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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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International Demand For UK Property Expected to Surge This Summer

Industry experts are predicting that overseas buyers will be rushing to invest in UK property in summer 2021, once international restrictions are eased.

Summary:

  • International buyers have still got a strong appetite for investment properties in the UK. Buyers from the Middle East and Hong Kong are leading the pack.
  • UK property market remains buoyant despite the COVID-19 pandemic, demonstrating the resilience of this historically strong market.
  • Areas outside of London are being touted as the best investment and cities in the North and Midlands like Manchester, Birmingham and Leeds are attracting keen interest.

International travel restrictions look set to be eased this summer, with overseas buyers expected to be waiting eagerly to be able to scout out new UK property investment opportunities.

The British property market has emerged from the gloom of COVID-19 intact and as strong as ever. While demand slowed considerably at the start of the pandemic, pent-up demand was unleashed in the summer of 2020 and another surge is anticipated in summer 2021.

Every region in the UK recorded an increase in house prices in 2020 and estate agent Savills is predicting that house prices will rise by another 4% this year. Lucian Cook of Savills commented that: “By extending both the stamp duty holiday and the furlough scheme in last week’s Budget, the Chancellor has significantly reduced the downside risks in the mid-year, while a recovering economy should support price growth towards the year end.”

Buyers from overseas – especially the Middle East and Hong Kong – are particularly keen to capitalise on the strength of the market. While properties in London were previously highly sought-after, many of these buyers are now looking to seek better investments in regional cities.

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The Stamp Duty holiday gave many of these buyers a push in 2020, but global optimism is set to cause another surge in Middle Eastern and Hong Kong purchase rates in 2021 as well.

Investment property in the North West and Midlands is being highlighted as having much stronger rental yields and better opportunities for long-term capital appreciation.

Middle Eastern property buyers have long been leading the way in the race to get on the UK property ladder, but there has recently been an influx of buyers from Hong Kong as well. This is due to the new path to UK citizenship being granted to them in 2020.

Where are overseas investors looking?

Developers and estate agents across the North West and Midlands are reporting strong interest from overseas buyers, and this trend looks only set to increase in the summer.

Manchester, Leeds and Birmingham are all featuring as some of the most desirable locations for investment-savvy overseas property buyers.

Global real estate agent Jones Lang LaSalle forecast in January that Manchester will see the highest sales price growth (17.1%) and rental price growth (16.5%) in the UK over the next five years.

Manchester has been known as an investment hotspot for some years, but the city continues to grow – both in terms of industry and population – and is highly desirable by both young professionals and families alike.

The bustling city of Birmingham also continues to be a strong contender on the international property investment scene. In global real estate services company JLL’s recent residential housing report, Birmingham was reported to be the ‘standout performer’. House prices and the rental market are both expected to perform strongly over the next few years due to business and transport investment in the city.

Source: Select Property

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Hull investment on the up as overseas buyers snap up Anlaby Road property

A Chinese businessman has snapped up a high-end residential complex in Hull in the latest example of foreign investment in the city.

Anchor House has been sold by Hull property company, Westfield Homebuyers, the multi-million-pound deal being handled by city legal firm, James Legal.

Westfield founder Mike Clayton purchased the iconic property, in Anlaby Road, from a housing association at auction five years ago and spent the following year on a refurbishment that transformed it into a high-quality rental complex that is now home to a range of young professionals, including medical staff working at Hull Royal Infirmary and visitors to some of Hull’s major industrial employers.

Mike said: “It had been used to house tenants with a variety of issues, and so was built from concrete and steel to withstand vandalism, arson and other issues, giving it a very institutional feel.

“We took it back to brick inside and created a suite of high-end flats and studio apartments, as well as putting in communal cooking, garden and barbecuing areas, and even a gym and sauna.”

It was Mike’s long-term passion for property that inspired the qualified chartered surveyor to take on what proved to be a tough but rewarding project.

Anchor House is now at the epicentre of Hull’s ongoing regeneration, with MyPad Accommodation acting as management agent for the building, but Mike, who is entering semi-retirement, has now sold the complex almost fully let and was not surprised that it was an overseas buyer.

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“Hull represents a really good investment compared to traditional hubs like London, Manchester or Leeds, because property remains relatively good value here, while still returning solid rental yields, particularly with interest rates on traditional savings still historically low,” he said.

Dealing with an international purchase in the midst of a global pandemic was no mean feat, however, the transaction taking longer than the anticipated three weeks – the deal eventually went through after about six months.

Simon Young, managing director of James Legal, said: “We take great pride in supporting major projects like this which are key to the city’s infrastructure and ongoing development.

“It’s the latest example of how our team regularly pull out every stop to get transactions over the line for our clients, even in the most challenging circumstances – in this case, in the midst of a historic global pandemic.”

Danny Gough, managing director of MyPad, said: “This deal was a fantastic development for all the companies involved, and indeed for Hull as a city.

“MyPad will continue to manage Anchor House for this overseas buyer, who I understand hopes this will be the first of many similar investments in this locality.

“And he’s not the only one, we’re seeing many similar enquiries, week-on-week, from foreign investors who like the look of what Hull and surrounding area has to offer.”

By Deborah Hall

Source: Hull Live

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Property investment in 2021. A year of new opportunities?

There are reasons to be optimistic over property investment in 2021 and the UK market moving forward, according to Paresh Raja.

It’s safe to say that there will seldom be another year like 2020. It seemed like there was be no end to the unprecedented developments that caught businesses, consumers, and investors completely off guard. Of course, the primary instigator of said uncertainty was the Covid-19 pandemic; an ongoing crisis that governments worldwide are still clambering to tackle.

A few weeks into 2021, however, and it seemed as though we may soon be entering the period of post-Covid-19 recovery. As the UK prepares to come out from under strict lockdown, the rollout of the AstraZeneca/Oxford and Pfizer/Biotech vaccines signifies the beginning of a transition back to normality.

But how should investors be preparing for the “new normal”? Which asset classes are set for impressive performances over the coming 12 months, and which may struggle to adapt to the post-Covid-19 era?

Commentators and investment advisors remain divided on the answers to these questions. What I’m interested in, however, is how the British real estate market will perform in 2021.

As numerous assets struggled to handle the unprecedented uncertainty imbued into the markets due to Covid-19, British property was able to easily hold its value; and even post record gains.

In November the average price of a residential property in the UK experienced its highest level of growth seen since 2015, according to Nationwide signifying a marked end to the previous four years of property price stagnation. Again, according to the building society annual house price growth rebounded to 6.9% from 6.4% in January, prices were up 0.7% month-on-month, more than erasing the small decline seen in January.

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So, looking ahead, can the UK property market maintain this momentum? Can investors look forward to another year of gains for British property owners? Or could future unforeseen developments knock the industry off course, reversing the gains seen last year?

Life under lockdown

The UK’s third wave of Covid-19 resulted in a third national lockdown being declared at the beginning of 2021, concurrent with the UK’s departure from the EU. Such a state of affairs meant that, for the month of January at least, we were unlikely to see the high rates of transactional activity recorded last year. Although prospective buyers can still move home, the added logistical complications of doing so during lockdown means that a slight property market slowdown is likely.

I believe that there is a strong chance that 2021 may even surpass 2020 in positive property sector growth. After the current lockdown passes, I am confident that the high levels of activity seen last year will continue; further increasing the average price of UK property.

Investors should take note. In December, Rightmove predicted house price growth of 4% over the coming 12 months, citing the knock-on effects of lockdown as a motivator for prospective buyers. Having spent the majority of last year home-bound, they claim, UK homeowners will be desperate to move home to larger lodgings; a trend that Rightmove believes will easily offset any negative market developments. Based on my experience, I consider such an analysis to hold some truth. As such, I can’t imagine that any negative repercussions of the UK’s EU departure will seriously deter investment into British real estate to any measurable extent, at least in the short to medium term.

But, as with any potential investment, there are still risks involved. The aforementioned unprecedented market uncertainty in 2020 meant that many UK lenders had to withdraw their mortgage products from the shelves and imposed meticulous loan application review processes. Consequently, many saw elongated mortgage deployment times, and even increased rates of application rejections.

Those hoping to profit from any potential 2021 UK property price growth, then, would do well to seek out alternative lenders with in-house credit lines to ensure they can easily close on transactions. We have seen increased demand for our bridging loans from buyers, investors, and their brokers needing tailored, quick finance solutions for their property dealings. Unless traditional lenders successfully adapt to the new normal soon, I can only foresee this trend continuing.

SDLT changing soon

One of the reasons so many people were eager to purchase property last year was due to the stamp duty land tax (SDLT) holiday, which allowed them to knock up to £15,000 off the SDLT fee on any given property transaction.

This policy is now due to end on 31 March 2021, despite some calls from within the industry for it to be extended. As such, property professionals and commentators alike are expecting a surge in demand for property before this key date. The reason is simple: investors eager to capitalise on future UK property price growth will understandably wish to avoid the additional SDLT tax that property transactions after this deadline will incur.

For overseas buyers and investors, the incentive to complete on property transactions is doubly important due to another upcoming change to SDLT: the 2% overseas-buyer surcharge.

This new policy, due to be implemented on 1 April, will impose an additional 2% tax on property purchases for buyers who aren’t already UK residents. For said buyers, then, the difference in potential SDLT bills on transactions before and after these dates will be substantial; meaning that a rush to finish such transactions soon is expected. Given the tight deadline, property investors will prioritise lenders that can approve applications in good time and quickly deploy loans to successful applicants.

Investors should take note of the points highlighted above, as there are great reasons to be optimistic about the performance of the UK’s property market moving forward. If there are any key lessons that investors should take away from 2020, it is that you should never underestimate the resilience of bricks and mortar. Demand is clearly rife, which means we are set for another 12 months of busy marketing activity.

By Paresh Raja

Source: WI

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Revealed – where are the best places for property investment overseas?

Purchasing an overseas property can be daunting and complicated at the best of times, and this is even more so the case with the economic and travel uncertainty caused by the ongoing global pandemic.

According to the research team at online letting agency Mashroom, choosing the right location is the best place to start for successful property investment.

The agency has revealed which cities across Europe are the best cities for those looking to invest their money in real estate, with the capital of Norway, Oslo, maybe surprisingly landing at the top of the list due to its pro-landlord laws and high rental prices.

The city has the second-highest rental rates across Europe, with landlords charging an average of €25.30 (£22.82) per square metre.

For overseas buyers, London is often seen as a safe haven and it landed in second place in Mashroom’s list. The capital city has the third-highest rental rates in Europe, averaging at €20.10 (£18.13), and – something that many London landlords might dispute – the city also had the strongest pro-landlord laws out of all the cities in Europe, scoring 2 on the GlobalPropertyGuide.

Below, you can see the top 10 cities in Europe for property investment:

  1. Oslo
  2. London
  3. Paris (inside)
  4. Copenhagen
  5. Amsterdam
  6. Madrid
  7. Warsaw
  8. Prague
  9. Rome
  10. Brussels

For its report, Mashroom looked at the cities with the strongest pro-landlord laws in place and the average rental rates in each city, and ranked them accordingly.

Luxury resort releases its annual report

Sticking with overseas property and the news that Quinta do Lago, the exclusive residential resort situated in the Algarve, has released its annual real estate market report. Following careful evaluation from February 2020 to February 2021, the report revealed a significant rise in virgin plot sales, despite the challenges posed by Covid-19.

Sales at Quinta do Lago’s virgin plot development, San Lorenzo North, have doubled when compared to 2019 while enquiries have grown by nearly half (47%). Some 65% of the plot site is now sold with seven villas now fully built. Plot prices have reached an ‘impressive starting price’ of €3.2 million, up by 26% over the past seven years.

In addition, despite the pandemic, Quinta do Lago Real Estate witnessed a 52% increase in the number of leads this January, when compared with the start of 2020. The resort has also welcomed a 300% increase in sales at the beginning of this year.

“Our buyers invest in Quinta do Lago because they have trust in our luxury market and quality offering and currently, we are continuing to receive a steady stream of interest and enquiries,” Sean Moriarty, chief executive of Quinta do Lago, said.

“Our virgin plot sales at our exclusive development, San Lorenzo North, have been performing extremely well with a 100% increase in sales. This is the largest demand we have seen and ultimately comes down to flexibility – San Lorenzo North offers buyers’ the chance to build their own home tailored to their unique demands, which have never mattered more than in the last year. We are not anticipating any significant increases in property prices due to the impact of Covid-19.”

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Emerging property trends

Like many other parts of the world, Quinta do Lago has seen a change in buyer priorities and demands. Buyers are now more demanding when choosing a property due to the increased amount of time spent at home, with a second home no longer viewed as a lock-up-and-leave bolthole but a safe space for someone to base themselves more permanently.

Because of the huge increase in working from home, high-speed internet is now a necessity and the importance of being located near to a top international school is also on the increase.

People are now changing the way they buy and view properties, too, with buying remotely becoming far more commonplace. Quinta do Lago Real Estate reported fewer property tours pre-purchase (due to travel restrictions, one site visit will now close a deal as opposed to three).

Unsurprisingly, there has also been more demand for real estate technology and digital tools, for example 3D guided virtual tours, to give people a good indication of the home they are going to buy without actually having to be there.

When it comes to buyer nationality, the UK continues to be Quinta do Lago’s strongest market despite the twin challenges of Covid and Brexit.

There has also been growing interest from the domestic market, increasing from 11% to 20%, while other feeder markets include Ireland. Interest from Belgium, The Netherlands, Germany, Luxembourg and Switzerland is also continuing to grow.

Quinta do Lago has also found that the average age of buyers at the resort is falling significantly as it becomes a more family-focused and lifestyle destination. Since Covid, there has been a growth in enquiries from young families and three-generational families who are looking to move to a safe community with green, open space.

Lastly, the demand for the Golden Visa scheme remains low in this part of the Algarve – which will be disqualified from the scheme from the start of next year anyway – with more buyer interest in the tax benefits granted by Portuguese legislation, such as via the NHR scheme.

What are the investment opportunities?

Despite Covid-19, the team at Quinta do Lago say the last year saw fantastic investment opportunities at the luxury resort, with the estate utilising the quieter time to improve and enhance their offering.

This included a new real estate project, Wyndham Grand Algarve Residences, on which Quinta do Lago Real Estate has been appointed the sole local agent.

Popular seafood restaurant Casa do Lago also received a £1.25 million (€1.4 million) renovation and the golfing resort’s renowned South Course saw a £7 million (€8 million) investment. Following on from the launch of the Quinta Farm back in 2019, the resort has also announced a new sustainability strategy in the form of new measures ‘that will foster nature, conserve resources and support the community’.

With a property market that is continuously developing, Quinta do Lago boasts a variety of luxury homes including new builds, re-sales and rentals. All feature ‘top-of-the-range amenities and beautiful, high specification interiors’.

The area remains a low-rise, low density and ecologically driven region, consistent with its original masterplan, established more than 45 years ago.

To ensure this is preserved, careful building restrictions are in place which means new developments are limited to just 9% amongst 2,000 acres of terrain and three renowned golf courses, all situated in the protected nature reserve of Ria Formosa.

“Covid-19 is going to affect our view of modern living and more importantly, our priorities. British buyers are giving even more value to nature, green living, safe spaces, and low-density environments,” Moriarty added.

“The Algarve, and especially Quinta do Lago, lends itself perfectly to this new approach. Nestled within the privacy and security of the Ria Formosa nature reserve, we enable families, friends and individuals to live a clean, heathy and active outdoor lifestyle all year round. We are committed to providing people with an opportunity to invest in their lives, improve their quality of living and reconnect with the natural world and for these reasons, I think our future is very bright.”

It’s expected to be announced today by the Transport Secretary, Grant Shapps, that Portugal will be removed from the government’s red list of countries from which travel is severely restricted, as case numbers in the country have fallen swiftly – along with hospitalisations, deaths and patients in intensive care. The Algarve, for example, recently went nearly one week without a Covid-related death.

Portugal has been placed on the red list since it was launched in mid-January, largely because of its close relations with Brazil – source of a ‘variant of concern’. While international travel is banned in the UK until May 17, there is hope that travel between the two countries may now become easier this summer.

By Matthew Lane

Source: Property Investor Today

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UK named top hotspot for property investment by overseas investors

Overseas investors ranked the UK as the best residential property investment hotspot for 2021. What makes investing in UK property so appealing?

For a number of years, the UK property market has been a prime target for overseas investors, and this has continued at strong levels. Property investors from Asia, Europe and the US have particularly seen UK property as a solid investment choice in the past few years.

Recently, the UK was even named the top global property investment hotspot in a survey by international law firm DLA Piper. Of the 500 high-net-worth investors and asset managers surveyed, 33% said they wish to invest in UK property during 2021.

Investors headquartered in China and the US ranked the UK as the best for residential property investment. And investors in the UK, Germany, France, Spain and Italy named the UK the third best place for property investment.

Olaf Schmidt from DLA Piper comments: “The UK remains an attractive market for investment also post-Brexit which should provide confirmation and reassurance that the UK is a vital hub for activity and growth.”

Investors continue to be optimistic

Despite uncertainty still surrounding the global COVID-19 pandemic, investors remain optimistic about property investment. DLA Piper’s survey revealed more than half of respondents feel positive about the outlook of the European property investment market. Additionally, only 11% feel negative.

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Investors also shared why they remain so optimistic. The most common reasons stated were because of high demand and a shortfall in supply, strong yields and attractive prices.

Additionally, another recent study revealed nearly half of buy-to-let investors in the UK are remaining positive about the year ahead. According to Property Master, only 10% plan to exit the sector in 2021. And nearly 70% said they are not planning to sell their properties.

UK property market remains appealing

Foreign buyers and investors have been snapping up property across the UK before the additional 2% stamp duty surcharge comes into effect for overseas-based investors in April. However, many feel the stamp duty surcharge will unlikely deter overseas buyers in the future.

The fall in sterling, low mortgage rates and the UK’s strong property market will more than make up for this additional tax. The sector has strong long-term prospects for capital appreciation and increasing rental demand. And many overseas investors view the UK property market as a safe haven.

Additionally, interest from Hong Kong buyers and investors is set to surge with a new special visa opening to British National Overseas passport holders in Hong Kong on 31st January. This will likely lead to a significant number of Hong Kong residents emigrating to the UK and investing in property.

Throughout 2021, overseas and foreign investors are expected to continue investing in UK property at strong levels. In recent years, the UK property market has remained robust even during political and economic unease. Because of the sector’s resilience, overseas investors will continue snapping up UK property, even with the continued uncertainty of COVID-19.

Source: Buy Association

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Overseas buyers to take advantage of covid and Brexit discounts

Overseas property buyers could look to get a bargain this year, owing to potential savings caused by the pandemic and Brexit, said Fabrik Invest.

Investors are expected to mainly come from the Middle East, Hong Kong and South Africa.

Dale Anderson, managing director, Fabrik Invest, said: “The UK remains a promising and active market for fully managed buy-to-let properties.

“The country has a fundamental lack of supply and that’s unlikely to change; we simply can’t build homes fast enough.

“For overseas investors, Brexit actually presents potential for savings, as currency exchange rates fluctuate.

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“Add to that the fact that Covid is bringing about opportunities such as discounted deals and suddenly 2021 is shaping up to be a huge year for the buy-to-let sector.”

Interest rates remaining at the historic low of 0.1% is also favourable for overseas investors.

Anderson added: “With borrowing rates at a record low, now is an excellent time to invest in property.

“The government is printing another £150 billion due to the pandemic – a move that will catch up with it eventually.

“It carries with it the potential for the currency to devalue and inflation to rise, meaning that tangible assets such as bricks and mortar carry an even more reassuring degree of safety than usual.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Stamp duty changes spur rise in interest from overseas buyers

Mortgage searches by advisers around visas and non-UK residents has seen a significant rise according to Legal & General Mortgage Club. Data from the SmartrCriteria tool, which helps advisers to determine whether a particular lender would consider a mortgage application from their client, shows that criteria searches related to ‘visas’ were ranked as the most searched term at the end of July.

Throughout July, mortgage searches by advisers for ‘expats not in the UK’ also featured in the top 10 search terms, whilst a search combination of ‘expat not in the UK’ and ‘foreign income’ has remained in the top five searches by advisers. According to the data, one in every 22 residential searches is for a query relating to an applicant currently on a visa or an expat not based in the UK.

The data also suggests that a growing number of overseas buyers are also reacting to recent changes to stamp duty, which include a 2% surcharge for non-UK buyers beginning in April 2021. SmartrCriteria searches related to applicants on a visa showed a 146% for buy-to-let searches, as well as 97% for residential criteria enquiries since May 2020. Of the residential visa searches made in July by advisers, 88% of applicants have a Tier 2 or other working visa and the majority (71%) have been in the UK for two years or more.

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The rise in visa-related enquiries coincides with increased interest from Hong Kong-based buyers as they turn their attention to the UK housing market. Recent industry data has shown a surge in demand from Hong Kong based buyers, which could grow further following the Government’s announcement on 22nd July of a new route to citizenship for 300,000 British National Overseas passport holders.

Kevin Roberts, director at Legal & General Mortgage Club, said: “Britain’s housing market is bucking the trend and has faced unprecedented levels of demand since reopening in May, and now figures show that a growing number of overseas buyers are also taking interest in UK property. Our SmartrCriteria tool is tracking some of the key industry trends in the mortgage market’s new normal and shows recent announcements from the Government have clearly gained the attention of non-UK based buyers. Many are now looking to take advantage of the stamp duty holiday while also investing in the market before the 2% surcharge for overseas customers takes effect.

“Our latest figures also coincide with increased interest from Hong Kong buyers, who are now looking to the UK housing market as a ‘safe haven’ amidst political uncertainty in the territory.

“There is an opportunity for advisers to support many of these buyers, particularly if they have little to no credit history in the UK. Lending criteria is changing every day in the mortgage market at the moment, and advisers will be key in helping these borrowers and others to cut through the noise and find the best product for their particular circumstances.”

Source: Property Wire