overseas property investors

The UK expat buy-to-let market creates a busy news cycle. Liquid Expat Mortgages will often pick the most important headlines to break down.

The continued activity in the UK expat buy-to-let mortgage market is partly due to increased interest coming from Hong Kong as the political situation continues to evolve there.

Despite the rises in the base interest rate, interest rates are still relatively low by historic standards and many lenders are not increasing – or increasing only marginally – their rates for expat buyers, as the expat buy-to-let marketplace is particularly lucrative.

Zoopla which noted that the number of people looking for rental properties this year is 76% higher than the average number for the same time between 2018 and 2021.

In the ongoing race to get rental properties to an EPC rating of a C or higher, 17% of landlords have already attempted to improve the energy efficiency of their property, while 22% of portfolio investors have begun green renovations.

Liquid Expat Mortgages takes a look at the top headlines from recent news in the UK expat buy-to-let mortgage market.

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Activity in the expat buy-to-let and remortgage markets is similar to the high seen late on in 2021, indicating that expat business is not being dampened by the consistent interest rate rises.” — Stuart Marshall MANCHESTER, GREATER MANCHESTER, UK, June 29, 2022 /EINPresswire.com / —
As we move into the second half of June, Liquid Expat Mortgages takes a look at the top headlines from recent news in the UK expat and foreign national mortgage market.

Expat Buy-to-Let Market Remains Strong After Rate Rises.
Activity in the expat buy-to-let and remortgage markets is at a similar level to the high seen late on in 2021, indicating that expat business is not being dampened by the consistent interest rate rises coming from the Bank of England. This is, in part, due to increased interest coming from Hong Kong as the political situation continues to evolve there.

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Despite the rises in the base interest rate, interest rates are still relatively low by historic standards and many lenders are not increasing – or increasing only marginally – their rates for expat buyers, as the expat buy-to-let marketplace is particularly lucrative and competitive. Further, there are still many interested buyers as the UK property market remains an attractive investment option offering a relatively stable asset class.

‘Anecdotally, this is something we’ve been seeing’ says Stuart Marshall. ‘The UK expat and foreign national buy-to-let mortgage market is very busy at the minute. Many UK expat and foreign national investors are benefitting from uncertainty in the domestic marketplace that is being caused by the consistent base rate rises. This is currently acting as a deterrent for domestic buyers and meaning less competition for UK expat and foreign national buyers. This means that properties are staying on the market longer and prices are coming down faster. There is also a more competitive rental market since fewer people are graduating to home ownership. This means UK expat and foreign national buy-to-let mortgage holders are seeing higher profits as competition in the rental market pushes up prices.’

Sky High Confidence Indicating a Profitable Marketplace.
In Shawbrook’s Changing Face of Buy-to-Let Report, it was revealed that 67% of landlords are confident about buy-to-let in 2022. It also showed that 34% of landlords are planning another buy-to-let property purchase in 2022. This is another indicator that expat buy-to-let is thriving despite the recent rate rises. This is largely due to rising rents contributing to greater profits, slightly dampened house prices in the UK and enticing yields. There is also an increased desire or necessity for those in the rental market to continue renting, with the survey showing that only half of renters expect to leave the rental sector in the next fifteen years, while 13% of renters are committed to long-term renting.

The increasing number of people in the rental market is also shown in a recent report by Zoopla which noted that the number of people looking for rental properties this year is 76% higher than the average number for the same time between 2018 and 2021 . Aside from the difficult market conditions, this could also be partly due to the number of young people leaving their parents’ homes and returning to the city centre post-pandemic.

As noted above, the difficult domestic conditions are creating a fertile investment landscape for those using UK expat and foreign national mortgage products. Consequently, buyer confidence is high among UK expats and foreign nationals. ‘This is likely to increase as forced sales start to bite in the marketplace too’ says Stuart Marshall. ‘Smaller salaried homeowners with larger mortgages are in a precarious position with the interest rate rises and are facing the real possibility of negative equity amidst falling house prices. Forced sales are inevitable with the way the market is currently poised. This will only lead to a higher number of properties available in a slower marketplace, meaning that investors will be able to utilise UK expat and foreign national mortgage products to secure a fantastic investment property at a reduced price.’

Another thing to note from Shawbrook’s report is that 29% of brokers said that three quarters of the portfolio investors they were dealing with were considering opening limited companies for their buy-to-let ventures. ‘This is continuing a trend that has emerged in recent years’ says Stuart Marshall. ‘With an increasing number of legislative changes for landlords, there are many good incentives for UK expats and foreign nationals to incorporate their investment properties in limited companies. A good broker will be able to help with this.’

Green Buy-to-Let Mortgages at a Record High.
In the ongoing race to get rental properties to an EPC rating of a C or higher, 17% of landlords have already attempted to improve the energy efficiency of their property, while 22% of portfolio investors have begun green renovations. The most popular renovations were new windows and new boilers, with 23% and 22% of those improving their property’s energy efficiency conducting these renovations respectively.

Stephanie Charman, head of strategic relationships at Sesame Bankhall Group, estimates that the cost of improving the EPC rating of a property will range between £5,900 and £10,400. ‘This is obviously a significant cost to landlords’ says Stuart Marshall. ‘However, discerning investors are talking to expert brokers and finding ways to minimise the cost of these renovations. One such way is to remortgage – which has proven very popular amongst the UK expat and foreign national investor population – and use some equity from the property to finance green renovations, especially with the chancellor’s new discount to green technology.

This is also a good strategy to take as the number of green mortgage products continues to grow, with 19% of all buy-to-let products now green mortgage products . These products offer discounted rates to UK expat and foreign national investors who commit to green renovations or purchase environmentally friendly properties. This can be an incredibly fruitful strategy in the current marketplace as both environmentally-conscious and cost-conscious consumers are looking to rent properties with higher EPC ratings.’

Source: MENAFN

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

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

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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