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Property market investment is crucial to economic recovery

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jamie Johnson is chief executive of FJP Investment

By Jamie Johnson

Source FT Adviser

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Overseas buyers’ interest in UK housing market rising

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

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

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

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

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

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

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

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

By Gary Adams

Source: Mortgage Strategy

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London house price growth to hit 8% in 2022

London’s millionaire mansions are set for ‘a long overdue recovery’ in house price growth, agents have predicted.

A report by real estate advisory company, London Central Portfolio, has indicated the prime central London residential market has continued to witness positive signs over the past three months.

This is despite the uncertainties caused by the Omicron variant and some overseas property investors not yet travelling to London.

The data, provided by Bricks & Logic, suggested that average prices in the area have increased by 1.7 per cent. The February 2022 prices have now surpassed levels seen before the pandemic by 0.6 per cent.

Residential property in PCL yields have also spiked, the report said.

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The average annual rental return for a flat in PCL was 3.4 per cent in February 2022. However, one must take into account that PCL has a significantly higher proportion of flats (87.5 per cent) than houses (12.5 per cent), which has driven the overall average.

According to Foxtons, the average flat price in central London is £1,091,708, while the average house price is £3,253,175.

Andrew Weir, chief executive of London Central Portfolio, said the current climate pointed “towards the investment opportunities within the flats sector.

“We have seen evidence of buyers seeking to acquire small apartments within prime addresses, as many professionals return to the capital.

“The gradual lifting of international travel restrictions and the full return of overseas investors will almost certainly see the performance gap between houses and apartments draw closer together once again.”

PCL is forecast to see particularly strong activity over the next 24 months based on an anticipated return in travel from the world’s high-net worth individuals and a severe undersupply of homes for sale and rent.

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Tom Bill, head of residential research for Knight Frank, told FTAdviser: “The return of international buyers has been erratic, it can be a bit more seasonal, so you might find more international buyers returning in April or May time…the story of prime central London this year is a long overdue recovery.”

Two separate reports, published by Savills and Jones Lang LaSalle, also predicted similar increases of 8 per cent and 7.5 per cent respectively.

The greater London market, which excludes the prime properties in central London, has outperformed the central areas of the capital over the past 24 months, with prices increasing by 9.4 per cent since February 2020.

Bill added there has been an increase in people looking for space in greenery, “so house prices in Dulwich or Wimbledon are performing more strongly than Knightsbridge, Chelsea or Bayswater”, he said.

However Bill explained: “London has an affordability problem… You have the race-to-space being layered onto that during the pandemic. This will start to recede, but that affordability squeeze is still going to keep driving people out of London.”

When talking about the general scope of house prices in the future, Bill mentioned: “I would expect the regions as a whole to outperform London, in terms of house price growth over the next five years.

He also predicted: “The Midlands is going to do well in terms of house price growth, and generally speaking you’re going to have a broad ‘levelling up’ of house prices over the next five to 10 years.”

By Calum Kapoor

Source: FT Adviser

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UK property market still attractive to overseas investors

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

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

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

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

Buyer behaviour

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

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

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

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

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Brokers’ considerations

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

The changing landscape

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

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

By: Gareth Morgan

Source: Mortgage Solutions

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Hong Kong developers are betting on London for its high rental yields amid BN (O) visa scheme, says K&K Properties boss

Hong Kong developers are increasing their investments in London, betting on higher yields as more Hongkongers head to the UK under the British National (Overseas) visa scheme.

There has been a surge of Hong Kong money going into the UK’s property markets in the last two years, according to Kino Law, chief executive officer and chairman of K&K Property Holdings.

This is probably because of the British capital’s higher rental returns compared to other gateway cities, and the relaxation of immigration policy for BN (O) passport holders, he said.

“The trend is [mainly] due to diversification and to create a more healthy investment portfolio to help the developers to fund their projects and create a more healthy balance sheet,” said Law.

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“Hong Kong developers, from my perspective, always very [much] have an international and global perspective.”

Hong Kong developers that have invested in London included Sun Hung Kai Properties, CK Asset Holdings, New World Development, Link Reit and Far East Consortium.

BN (O) status was extended to Hongkongers born before the city’s handover to China on July 1, 1997. As many as 5.4 million Hongkongers, including their dependents, are believed to be eligible for the BN (O) visa scheme.

Under the programme, people from Hong Kong can apply for an initial visa lasting up to five years to live, work and study in the UK. The visa scheme, introduced following the imposition of Beijing’s controversial national security law for Hong Kong in June 2020, allows for an easier path to British citizenship.

K&K has a portfolio of properties in London’s West End worth about HK$4 billion (US$513.6 million). Law sees this potentially expanding by about 50 per cent over the next five years.

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The developer recently made its fourth acquisition of landmark commercial property in Central London within the last two years. It paid £66.1 million (HK$697 million) for 15 Adam Street, an office building with a retail component.

K&K’s London portfolio has an overall occupancy rate of 93 per cent. Most tenants are international firms and tech companies.

The London portfolio currently generates £17.3 million in rental income each year, Law said. That translates to a yield of 4.6 per cent.

In comparison, commercial assets in major European cities are trading at around 3 to 3.5 per cent, while those in Hong Kong and Singapore are trading at 2.5 to 3 per cent, he said.

The West End – traditionally London’s theatre district – has attracted a number of tech start-ups as well as established international players in recent years. Google just bought its second headquarters there, next to Endeavour House, which belongs to K&K, Law said.

Office leasing inquiries in the area have increased 20 per cent in the last two months, as the Covid-19 situation improved, Law said.

He also believes there is a currency benefit to investing in the UK. The pound sterling is “trading well below the long-term average”, with a “15 to 20 per cent upside”.

The biggest obstacle to the first of K&K’s acquisitions in London was lack of credibility, said Law.
“The local UK market just didn’t know us well enough to trust us,” he said. “When we first purchased Orion House in 2019, I was thankful that I met the managing director from [the largest specialist Central London office fund] Welput in London and he believed in us enough to complete the transaction.”

The Hong Kong market will continue to be K&K’s main focus as it continues to participate in the government land sale market, said Law. K&K’s commercial investment portfolio in the city is worth about HK$7 billion.

“In the next five years, we aim to reach total assets under management of HK$20 billion, with an asset allocation of 30 per cent overseas investment and 70 per cent Hong Kong investment,” said Law.

By Lam Ka-sing

Source: SCMP

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Prime London properties set for further recovery as Hongkongers, local investors flock back to city centre as Omicron wave peaks

Global investors, including those emigrating from Hong Kong, are flocking back to London’s prime areas to snap up properties as the world gradually moves on to living with Covid-19.

Several districts in London are recording higher property sales in recent months, according to real estate agents as workers return to their offices amid easier travel rules and a top health official said the city may have seen the peak of the Omicron wave.

Transactions have increased by 4.1 per cent per month on average across the capital over the last one year, according to Bective, a London-based property agency. Sales in the firm’s prime central London offices have also gained by 24 per cent on average.

“There are signs that momentum is starting to build,” said Marc von Grundherr, director of Benham and Reeves.

The green shoots of recovery are showing after the industry was battered by months of upheavals since the pandemic broke out in early 2020, slamming demand from foreign investors. Office workers, enabled by flexible working arrangements, opted for properties outside the capital for their bigger spaces.

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Hong Kong-based buyers, including those moving to the UK under the British National (Overseas) visa scheme, are likely to be among the most active investors. As many as 322,400 of these emigrants are likely to buy homes in the next five years, the UK government estimates.

As of the third quarter of 2021, about 88,900 Hongkongers had applied for the visa scheme since its introduction in January, of which 76,176 had been approved, according to official data. The scheme, which offers an easier path to citizenship, was London’s response to Beijing’s imposition of a national security law in June 2021.

“Prime central London has always been a destination of choice for foreign buyers, Hongkongers included,” von Grundherr said. “Many of those that are migrating with the help of the BNO visa scheme are doing so at slightly lower price thresholds.”

Hong Kong buyers typically fork out around £700,000 (US$947,000) to £800,000 for their UK homes, he added. They tend to gravitate toward the Highgate and Hampstead areas in the northern part of London, which offer a greater choice of large family homes, schools and an established Hong Kong community, according to von Grundherr.

The upscale districts of Kensington and Chelsea in central London are also popular among Hong Kong-based buyers, who make up 42 per cent of the active clients at London Central Portfolio, according to Andrew Weir, its chief executive.

“We recently acquired a pied-à-terre in Chelsea, close to the river with off-street parking, on behalf of a Hong Kong client,” he added. “We also have Hong Kong clients looking for family-sized homes,” he said, including one who already owns London properties and plans to retire to the city permanently.

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To be sure, the public health crisis is far from over. While prime central London values have risen and activity levels have picked up significantly in recent months, the Omicron variant is likely to delay the market recovery, according to Frances Clacy, research analyst at Savills.

“The renewed Covid-19 uncertainty adds an unwelcome additional layer of doubt that is likely to push the expected bounce in values further into 2022,” she said. “We believe it’s a question of when, and not if, prices rebound, particularly as more pent-up demand builds.”

Britain recorded 141,472 new cases on Sunday, versus 146,390 on Saturday, according to official data, while the number of new deaths fell to 97 from 313.

Last week, the British government said fully vaccinated travellers will no longer be required to take a pre-departure test before arriving in the country. Meanwhile, London “may well be past the peak,” Kevin Fenton, London’s regional director for public health, said on Sunday, referring to the Omicron wave.

Prices in the London region rose 6.2 per cent in October from a year earlier, versus 2.8 per cent in September, the UK statistics office said last month. Despite rising at the slowest pace among nine regions, average house prices remain the most expensive at £516,000, it said.

By Cheryl Arcibal

Source: SCMP

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What is the top UK market trend from an Asian investment viewpoint?

Wealthy Chinese investors have long been reliable investors in the market, and have frequently looked to the UK, specifically London, as a stable and reliable point for investment.

Twice as many homes were sold in Central London for more than £15 million in 2021 as in 2020, the latest figures revealed, and it is anticipated that Russian and Chinese buyers will lead the way in the capital in 2022.

But, from a Chinese and Asian investment perspective, what is set to be the number one trend in the UK residential property market in 2022?

In a thought leadership article collated by 11K Consulting, a leading UK-based China-focused property PR agency, predictions have been made by eight China/Asian respected industry experts across the tax, legal, immigration, wealth management and property sales sectors.

We explore the main findings below.

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Education, education, education

It is predicted that in the aftermath of the pandemic, education will remain a key driver for Chinese and Asian buyers of UK residential property. Security is also becoming a priority, and there will be a continued increased use of digital tools for property viewing with the ongoing global travel restrictions caused by Covid.

Rafael Steinmetz Leffa, executive director of GWM, said: “From clients based in mainland China, the main trend I have witnessed is an actual willingness to move to the UK. There has been an educational reform causing challenges in obtaining private tutoring or access to international schools. This reform is causing a lot of investors to consider moving to the UK which is known for its education.”

He added: “I have also witnessed an increase in the demand for financing products for investments made in real estate by these investors. This increased need for mortgages and other forms of lending is certainly becoming more prominent amongst buyers who in the past would quite often disclose and promote the fact they paid in cash. This, in turn, changes the general habit of these investors.”

Catharine Che, director, head of Asia department at Sotheby’s Realty, said: “The number one trend would be increasing investment with [a] budget around £500,000. Target cities are London, Birmingham, Manchester, Oxford, Cambridge and York. In terms of home relocation, the budget would be around £5 to £10 million. Target houses located in London and London suburbs with good living environment and great schools.”

Joanne Chung, senior immigration solicitor at Woodcock Law & Notary Public, said: “We have seen many overseas buyers interested in new build properties, although there is a growing number of sourcing agents that offer a full project managed refurbishment service including HMOs. We continue to see steady growth in instructions, although numbers have reduced since the end of the stamp duty holiday.”

She added: “We expect demand from Asian investors for UK property to continue to run strong into 2022, as the shortage of homes remains a serious problem for the UK housing market. Young professionals are likely to look for rentals, which highlights a great potential for rental investment returns in major cities. We believe rental prices will grow even stronger as the UK market continues to grow alongside increased demand.”

Dr. Ian Zhu, head of China outbound investment – China Britain Services Group, Grant Thornton UK LLP, said: “My observation is the security became one of the major concerns. Some new buyers dare not to live in the house because they feel that the windows and doors can be easily broken into while high-security apartments the visitors have to go through various security checks.”

He went on: “Another trend for buy-to-let is that luxurious apartments are very popular with Chinese students whose parents are very supportive to let them stay in a two or three bedrooms apartment without sharing with others because of concerns regarding Covid-19 and offering enough space in case of another lockdown.”

Steven Landes, managing director of Hawksford, said: “The number one trend will be increasing competition from local buyers for the new UK properties that buyers from the Chinese/Asia markets tend to favour. This increasing competition is coming at a time when labour and material supply problems caused by Brexit and Covid have delayed many new developments restricting the supply of new properties.

He continued: “At the same time local buyers from the UK are seeing rock bottom interest rates making mortgages even more affordable for those whose incomes have been unaffected by Covid. This has little effect on Chinese/Asia investors investing in the UK residential property market as they tend to be cash buyers.”

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Searching and comparing

Amy Hon, senior partner – strategy at New Vision, said: “We expect the demand of the Chinese market on UK property investment and overseas investment will become more complicated in the year ahead, meaning Chinese clients will expect higher standard service from a specialist organisation.”

She added: “Having dealt with many Chinese clients, we have observed a noticeable trend. Clients used to query on a few properties, but they have become more eager to search and compare a wide range of properties nowadays. As an organisation providing service for buyers, our solid relationships with major developers and leading estate agents in the market allows us to provide a wide range of options and the most suitable and optimal solutions for our clients.

She continued: “Multiple property options, remote viewings, professional analysis reports and overall comprehensive planning from a specialist organisation like New Vision are the advantages that clients will benefit from to make a sensible and realistic investment decision even without a physical property viewing.”

Caryn (Shu Hui) Toh, associate solicitor at Ronald Fletcher Baker, commented: “Investing in digital marketing, high quality photographs, virtual tours and short film of the neighbourhood for example can enable buyers to have a true sense of where they will be living. The photographs would be targeted to the consumers’ appetite and the idea is that this will positively help them in their decision-making.

“Online platforms will also play a huge part in changing how investors, buyers and sellers navigate the residential property market and businesses. Gone are the days where you have to be ‘local’ to purchase properties. Of course, not forgetting that building relationships is still important.”

Lastly, Parikshat Chawla, director of industry relations at Pacaso, said: “The biggest trend I’ve noticed recently is the inclusion of shared workspaces in new developments – both apartment and villa projects. With the work from home movement now becoming the norm, many homeowners and renters still prefer to get out of the house to get some work done or make their Zoom calls etc. in privacy. These shared workspaces are an absolute boon for anyone in such a situation.”

By Matthew Lane

Source: Property Investor Today

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Expat mortgage market growing as lenders expand offerings

Buyers from overseas continue to seek UK property investments, and obtaining an expat mortgage is no longer the barrier it once was.

British citizens who do not reside in the UK have been increasingly seeking loans to purchase property here, according to Dudley Building Society. As a result, the lender has enhanced its expat mortgage availability to cater for its growing client base in this field.

The firm has increased its maximum loan size for expats from £1 million to £1.5 million, which will make a significant difference to the types of properties that can be purchased by those living abroad. It is also offering a two-year fixed rate expat mortgage with an LTV of up to 80% at 3.89%.

While borrowing can sometimes be more of a challenge in the “underserved” and “niche” area of expat mortgages, Dudley Building Society’s new offering aims to open up the market for more buyers. The lender has also enhanced its holiday let loan offering at the same time.

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New expat mortgage opportunities for 2022

Commercial director, Kieron Blackburn, said: “We see continuing demand from expat and holiday let customers and it seemed appropriate that we look to enhance our offering in line with our recent increase in maximum loan sizes for our standard large loan product. There are now only two other lenders who can currently match our new loan sizes for expats, and two other lenders that can match our loan sizes for holiday let mortgages.

“Dudley can be very pleased with the progress it has made this year. Thanks go particularly to our introducers for their continuing support. It is satisfying to know that as we approach 2022, the Society is in great shape to go on providing a robust proposition based on strong products, innovative solutions in underserved niche areas like the expat market and underwriting that always seeks to understand the human story behind each application. We are looking forward to being on the road next year and taking our proposition to more brokers.”

Many of the country’s mainstream banks now offer mortgages specifically for expats, alongside a number of specialist lenders. Expat buy-to-let mortgages can also be obtained for property investors living abroad.

Buy-to-let from abroad

If you want to buy a property to generate rental income while you live abroad, you’ll need a “buy-to-let expat” mortgage. But property you purchase to be your primary residence will require a “residential expat” mortgage.

To apply for either, you’ll need a substantial deposit (ideally held in a UK bank account) and evidence of the deposit’s source. You’ll also need proof of residency (for the past three years) and proof of income for a residential mortgage. For a buy-to-let mortgage, borrowers will be assessed on their expected rental income.

You should also take the repayment currency into account. The Mortgage Credit Directive (MCD) means that lenders must monitor exchange rates to ensure foreign currency loans remain affordable for the borrower. Some specialist lenders also have an “approved currency” list.

Where are overseas investors buying?

According to the Centre For Public Data (CFPData), who compiled the research from HM Land Registry, more investors than ever are branching out from the traditional London market. While a decade or more ago, London was the go-to spot for a lot of foreign investment, many are seeing the value of backing new areas elsewhere.

The data shows that, in particular, Liverpool, Manchester, Salford and Leeds are attracting bigger numbers of overseas investors now. All of these areas are notable for their regeneration, redevelopment and investment overhauls in recent years, making them a genuinely attractive alternative to pricier London. The CFPData believes most of the foreign investment in these cities is in flats, supporting the thriving rental demand in these areas.

By Eleanor Harvey

Source: Buy Association

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Kensington and Chelsea tipped to lead UK property market in 2022 as overseas buyers return to London

The return of overseas buyers means expensive central London houses should lead the British property market next year when it comes to price growth, according to estate agent Winkworth.

Prime London real estate suffered during the pandemic as overseas buyers fled and some Londoners moved out of the capital. But international buyers are now returning, with booming demand in areas like Kensington and Chelsea.

Winkworth Chief Executive Dominic Agace said demand for prime central London properties was up 44% on pre-pandemic levels in the last quarter, compared to just 4% for suburban properties.

Agace said on the company’s podcast: “We will see the return of prime central London. It has been most affected by the pandemic and it hasn’t gone anywhere for the past six years. There will be significant pick up.

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“We are likely to see six to seven per cent growth next year. The country markets will continue at a lower rate, driven by a lack of supply, at around four to five per cent, with suburban London staying steady at three to four per cent, apart from the super suburbs that generally outperform.”

House prices have been rocketing during the pandemic as people search for bigger properties to accommodate the shift to working from home. Supply has failed to keep up with demand.

Prime properties in central London boroughs like Camden and Kensington have failed to keep pace with national price growth but the market is starting to pick up.

Last month estate agent Knight Frank said prime central London prices had risen by 1.1% so far this year thanks to the return of rich international buyers. Prices have risen consecutively for the last six month — the first time that has happened since before the Brexit referendum.

By Oscar Williams-Grut

Source: Evening Standard

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More Overseas Buyers Eye UK Property Market

With increasing numbers of overseas buyers looking toward UK property, we look at the reasons for this rise and where to look.

Increasingly, UK expats and foreign nationals have been looking towards UK property for investment purposes. Those living and working in the US, Canada and the Far East are facing strong investment prospects, emboldened by a weaker pound, the availability of foreign national mortgages, confidence in the UK housing market and economy more generally, and a vaccine programme that promises to keep foreign travel a distinct possibility.

What We’re Seeing – UK Expats and Foreign Nationals Look to UK Property.

‘The number of UK expat and foreign nationals buying in the UK with the help of UK expat and foreign national mortgages was incredible over the course of the pandemic’ says Stuart Marshall. ‘But there’s no sign of that slowing down in our new post-pandemic world either. Anecdotally, we’ve seen a huge surge in the numbers of enquiries talking about obtaining a UK mortgage while being paid in a non-sterling currency. As restrictions have eased, we’ve seen a proportional rise in enquiries for UK mortgages coming from UK expat and foreign national investors. And many of these are looking at around the £500,000 mark, indicating that investing in the UK property market is no longer just for the super-rich working overseas. Further, entry-level investors are also increasing their volume of enquiries in a bid to get a slice of the lucrative UK investment market.’

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There are many interesting things to note when looking at the enquiries we’re receiving. First off, investment in the UK property market remains strong from the Far East. This is no doubt due, in part, to the UK’s BNO passport scheme in Hong Kong, which is continuing to contribute to the steady stream of foreign investment in the UK. New build properties are also a popular choice with UK expat and foreign national investors at the minute as they try to bypass supply issues and capitalise on the cheaper cost of newbuilds. Another factor to note is that investors are seeing the opportunity presented by city centre flats. While these types of property are not as popular as they once were in the property market, they are growing in popularity again in a rental market which is struggling for stock. The more affordable cost of these properties coupled with the rising rental cost is the perfect combination for a quality investment using a UK expat or foreign national mortgage.

Lastly, London continues to maintain popularity with overseas buyers, with lower prices in the capital proving to be an incentive for foreign investment. Prices are once again rising in the capital and so is rental growth, meaning that it’s an excellent time for UK expat and foreign national investors to buy an investment property in London.

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After the terrible effect of the pandemic on London’s rental market, prospects are starting to look up for UK expat and foreign national buy-to-let investors looking to the capital. ‘As we’ve said, many of the enquiries we’re getting are about London property. It’s a tried and tested route for many UK expats and foreign nationals and somewhere they’re familiar with. The pandemic has affected rental stock massively, with 57% fewer homes available to rent in the capital in August 2020 compared to the previous year. This lack of available homes is putting upwards pressure on rental prices with London rents predicted to recover to their pre-pandemic level by the middle of 2022.’

‘Crucially for UK expat and foreign national investors, the sales market in London remains inviting, with prices far lower than you would typically expect in the capital market. There were 14% fewer people looking to buy in London in August 2021 compared to in 2019’s pre-pandemic market. This is contributing to a stock increase in properties for sale in the capital (19% higher in 2021 compared to the same time in 2019). This stock surplus is making sure that prices stay low – a great thing for UK expat and foreign national investors looking to capitalise on the rising rents by using a UK expat or foreign national mortgage.’

North West.

‘The North West is another area that we recommend to many UK expat and foreign national investors looking to buy in the UK. For those that are unsure about where to buy, the North West presents a proposition that’s hard to resist.’

One area in the North West that is of particular interest is Manchester. In recent studies, it’s been found that the number of properties available to rent in Manchester has fallen below 500. For a population of 500,000, this means that securing a rental property is incredibly competitive – a good thing for UK expat and foreign national investors who own a rental property in Manchester. As a consequence of the low stock, properties in Manchester are renting thick and fast. In the third quarter of 2021, there were more than 2750 lettings agreed in Manchester, 10.3% higher than we saw in the same period of 2019.

‘There is a great opportunity for UK expat and foreign national investors in Manchester at the minute. Zoopla is reporting that the average rental price in Manchester city centre currently sits at £1,505pcm, around £500 higher than the UK average. Average rents for studio and two-bed apartments have risen 6% in the last 3 months as a result of the constraint on supply. The average rental yield in Manchester now sits at 8.55%, more than double the UK average.’

The figures in Manchester speak for themselves so it’s no surprise that many UK expats and foreign nationals are making enquiries about mortgages for properties in Manchester and the rest of the North West. With so many UK expats and foreign nationals looking to invest in the UK with a UK expat or foreign national mortgage at the moment, it’s important to be aware of the areas that are most in demand in order to maximise the profitability of your investment and ensure financial stability for years to come.

Source: EIN News