comparison to buying from April next year and this has caused an immediate uplift in buyer demand from foreign shores.

“Great news for developers who with stock currently, or due to hit the market in the coming months.

“What’s more, some boroughs have seen property prices reduce over the last year and so foreign buyers are not only able to save considerably where stamp duty is concerned, but they’re securing even better value in terms of the price of the property itself.

“London remains the pinnacle of homeownership for many foreign buyers, and while a ramped-up level of stamp duty will be hard to swallow, it certainly won’t deter buyers in London’s high-end market.

“However, with many rushing to make the most of the savings currently on offer, any negative price trends that have plagued the capital in the last 12 months are sure to be short-lived as demand starts to outweigh supply.”

By Jessica Bird

Source: Mortgage Introducer