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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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Hong Kong Buyers Rush For Properties In The UK

There has been a significant increase in the number of people from Hong Kong buying property in the UK, estate agents report.

Research shows that Hong Kongers became the fifth largest foreign investors in central London as of last August and have been driving up prices in some popular districts outside the capital.

Some people are investing in the UK’s buy-to-let market, while others are making preparations to move to the UK to live.

A visa scheme to allow Hong Kong residents to come to the UK opened almost four weeks ago, with some 300,000 people expected to apply.

The visa, which is open to holders of a British National (Overseas) passport and their immediate dependents, will offer a fast track to UK citizenship.

The UK launched the new visa after China imposed a new security law.

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Those who apply and secure the visa will be able to apply for settlement after five years and then British citizenship after a further 12 months.

About 7,000 people from Hong Kong have already been allowed to settle in the UK since July, the Home Office said.

“It’s become much more of a trend in the past six months or so,” Guy Bradshaw, head of London Residential at Sotheby’s International Realty told Reuters. “I’ve certainly been involved in a lot more conversations and Zoom calls with people in Hong Kong and funds in Hong Kong.”

Marc von Grundherr, director at Benham and Reeves, said he has seen the same trend.

“I’ve had a few clients come to us and say, ‘Look, my son or my friend is wanting to invest in property because they’re thinking about coming [to the UK], but they can’t afford to do it on their own or they want to buy something slightly different – is it okay with two or three or four of them buying together?”

“That’s a change. Obviously, you always had larger investment companies who bought large amounts of stock, but we’re talking not the very, very, very wealthy,” von Grundherr said.

By MARC DA SILVA

Source: Property Industry Eye

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Hong Kong Residents Are Buying More Houses To Rent

Hong Kong residents are buying more houses and apartments to lease out for income in Britain, property agents say, a trend that coincides with what many expect to be a wave of emigration after China passed a national security law last year.

Hong Kongers became the fifth largest foreign investors in central London as of last August and have been driving up prices in some popular districts outside the UK capital.

But the new wave of buying also includes some Hong Kong residents who are pooling money to invest, a trend property agents expect to continue as more middle-class Hong Kong residents consider leaving for Britain and look to establish a source of revenue in advance.

“It’s become much more of a trend in the past six months or so,” Guy Bradshaw, head of London Residential at Sotheby’s International Realty told Reuters. “I’ve certainly been involved in a lot more conversations and Zoom calls with people in Hong Kong and funds in Hong Kong.”

The UK government is offering a new visa to Hong Kong holders of British National Overseas (BNO) passports that gives them a chance to become British citizens – a change it made after China’s national security law for Hong Kong.

A steady rental income would be useful in applying for the citizenship, as the BNO holders need to prove they can provide financial support for themselves for at least six months.

London estimates that over 300,000 Hong Kong residents could emigrate over the next five years, and Bank of America expects Hong Kong residents moving to Britain could trigger capital outflows of $36 billion in 2021.

While Hong Kong residents have long been active buyers of homes in Britain, real estate agents say more recently there has been increasing interest in older apartments and houses as rental assets.

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Hong Kongers have an affinity for real estate investment, with property prices in the Asian financial hub among the most expensive in the world.

Alan Wan, 38, who owns 13 residential properties in Britain, launched classes in Hong Kong two years ago – at the height of anti-government protests in Hong Kong – aimed at potential investors in properties in and around Manchester.

So far, his “UK Property Owner Association” class has attracted around 1,500 students. Enrolment spiked in the second half of last year after Beijing imposed the national security law.

One of Wan’s students, 30-year old Isla Kwok, who moved to Manchester in late January waiting to start a degree, is using the rental income she receives from a terraced house bought in 2019 to finance the cost of renting a smaller flat and mortgage payments.

She plans to re-mortgage her first property to buy a second one this year after getting a residence permit, as mortgage interest rates will be much lower.

“Once you’ve started your first property, it’s much easier to create more income to ease the financial pressure of living here,” Kwok said.

Wan said most of his students bought their properties individually, but he also had some who pooled money to buy in London.

Marc von Grundherr, director at realtor Benham and Reeves in London, said he has seen the same trend.

“I’ve had a few clients come to us and say, ‘Look, my son or my friend is wanting to invest in property because they’re thinking about coming (to Britain), but they can’t afford to do it on their own or they want to buy something slightly different – is it okay with two or three or four of them buying together?”

“That’s a change. Obviously you always had larger investment companies who bought large amounts of stock, but we’re talking not the very, very, very wealthy,” von Grundherr said.

Reporting by Clare Jim in Hong Kong and William James in London

Source: Reuters

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What Do The UK’s High House Prices Mean for UK Expats?

With UK house prices at their highest since 2017, we look at where this growth is most concentrated and what it means for UK expats looking to invest.

According to Zoopla, one of the world’s leading property portals, UK house prices are nearing their highest levels in four years – an average of £223,700. As of the end of January, house price growth reached its highest since April 2017 – 4.3%. But what does this mean for UK expats and overseas buyers looking to invest in buy-to-let UK property and are mortgages as readily available as before to UK expats and overseas buyers?

House Prices Across the UK.

As predicted, the start of 2021 has seen the UK housing market continue its strong performance. This is no doubt due, at least in part, to the imminent closure of the UK’s stamp duty holiday as people rush to complete on transactions and take advantage of the potential savings. Another factor stimulating the continued upward growth of the housing market is a lack of supply coming onto the market. As an expat looking to invest in a UK buy-to-let property, there are a few things to be aware of in the current marketplace.

“Over the last few years, much of the growth in house prices is being driven by the North. In particular, Liverpool and Manchester – two cities which are really head and shoulders above the rest when it comes to investment prospects” says Stuart Marshall. “Liverpool is currently experiencing the fastest rate of house price growth in 15 years with prices up 6.3% compared to the same point last year. Unsurprisingly, Manchester is also delivering fast price growth, up 6% from this time last year.”

“Wales continues to improve as an investment prospect with its countrywide growth rate up 5.4% from January 2020. This is no doubt driven by the massive growth of major cities like Cardiff, which continue to perform well for buy-to-let purposes and are increasingly popular for expat buy-to-let investors. The improved popularity of the ‘staycation’ is also partly to thank for Wales’ promising growth as more people have started to explore living in coastal and more rural areas, and Wales has many features which really suits their wish list.”

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Where are the Hottest Regions for Investment?

“The North. The North. The North. This is what we see day in, day out at Liquid Expat Mortgages. We’ve been really singing the praises of Northern investment for a number of years now and, more and more, the figures are really showing this to be sound advice.”

In the North East, North West and Yorkshire and Humber, price growth is at a 10-year high – the highest rate since before the global financial crash (an annual rise between 3.8% and 5.4%). This rapid rise in prices is increasingly encouraged by the affordability of property in these areas – a factor that is hindering growth in Southern regions. Though London is also seeing growth – 2.9% compared to January 2020 – it pales in comparison to other investment hotspots across the country, plus entry prices are a lot higher and so can be prohibitive for a lot of investors.

The Picture for Expats Looking to Invest.

“For expats looking to invest in buy-to-let property, eyes should be looking toward the regions mentioned above. Not only are properties in these areas far more affordable than other popular areas of the UK, but prices are projected to continue growing and rental yields are also high. For expats, buying now could mean strong profits from renting your property – as consumer demand is incredibly high in Northern hotspots like Manchester and Liverpool – and good financial gains when you come to sell the property as its likely to appreciate.”

“For those expats willing to wait to invest, the near future could hold even better investment prospects. Currently, market conditions created in 2020 look set to continue through the start of 2021. This means that the number of homes available is low and demand for them is high, resulting in higher prices. But, despite a strong start to 2021, prices are still projected to slow to 1% growth by the end of 2021. For those expats who are in no rush to buy, buying in a less competitive marketplace could make all the difference for the quality of your investment.”

In the aftermath of Brexit, expat buy-to-let investors were able to capitalise on a weak pound, low confidence from domestic consumers and political instability in the UK. It’s possible that we could again see a similar set of circumstances in the coming months, as initiatives like the UK’s furlough and self-employment income support schemes come to an end. As more homes come onto the market and new buyers become reluctant to buy or invest – or even pull out of proposed opportunities – the opportunity to pick up a great deal will become more common for discerning UK expat investors.

“It’s really important to adopt a holistic view of the situation – both of the UK housing market in general and of your specific circumstances as an investor. Often, prospective investors can be too close to the situation to really take stock of their needs and what they want out of their investment. This is where an expert broker comes in as we’re able to assess your overall objectives and marry them to the right type of expat mortgage product.”

Source: Ein News

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Overseas investment into UK commercial property reached highest market share ever at 50 per cent in 2020

The share of overseas investors in the UK commercial property market reached its highest ever level in 2020, accounting for 50 per cent of the GBP44 billion total for the year.

December saw investment into the UK commercial property market reach GBP6.7 billion, more than 80 per cent above the 2020 monthly average. The industrial and office sectors accounted for more than GBP2 billion of investment each in December, driven by several high-profile office deals in London and three large industrial schemes.

John Knowles, head of National Capital Markets at Colliers International, says: “The continued interest from overseas investors in 2020 is testament to the value that is still to be found in UK commercial property. Despite all the negative headlines around the future of the office, December’s investment volumes into the sector show that there is still capital ready to invest in well located, core stock. It will come as no surprise that industrial had a particularly strong December as appetite remains unabated, and I expect that the sector will still be the most in demand well into 2021.”

The GBP2.3 billion invested in offices in December drove the annual total for 2020 to reach GBP13 billion in the sector, 27 per cent below the 2019 figure. Last year, overseas capital accounted for 62 per cent of investment into offices, up from a 58 per cent share in 2019. The largest December deal was Sun Venture’s purchase of 1&2 New Ludgate for GBP552 million at a 4 per cent yield. The next largest deal by value was Allianz Real Estate’s purchase of the Marylebone Portfolio for GBP401 million at a 4.32 per cent initial yield.

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Industrial investment reached GBP2.9 billion in December, as monthly investment volumes broke through the GBP2 billion mark for only the second time on record. The 2020 annual figure of GBP9.3 billion means that the sector’s share of all CRE investment rose to 21 per cent, up from 14 per cent in 2019 and the highest on record. December’s largest deals include Blackstone Real Estate’s acquisition of the EPIC industrial portfolio for GBP335 million, AIMCo’s purchase of the Marlin Portfolio for GBP260 million, (4 per cent initial yield) and the sale of the Metro Portfolio to InfraRed Capital Partners for GBP50.75 million (4.75 per cent initial yield).

Around GBP500 million was invested across the retail sector in December, roughly 30 per cent above the 2020 monthly average of GBP370 million and slightly higher than the 2019 monthly average of GBP450 million. Several larger retail parks traded during December with Oxford’s Templar Retail Park bought by Federated Hermes for GBP45 million at 7.25 per cent initial yield.

The alternative/mixed-use and leisure segments attracted a combined GBP900 million in December, a third below the 2020 monthly average of GBP1.4 billion. The annual total of GBP17.2 billion is around 25 per cent below both the 2019 figure and the five-year average. Nonetheless, the sector accounted for roughly 40 per cent of all activity by value in 2020.

Oliver Kolodseike, Deputy UK Chief Economist at Colliers International, adds: “Last year’s market was characterised by uncertainty, lockdowns and government stimulus and this is unlikely to change in the first quarter of 2021. However, businesses have generally adapted well to lockdown measures and the roll-out of different vaccines and ongoing government support (such as the extension of the furlough scheme and new business grants) will help the economy to rebound strongly in Q2 21.”

Source: Property Funds World

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BNO Applications to Drive UK Property Demand in 2021?

With Hong Kong residents with BNO status able to apply for a new British visa from January 31st, will this correlate with an increase in demand for UK homes?

  • From 5pm local time on Sunday 31st January, Hong Kong citizens with British National Overseas (BNO) status can apply online for the new UK visa scheme
  • The new visa will allow people to reside in the UK and, after five years, be able to apply for permanent settled status
  • With UK property already one of the most popular overseas investments for Hong Kong nationals, is there likely to be an increased focus on British property for permanent residency in 2021 and beyond?

Following its announcement in 2020, applications for the new British National Overseas (BNO) visas have now opened online.

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From 31st January, any of the near three million BNO passport holders in Hong Kong, in addition to their immediate dependents, can apply for the visa from the UK Home Office.

The new arrangements will also allow for a staggered relocation. One parent will be able to remain in Hong Kong to continue working, while the other can move with their dependents to the UK.

Naturally, anyone moving to the UK will need a place to live. And, as one of Hong Kong’s most popular overseas investments, will this now lead to increased in UK property in 2021 and in the coming years?

UK property has long been renowned for its strength and resilience, particularly during times of wider uncertainty. In 2020, amidst the backdrop of the global pandemic and Brexit negotiations, average property price growth in the UK hit a new six-year high.

For Hong Kong residents in particular, the UK has also been a popular investment destination if their children are studying at a UK university, providing a place for them to live.

London is traditionally a hotspot for Hong Kong-based investment, but in recent years the strength of the property markets in regional cities – places such as Manchester and Birmingham – has also prompted increased focus in these sectors, too.

Source: Select Property

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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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2021 UK Property Market Outlook for Overseas Investors

Generally, the UK is considered to be a very good place for Property Investors seeking buy to let properties, but changes to regulations and the property market can affect whether it is the right time to buy UK property. Covid-19 and Brexit have had a big impact on the UK economy and the property market, so if you are a British Expat or Foreign Investor looking to buy property in the UK, you should find this information useful.

Are UK Property Prices Good Value?

Following the outbreak of Covid-19 the UK property market has experienced a big shift in house prices, with the market bouncing back after the UK’s first lockdown and reaching a record high for house prices. Indeed, UK House Prices grew at their fastest rate since 2015 in November and indeed this trend is expected to continue with a very promising start expected for beginning of 2021.

Of course, high prices are not ideal for property investors, however property experts are predicting prices to reduce over coming months. One significant factor in this will be that the stamp duty holiday introduced by the UK government will expire in March 2021.

When compared to other countries, the UK has a very good rental market, with a lot of demand for renting property. Interestingly, one of the big trends that emerged from post-lockdown property searches was that more people were looking to move away from the city, to quieter areas with more space.

Investment Opportunities for Overseas Landlords

From a property investment perspective, if people are moving out of the city and looking to buy property in the suburbs, this will potentially mean that more properties close to the city centres will go up for sale. Usually, these are the areas that property investors are looking to rent out, either for students attending the local universities or young professionals who work in the city. So, this could mean that once the house prices settle, more houses in the types of areas that are perfect for landlords would be available at good value.

The other big factor that will affect the UK property market is that mortgage lending criteria has become stricter due to the economic situation, which means those people who might have been looking to buy their own property might have to rent until the economy becomes more stable again. This of course, means that there are further opportunities for landlords, with rental demand remaining high for the foreseeable future.

Unemployment rates have been increasing throughout 2020 due to the health pandemic and the job market is looking increasingly challenging, especially with the government’s furlough scheme due to end in March, at which time companies may be forced to make redundancies. So, it is going to be harder for a lot of people to get their own residential mortgage than it would have been a year ago, before the impact of Covid-19 took hold.

Is a UK Property Crash Likely?

Initially, a lot of property experts were expecting a significant crash after the mini boom after lockdown, when sales started to go through again. The introduction of the stamp duty holiday has helped the property market to stay buoyant, with lots of sales going through but when the stamp duty holiday ends, sales are likely to slow down at this point.

However, with the Covid-19 vaccine having started to be rolled out, there is a more positive expectation for the property market for 2021 and beyond, so investing now should not see any drastic house value crashes. Property investment is most successful for those looking for long-term investments, so as long as there is the demand to live in rented properties, buying investment property in the UK is still very attractive opportunity right now.

Student Housing Demand

Landlords, and potential landlords, have been wary about the impact of Covid-19 on students applying courses and living in student housing. Perhaps surprisingly, there was an increase in the number of UCAS applications for undergraduate courses for the academic year of 2020/21.

When universities re-opened in September and October, the UK news was filled with updates regarding the high numbers of Covid-19 infections throughout the student population. Many students also complained about paying course fees when much of their course had to be delivered online.

Universities have been worrying about the impact on applications for the next academic year but with the vaccine expected to be available for the majority of the UK population before the new term, this should give students confidence in the university experience they will receive in the next academic year.

Another interesting factor regarding student applications is that there was a 9% increase in international student applications in 2020, as announced by UCAS. So, student applications were actually at an all-time high, despite the UK lockdown and with so many foreign students looking to study at UK universities, demand for student accommodation should remain high.

To find out more about how we can assist you with your Expat Mortgage requirements, please click here to get in touch

The impact of Brexit on students

There was a noticeable drop in EU undergraduates for 2020-21, which was largely attributed to the uncertainty of Brexit. As of 1 January 2021, students from the EU will require a study visa to attend a university in the UK, which could result in lower numbers of students coming from the EU this academic year. However, the numbers of students coming from China, India, the US, Hong Kong, Malaysia and many other non-EU countries has been rising in recent years.

This gives confidence to Overseas Landlords & Property Investors who are looking at renting property out to students and now that the vaccine has started to be rolled out to the UK population and also around the world, this should provide additional confidence that there will be a lot of demand for student accommodation for the foreseeable future. The UK remains a very attractive option for international students, with many UK universities having very good reputations around the world.

Demand for UK Rental Properties

We mentioned earlier that stricter lending criteria will be a barrier for many people who were hoping to get onto the property ladder in the near future. The UK mortgage industry had to adapt quickly to take into account the impact of furlough arrangements, where potential borrowers had their salary reduced by 20%.

Mortgage Lenders adjusted their criteria to manage the risks of furloughed workers not being able to afford their mortgage payments and also to try and mitigate the risk of many furloughed workers later being made redundant. 

Mortgage lenders have also had to provide payment holidays to their current mortgage holders, as directed to do by the government, so lenders have had a lot of new challenges to face in 2020 and are constantly working on setting out the best approach to lending criteria going forward.

The Bank of England revealed in August that the number of mortgage approvals in 2020 stood at 418,000 compared to 524,000 for the same period in the year previous. It is expected that the higher levels of unemployment and other economical factors in the UK will result in a reduction of approved mortgages in 2021.

This scenario can be advantageous for Expat & Foreign Property Investors because mortgage lenders will be looking to lend to applicants that are more likely to be able to afford to pay their mortgage. Unlike many industries such as hospitality that has been devasted by lockdown restrictions, property investors will often be deemed to be lower risk to lenders, as they have financial stability and different income streams.

UK Mortgages for Expat or Foreign Investors

While many mortgage lenders are tightening their lending criteria, using a Specialist Expat or Foreign Investor Mortgage Broker will help to find a good mortgage deal that will enable investors to expand their property portfolio in the UK.

Expat Mortgages UK are a whole-of-market broker that has access to every single mortgage deal on the market, which enables us to find our clients the best possible deal at the most attractive interest rate. Our experience and specialism in this sector also bring benefits such as working through the challenges of being a non-UK resident.

We work with a wide range of property investors from around the world and even if they have little or no UK credit history and their income is in foreign currency, we are still able to find the right mortgage solution to help them to succeed in buying UK investment or residential properties.

Foreign investors often struggle to obtain mortgages in the UK but at Expat Mortgages UK, we work with lenders who will take on this risk and we will help you to complete the application, so that it goes as smoothly as possible.

Our expertise will also help to ensure there are no unnecessary delays that can result in missing out on a property, so contact us today and we can get started on your foreign investor mortgage application.

To find out more about how we can assist you with your ExpatMortgage requirements, please click here to get in touch today.