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Overseas buyers return to London with apartments in high demand

Since the first UK national lockdown in March 2019, the presence of overseas buyers in the London market has been severely impacted, however, with the return of international travel, demand is returning to pre-pandemic levels, where two-bedroom apartments are proving most popular.

According to research by London buying agency Astute Property Search, overseas buyers are ‘hedging’ 2021 prices in anticipation of a stronger 2022 market.

Matt Turner, Founder of Astute Property Search, says: “Many of my clients are British expats, with plans to move back to the UK in 3-5 years’ time. They are mainly looking for homes that can double up as rental investments to cover themselves before they’re ready to move back but are essentially buying now to attempt to hedge 2021 prices before the market fully recovers in 2022. In the past few months we have seen a huge rise in enquires from expat couples that are coming over and block booking viewings for properties that fit their profile.

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“One of our best transactions this year was secured in St John’s Wood, for a client based in Europe and looking for a city pied a terre. Due to travel restrictions, they were not able to physically be in the London and “their viewing” was undertaken through video calls. Close to 50 per cent of all apartments in prime central London were sold to international buyers pre-pandemic and it’s this inability to travel that has seen a lull in the market, so having us on hand to verify and negotiate allowed them to secure a fantastic deal.”

Astute Property Search predict that apartments will see a renaissance and an increase in demand will see prices rise sharply 2022, especially for two-bedroom apartments, so now is the time for investors to secure the best deal. Furthermore, the return to offices is predicted to recover the near pre-pandemic levels in 2022, which may lead to some finding their new commute to be too lengthy that will further increase demand for London flats.

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One lasting impact of the recent lockdowns is the increased demand for space, which has seeped from the house market to flats, with overseas buyers seeking value in larger apartments.

Turner adds: “The studio and one-bedroom flat market has dropped significantly and will take the longest to recover, so currently we are encouraging our clients to purchase apartments with a minimum of two bedrooms in locations where value is still there to find.

“Space and square footage are key and I would go further to say that for now two bedroom apartments will be in higher demand from prospective tenants. Working from home has become the norm with tenants sleeping in one bedroom and then using the other as an office. Units with dedicated outside space such as balconies, communal gardens, terraces all carry a premium on the rental market, so are proving popular with international investors looking for strong yields.”

Source: Property Funds World

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

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

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

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

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

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

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

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

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

Surge in buyers from the GCC

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

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

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

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

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

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

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

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

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

Three apartments sold for £147m in April 2020

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

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

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

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

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

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

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

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

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

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

Market has transformed since grinding to a halt in lockdown three

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

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

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

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

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

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

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

House prices in prime central London hit a turning point

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

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

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

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

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

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

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

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

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

Home ownership set to surge over the next 10 years

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

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

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

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

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

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

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

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

By Alice Haine

Source: The National News

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Major overseas investor shifts to long-term lettings from short-lets

A lettings agency with links to Saudi Arabian investors has produced a case study of how faith is returning to the long term lettings sector after the worries of the pandemic.

London and Manchester agency Orlando Reid cites one Saudi Arabian client, for whom they manage 26 properties in apartment blocks located in Belgravia and Knightsbridge.

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The prime central London portfolio ranges from one bedroom flats of 431 square feet to three bedroom apartments boasting 2,250 square feet, and with rental values starting at £2,100 pcm up to £8,000 pcm.

Orlando Reid managing director Baljit Arora comments: “Our investor client has recently moved his entire rental portfolio, located in Lyall Street, Lower Belgrave Street and Hans Place SW1, from short to long term lets.

“Having experienced unprecedented void periods during the pandemic from offering only short term lets, a switch to long term rental makes a lot of sense. The long term rental market has come back fighting and demand is consistent with the summer 2020 market.”

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Arora says that as travel restrictions have started to shift, London is welcoming back wealthy overseas students to attend universities, which is driving up rental property prices across prime central London.

This, along with more people returning to live and work in the city, is increasing demand across the rental sector, he says.

By Graham Norwood

Source: Letting Agent Today

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Prime outer London premium property prices set the pace in 2021

A forecast made on Tuesday by estate agents Knight Frank suggests that property prices in prime outer London will grow by nearly 4 per cent over the rest of 2021, double the rate of prices in prime central London.

This trend is partly driven by the return of overseas buyers to the London property scene who have traditionally invested in more central areas.

It may defy precedent, but is not predicted to be a pandemic-induced one-off. Knight Frank’s five-year forecast shows growth in prime outer London will remain steady at between 4 and 5 per cent.

“Prime outer London” is defined by Knight Frank as covering Barnes, Battersea, Canary Wharf, Chiswick, Clapham, Fulham, Hampstead, Richmond and Riverside.

By contrast, prime central London spans the City of Westminster and the Royal Borough of Kensington and Chelsea, and parts of the boroughs of Hammersmith and Fulham, and Camden.

There had been little in the data to foreshadow this sudden growth, said Henry Faun, partner at Knight Frank Middle East.

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“There were some spikes in the market back in 2016 revolving around the EU referendum and Brexit, but since then things have been relatively steady,” he said. “The fluctuations were more in 2020 during lockdown.”

The same applies to offers accepted which, like prime prices, have gradually increased since March last year when the pandemic was declared, upending markets around the globe.

Yet the steady recovery from 2020’s initial Covid-induced shock has morphed into the “most active point in the market at any one time in the last five years”, said Mr Faun.

With many overseas buyers unable to fly to London owing to pandemic restrictions, domestic buyers have sustained the market for the past 18 months.

These buyers have acted like a centrifugal force, stretching London prime out of its traditional home within the SW1 postcode, and into areas of east and outer London not traditionally viewed as premium.

“A very large proportion of the prime central areas, those around Hyde Park, for example, do rely on overseas buyers,” said Mr Faun.

Their absence, along with the newly beefed up pound, has kept prices in and around Hyde Park “in check”.

Overseas buyers looking to London outer prime

The heat of pent-up overseas demand is now starting to be felt, however, and the inquiries aren’t solely about prime central London.

The trend was highlighted by Stuart Leslie, international sales and marketing director at property developer Barratt London.

“We have seen a lot of interest in east London, particularly from young professionals, in Canary Wharf – wanting to have a little bit better value for money than they will be getting in the west [of London] – and that value proposition has brought over [international] investors as well,” he said.

“So, whereas three or four years ago we wouldn’t have necessarily seen people from the Middle East investing in east London, now we’re seeing quite regularly both individuals and even family offices and institutional investments looking for real value for money and that strong rental demand, which is really driving the good rental yields” in the area.

Wherever this demand is focused, it is welcomed by Mr Faun, whose team has been increasingly busy.

“Prospective Middle Eastern buyers coming into the market are picking up the phone and sending through web inquiries or perhaps speaking with myself or the team in the Dubai office and saying: ‘We’re looking at buying real estate in London. Can you help us?’”

By Tim Kiek

Source: The National News

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China update – increased interest in UK resi buying and a demand bounce-back

Interest from China in the UK property is bouncing back, according to experts on the Chinese buying market in Britain.

Domenica Di Lieto, chief executive of Chinese planning and marketing consultancy, Emerging Communications, says a new round of restrictions designed to cool down China’s housing market is leading to growing interest in UK residential property buying despite the stamp duty holiday ending on September 30.

In total, over 300 new regulations have been introduced across Chinese municipalities, designed to limit investment in housing. Measures range from increases in loan rates to the issuing of official house buying coupons.

“The introduction of new regulations was understandable given the soaring prices seen in some areas such as Shenzhen, that witnessed increases in premium property values of 53% in less than four years. The damping measures are working with property sales growing weaker,” Di Lieto claimed.

“The result is more investment focus on overseas property that provides better returns, with the UK being a central point of interest.”

Di Lieto says that, among China’s wealthy middle classes, there is no shortage of funds to invest.

“They currently hold more than £27 trillion in investable assets growing at an annual rate of 13%, according to a report by China Merchants Bank. By 2025, it is predicted the amount will reach £33.5 trillion,” she said.

“China’s economic growth will continue to fuel demand to invest while at the same time generate greater numbers of high-income families wanting to diversify financial portfolios abroad. Bloomberg predicts economic growth of 8.9% for this year.

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“While this is not as fast as pre-pandemic levels, it is significant, and more than enough to fuel sustained demand for overseas property acquisition.

Another positive factor in maintaining Chinese interest in UK residential property is relaxation of overseas investment regulations, Di Lieto adds. She says there are significant signs that rules on savings will be loosened, with the Chinese Government giving approval in June for record amounts to be allowed out via an officially sanctioned investment quota.

“There has also been the launch of Wealth Connect, a programme that allows households in southern China to invest overseas,” Di Lieto said.

Terry Pan said: “Liberalisation is happening in front of our eyes. This is a very interesting time.”

Ye Haisheng, a Chinese official at the State Administration of Foreign Exchange (Safe), has said the Government is looking into whether the current $50,000 allowance for spending on travel and education could be extended to overseas investments.

Although the amount itself is not enough to have a major impact on house buying, Di Lieto says it is an important sign that Chinese authorities are relaxing financial restrictions on the outflow of money.

“Analysts predict a gradual move to liberalisation. While this is positive news in terms of opening official channels for property investment, it does not signify the closing of the options currently being used to fund Chinese buying of UK property,” she explained.

“The significance of deregulation is that it will simplify purchase and add further momentum to buying.”

Another factor in buying British housing, according to Di Lieto, is the new Non-Resident Stamp Duty Land Tax (NRSDLT).

“The new charge is not influencing Chinese buying interest. The increase in house prices of 13% during the pandemic, with new rises predicted for the future, more than offset sentiment over the 2% government levy,” she insisted.

She also claimed that some Chinese buyers will be able to avoid the tax. To do so, buyers have to remain in the UK for at least 183 continuous days in the year before purchase. Buyers can arrange buying as part of a half year stay in the UK stay, and with a high proportion of Chinese buying being for students, many families look at the potential to use university attendance as a way to circumvent the new charge.

“The high number of expat buyers will also be able to avoid the tax,” Di Lieto said, who said the new charge should also be seen in the context of the amounts set in other countries. “For example, the duty in Singapore is 20%, and in New York 15% is taken on sale alone. Many otherwise attractive locations have much higher property buying tax rates than the UK.”

Di Lieto says sellers can also look forward to a significant medium-term lift to Chinese buying. The latest report by Asian real estate technology group Juwai IQI, predicts activity will increase rapidly once international travel out of China resumes fully.

The travel trade in China believes tourist, and other international travel, will resume on a large scale in the first quarter of 2023 – not including student travel to study abroad that has already returned to normal levels.

“Still the biggest Chinese barrier to purchase in the UK comes from sellers themselves,” Di Lieto says.

“The reluctance to fully understand and communicate with Chinese buyers on their terms is a persisting trend. The majority of developers and agents opt for sales strategy based on overlaying Mandarin translations onto sales communication that works in the domestic arena, but generates little or no resonance among Chinese prospects who demand a different sales journey.

“One based on building trust, high levels of information, and assurance that is a far cry from the quick or hard sell.

She said there are a notable few developers and agents that have been prepared to learn, and tune sales strategy appropriately.

“But until the majority are prepared to commit to understanding and serving prospective buyers from China, the interest shown in buying in the UK will to a large degree, remain just potential, and sales will be lost to locations better prepared to engage with the Chinese market.

Chinese residential investment – will it be back?

Talking of the Juwai IQI report mentioned above, it aimed to analyse whether Chinese interest in residential property will bounce back now that restrictions have eased.

The report for Q3 2021 includes the latest insights on: tantalising news on Chinese capital controls, Chinese participation in UK education and the impact on property, how slower property markets in China push buyers to the UK, the UK market outlook and impact on Chinese buyers, and the impact of the non-resident stamp duty on Chinese buyers.

Georg Chmiel said of the report: “It looks at if and how quickly Chinese demand for UK property will bounce back. Our base case is that buyer activity will rapidly increase once travel fully resumes. Buyers eager to get on with long-postponed transactions will push investment levels higher.

“After this initial rush to transact is past, transaction levels will likely fall back and resume a more sustainable level of growth.

He added: “The appetite for overseas property is increasing among Chinese consumers and investors. They are turning their eyes abroad because of increasingly restrictive local property markets in China and relatively poor prospects for economic growth.

“Chinese demand for UK property has remained remarkably stable since 2014, with the UK’s market share of Chinese buyer enquiries changing just 0.4% in that time.”

He said the UK’s world-renowned education sector is the primary driver for the stability of Chinese demand for UK property.

“Chinese households will hold US$46.3 trillion of investable assets by 2025 and have a demonstrated preference for property investment. That gives them both the means and desire for investment in the UK,” Chmiel said.

“Signs of capital controls liberalisation are tantalising for UK real estate markets. They signal the possibility that more of China’s wealth may find its way to the country in the years to come.”

He added that the UK’s strong price performance attracts buyers from China and looks likely to continue. The new non-resident stamp duty is unlikely to deter many buyers, as the UK still offers relatively affordable prices and associated costs.

“For all these reasons, the desire for UK property has not fallen, even though the pandemic has made acting on that desire more difficult. As travel resumes and obstacles fall away, we expect a resumption of Chinese buyer activity in UK markets.”

By Matthew Lane

Source: Property Investor Today

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Overseas buyers’ interest in UK property soars again

There has been a significant surge in the number of overseas buyers and tenants expressing interest in UK property, the latest figures from property agent Knight Frank show.

So, why is demand for property rising among foreign buyers and tenants? And what implications could this have for the UK property market? Let’s take a look.

Why has overseas demand for UK property risen?

According to Knight Frank, almost a quarter (24%) of all web users looking at sales and lettings properties in the UK in August were based overseas. This is the highest the overseas figure has been since before the pandemic in January 2020. And it’s up on the average figure of 17% in the 18 months to June this year.

Further, the data shows that the number of overseas web users looking at lettings in August exceeded the number of users based in the UK for the first time since the beginning of 2020.

There are two main factors driving this increased demand. The first is a high number of overseas students who are beginning their property search ahead of the new academic year. The second is returning corporate tenants as more sectors and offices reopen.

Tom Bill, Knight Frank’s head of UK residential research, said: “International demand is undoubtedly building as the feeling grows that the worst of the pandemic is behind us.”

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What can we expect going forward?

In the lettings market, Knight Frank expects tenant demand to be more evenly spread over the year than normal as foreign students receive more clarity about face-to-face study.

In the sales market, the presence of foreign buyers is patchier, but numbers may begin to increase this month.

How could the demand for UK property affect purchase and rental prices?
The recovery of overseas demand, along with a relative scarcity of available properties, means that we might see house prices and rents go up in the foreseeable future.

Indeed, we are already seeing price increases in some parts of the country. Recent figures show that rents in London rose for the third month in a row in August after a year of decline. Further, research shows that the average monthly rent in the UK is now above £1k for the first time in history.

Property values, just like rents, are also expected to go up. For example, Knight Frank anticipates a 2% rise in prime central London by the end of the year. Next year, they think the rise could be as high as 7% as even more overseas demand kicks in.

What help is available for buyers and tenants?

Increased overseas demand for local housing and the resultant rise in purchase and rental prices means that prospective buyers and tenants might need bigger deposits in the near future.

If you intend to rent and rising prices mean you are having difficulty raising your tenancy deposit, there are ways to get help.

Your local council may offer a rent deposit scheme or rent guarantee scheme. This can help you cover the cost of your tenancy deposit. Additionally, you may be able to claim a Discretionary Housing Payment from your local council to help with your deposit.

Help is also available for those struggling to afford a mortgage deposit in light of rising property prices.

For example, a Lifetime ISA, which you can open using investing solutions providers like Nutmeg, can speed up the process of saving for your deposit. You can save up to £4,000 every year and receive a government top-up of 25%. You can then use the money towards a house deposit.

There is also the Help to Buy: Equity Loan scheme. Using the scheme, you only need to raise a 5% deposit. The government then supplements it with a loan worth up to 20% of the property value (or up to 40% in London).

By Sean LaPointe

Source: Fool

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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.”

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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.

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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Middle East buyers step up UK property purchases

Buyers from the Middle East are playing a more active role in the UK property market, snapping up 16 per cent of all real estate by volume sold to overseas buyers in the first three months of this year, according to property consultancy Knight Frank.

The proportion of properties bought by Middle Eastern investors was lower than those from Europe (who made up 59 per cent of overseas purchasers) and Asia (18 per cent), but was the highest since the onset of Covid-19 and is expected to tick up further when travel restrictions ease, the consultancy said.

“The relaxation of international travel rules will provide a boost for the prime central London property market but prices are on the up anyway,” Henry Faun, a partner at Knight Frank’s Middle East private office arm, said.

“Things are picking up where they left off after the general election in December 2019 and Middle Eastern buyers can recognise good value after five or six years of falling prices [in central London].”

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Property prices in prime central London areas rose for the first time in five years during the first quarter, but only marginally – by 0.3 per cent, the consultancy said.

Prime central London prices had declined by 20 per cent between 2014 and the first half of last year, and “looked ripe for recovery in early 2020 after five years of price falls”, Frances Clacy, associate director at consultancy Savills, said last month.

“The pandemic put that on hold but does not appear to have dented the appeal of the city’s very best residential real estate,” she added.

Savills is forecasting 3 per cent price growth for prime central London residential prices this year, followed by a 7 per cent hike next year. Over the next five years, it expects prime central London prices to grow by 21.6 per cent.

“It now looks as though buyers are themselves calling the bottom of the market,” Ms Clacy said.

Buyers of UK properties in foreign currencies had already seen the discount available to them in other currencies being eroded by the rally in the UK pound, Knight Frank said.

The combined price and currency discount for buyers of prime central London property in US dollars, compared to the period before the Brexit vote took place in June 2016, fell to 19.2 per cent at the end of May, from 24.3 per cent at the end of last year, Knight Frank said.

The pound has gained more than 12 per cent against the US dollar over the past 12 months to $1.4109 at 12.25pm UAE time.

Transactions for prime central London properties soared in March, as buyers attempted to complete deals before two deadlines – the end of a stamp duty (a UK property tax) holiday (although this was subsequently extended until June) and the introduction of a 2 per cent surcharge for overseas buyers from April.

This led to the highest number of offers being accepted and new prospective buyers being registered in London for almost 10 years, according to a report by Emirates NBD’s private banking arm.

“There have been some encouraging signs in the prime central London market over the first months of the year and the return of international travel and therefore buyers should have a galvanising effect on prices,” the Dubai-based lender said.

By Michael Fahy

Source: The National News

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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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