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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chinese residential investment – will it be back?

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

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

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

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

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

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

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

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

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

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

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

By Matthew Lane

Source: Property Investor Today

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Overseas buyers’ interest in UK property soars again

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

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

Why has overseas demand for UK property risen?

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

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

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

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

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What can we expect going forward?

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

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

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

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

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

What help is available for buyers and tenants?

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

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

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

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

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

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

By Sean LaPointe

Source: Fool

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Overseas investors ‘gearing up for return to UK property market’

More overseas investors could be poised to enter the UK property market following the disruption caused by the coronavirus pandemic, figures from an estate agent suggest.

Knight Frank said its web traffic data showed nearly a quarter (24%) of users looking at sales and lettings properties in August were based abroad.

This was the highest number since its figures started in January 2020. The average proportion in the 18 months to June was 17%.

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The number of international web users looking at lettings properties in August also exceeded those based in the UK for the first time since the start of 2020.

Demand has been driven by overseas students acting before the start of the academic year and returning corporate tenants as offices reopen, Knight Frank said.

Tom Bill, head of UK residential research at Knight Frank, said: “As the feeling grows that the worst of the pandemic is behind us, normal service will resume in the UK property market and I expect overseas investors and tenants to make their presence felt in the final quarter of this year.”

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By Vicky Shaw

Source: Independent

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UK named top hotspot for property investment by overseas investors

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

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

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

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

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

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Investors continue to be optimistic

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

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

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

UK property market remains appealing

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

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

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

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

Source: Buy Association

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Overseas investors find UK regional property a safe bet

British homeowners are not the only ones feeling left out of London after a year of sharply rising house prices. Overseas investors from Saudi Arabia to Hong Kong were placing ever-increasing bets on the British regions, building houses there and making huge profits.

For three decades, overseas money flowed mainly into the capital, attracted by a booming economy and sharply rising house prices.

When the Saudi conglomerate AIMS Holdings rated the UK in 2019, it quickly came to the conclusion that people like Manchester, Newcastle and Leeds offer better value for money.

‘When we first wanted to invest in the UK, we looked at London. Then we see there are many more opportunities elsewhere. It was a real eye-opener, ‘said Abdulaziz Albassam, CEO of AIMS Investments, its wealth management arm.

The timing was perfect.

The average house price in England, the year to April 2021 increased by 8.9 percent. But in London, the rise was just 3.3 per cent, compared with 16.9 per cent in north-east England. In Scotland, the average house price rose by 6.3 per cent during the year to April.

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House prices in London is double that of the national average and the coronavirus pandemic has defended its attractions. Families are looking for larger homes with gardens outside the city, and many workers are no longer forced to commute daily to the office.

Meanwhile, employers are relocating jobs to local cities, where they can attract graduates by providing a better quality of life. Goldman Sachs announced in April a new technology center in Birmingham employing several hundred people, which is part of a growing trend.

The bulk of the investment flows into private houses for rent, mainly apartments for young professionals. The developer retains the asset or sells it to individuals, usually in Asia. They continue to manage the development for a fee and ensure that it retains value.

Savills, the advisory firm, said investment in the private rental sector in Manchester, Birmingham and Leeds together rose £ 1bn in 2020, up from £ 361m in 2018. Jacqui Daly, director of Savills for residential research, said ” The demand for investment is strong with lots of new entrants, both internally and internationally, and better returns mean that the regional market for urban and suburban buildings for rent attracts those who consider it long-term. ”

AIMS has acquired a majority stake in Beech Holdings, a Manchester developer that has started building dedicated student accommodation.

Wasim Choudhury, director of Beech Holdings, said he expects 20-25 percent capital growth between 2020 and 2025. “Covid has accelerated our thesis,” Choudhury said. ‘Seven or eight UK cities have become acceptable to institutional investors. The yield is higher than in the capital. ”

Beech is building more than 1,000 apartments and houses with a gross development value of around £ 350 million in Manchester and Newcastle, and is looking at Sheffield, Leeds and Birmingham. It uses old office buildings and repairs contaminated sites.

Founder Stephen Beech said the British chronic housing shortage without overseas investors would be even worse. ‘British banks are not interested in revival. This is too risky. An early scheme, Basil House, a converted 19th-century office building in central Manchester, now recommends renting £ 2,000 a month for a two-bedroom apartment, all bills included. “Students who rent from us want to stay when they get their first job.”

Beech is now concentrating on family homes to diversify its income mix.

Manchester City Council has defrauded investments and in 2014 partnered with Sheikh Mansour bin Zayed Al Nahyan, part of the ruling family of Abu Dhabi and owner of Manchester City Football Club. Together they build almost 1,500 houses that are mostly private houses.

The council also has a joint venture with Far East Consortium, a listed Hong Kong conglomerate that has been operating in London since 2011 but which began operating in Manchester in 2017.

They will build up to 15,000 new homes across North Manchester over the next 15-20 years. A fifth of them are ‘affordable’ or meet the needs that would not otherwise be met by the market, as defined by the government.

Gavin Taylor, FEC director in Manchester, said the range of blue-chip employers such as Amazon, the BBC and TalkTalk moves to the city coupled with business-friendly local leadership, it has made it an attractive place to invest.

FEC, with a £ 600m investment in the UK, is now looking at Bristol and Birmingham. It also shifts the focus from apartments to family homes. ‘Covid caused a reassessment of life. If someone closes their eyes and imagines their dream home, it has four walls and a garden. “It is very expensive in London,” he said.

Alasdair Nicholls, CEO of Native Land, a major UK residential property developer who regularly works with international investors, said their growing presence in areas outside London reflects their experience in the market.

‘[For a] ‘a new investor deciding to enter the UK market is the obvious first point in London,’ Nicholls said. ‘But we’re now at a point where it’s done, and it’s’ OK, well, we can leave for anywhere, Edinburgh, Manchester, Birmingham’. “

Native Land markets its first project outside London, a joint venture with US asset manager Nuveen of 152 luxury homes in the new St James Quarter Complex in Edinburgh city center, which he says is worth a total of around £ 100 million.

Native Land, which last year acquired a former department store in Guildford for redevelopment, sees other cities and towns in the UK following Edinburgh and Manchester to make their central areas desirable.

Nicholls said he expects international capital to buy into these opportunities. “I think it’s going to be a big piece of what we and others will do in the future,” he said.

Source: afegames

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Middle East investors begin to return to UK’s property market

Investors from the Middle East are beginning to return to the UK’s property market, according to the latest data compiled by global property consultancy Knight Frank.

The firm’s data highlights that 16 per cent of all sales to overseas buyers in the first three months of 2021 were to Middle Eastern buyers, up from less than 10 per cent in the second and third quarters of last year. This is the highest proportion of Middle Eastern interest since the outbreak of COVID-19 in the UK.

Despite early signs of a recovery, the firm says Middle Eastern investment is still some way off pre-COVID levels, yet it expects activity to tick up further as international travel restrictions ease.

The data highlights that buyers from the GCC are currently ranked third most prominent in the UK, only surpassed by buyers from Asia (18 per cent) and Europe (59 per cent).

“International demand for London property has been building over the last 12 months despite global travel restrictions,” said Tom Bill, head of UK residential research at Knight Frank. “It has led to frustration on the part of some prospective buyers, particularly against the backdrop of the UK’s successful vaccination programme. Once travel rules are relaxed, we expect normal service to resume, including London’s long-standing relationship with buyers from the Middle East.”

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Despite lower-than-normal levels of investment from GCC investors, Knight Frank’s Global Wealth Ambassador to the Middle East, who works closely with the region’s high net worth individuals and family offices, has completed almost £90m worth of sales since the UK went into lockdown.

Moreas Madani, Middle East Global Wealth Ambassador at Knight Frank, said, “There is a particularly high demand from GCC investors for best-in-class new build projects in and around Mayfair.

“We are seeing steady interest from the Middle East; however, the biggest challenge remains restrictions on international travel. As this eases, and post-Ramadan, we are expecting to see more activity from the region as pent-up demand is released.”

Lodha, the developer behind No.1 Grosvenor Square, the former US Embassy and the Canadian High Commission, is witnessing first-hand the uptick in demand from Middle Eastern buyers. No.1 Grosvenor Square offers 44 Grade I listed apartments, through Knight Frank (+44 20 7861 5461).

Gabriel York, Co-CEO of Lodha UK comments, “We have seen a steady increase in enquiries from prospective purchasers from the Middle East since the start of the new year, and we expect this to continue through the summer as London re-opens and international travel resumes. We are now meeting numerous GCC families and business people who may have previously stayed in a hotel suite when travelling to London but are now looking to acquire a permanent residence in the city.

“They are attracted to No. 1 Grosvenor Square by the prestige and grandeur of the building, the central Mayfair location, the quality of the amenities and the desire for exceptional services that are personalised for them. The unique automated parking system, known as the vault, has also been a particular draw for customers from the Middle East with special car collections who want a total security for their vehicles.

“Health and wellbeing are increasingly important factors in property decisions, and purchasers are seeking residences close to garden squares and parks with exceptional health facilities and easy access to health services. No 1 Grosvenor Square is located on London’s second-largest garden square and within walking distance to central London’s largest park, Hyde Park. The building contains its health and wellness centre, including 25m swimming pool, gym, pilates room, treatment and consultation rooms, and is supported by health advisers from a range of wellness and medical disciplines.”

Source: Times of Man

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UK Property Market Still a Great Prospect for UK Expats

Many UK expats and foreign nationals are still looking to invest in UK property. And this is not surprising with the UK rental market predicted to keep growing.

Despite the turbulent times and the impending closure of the UK’s stamp duty holiday, UK expat mortgages and foreign national mortgages are still available for those looking to invest in UK property. And investing in UK property is one of the best financial decisions you could make.

An Appetite to Invest Amongst UK Expats and Foreign Nationals.

The extremely busy UK property market in 2020 has continued throughout the start of 2021. According to Rightmove, the UK’s number one property portal, 2021 saw the busiest ever start to a year in the property market (30% up from the start of 2020). Rightmove also predicts that the 2021 housing market will continue to perform strongly, with the number of prospective buyers contacting estate agents 53% higher than the same point in 2020.

There is a particular appetite to invest amongst UK expat and foreign national investors. According to a survey conducted by multinational law firm DLA Piper, 75% of investors are planning to invest in European residential properties in 2021. The respondents also ranked the UK as the number one spot for investment, indicating that the strong uptake of UK mortgages from UK expats and foreign nationals will continue through 2021. And overseas investors are particularly excited by the current conditions in the UK where there is a high demand for rental properties, property prices remain enticing, and the rental yields from properties are strong.

Years ago, major lenders had a monopoly on international property buyers. This meant that purchasing a UK property from overseas involved navigating extensive paperwork, salaries paid in a foreign currency and the lack of a UK credit history. However, nowadays expert mortgage brokers have access to a much wider range of products than those presented by mainstream lenders. This means that many of the difficulties involved in getting a UK mortgage as a UK expat or foreign national are now a thing of the past.

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The Strength of the Rental.

Traditionally, the UK rental market is very resilient. While the housing market remains steadfast, the rental market has also performed at consistently high levels. For example, in the aftermath of the global financial crisis, house prices fell 18% compared to only a 2% fall in rental prices (as reported by Savills, one of the world’s leading property advisers). This is a promising sign for UK expat and foreign national investors who are looking to invest, as even in the most turbulent circumstances, rental prices remain relatively resilient. And the outlook remains strong for the future too, with Oxford Economics predicting a 13.6% rise in UK rents by 2024.

‘The current conditions for investment remain solid, with Oxford Economics also predicting that the Bank of England’s base interest rate will remain at the low of 0.1% until Q2 of 2022. Consistently low interest rates also mean that there is a strong potential to make money from good capital growth on your property too.’ So, where should you invest?

Where to Invest.

‘The picture is clear on where to invest. The North West leads the pack with a projected growth of 24.1% over the next five years. This is followed by Yorkshire and the Humber, with a predicted 21.1% growth and Scotland which is predicted to grow 20.1% over the next five years. The rental growth picture is also strong in these areas. For example, according to JLL’s research, Manchester is predicted to have a rental growth of 7% by the end of 2022.’

Manchester is England’s fastest growing city with its population predicted to reach 600,000 by the middle of the 2020s. The surrounding area of Greater Manchester has a further population of almost 3 million people who support the economic and social infrastructure of the city. With a £7 billion investment from the government as part of their Northern Powerhouse scheme, Manchester’s infrastructure is bound to keep on growing and attracting more young professionals looking to both live and work in the city.

‘For UK expats and foreign nationals, Manchester presents such a strong investment opportunity. All the factors mentioned above are sure to stimulate demand and make sure that supply is kept low – thereby driving continued capital and rental growth. The city and surrounding suburbs are currently undergoing a rapid period of growth and change. The availability of UK Expat and foreign national mortgages, coupled with the incredibly low base interest rate from the bank of England, means a great range of mortgage products to choose from and, as such, it’s an excellent time to invest.’

Source: EIN News

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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.

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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.

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International investors clambering for UK property amidst global uncertainty

COVID-19 cases might be steadily decreasing, though this does not mean we have overcome all of the fundamental challenges posed by this global pandemic. Market uncertainty has made it difficult for investors to plan for the future. While it looks as though we are on the path to recovery, there is nothing to suggest a second spike in infections is completely off the table.

What’s more, we are only beginning to realise the economic ramifications of the coronavirus.

It seems as though the majority of the world’s major economies will stay in a recession for at least the rest of 2020. GDP levels in advanced economies are expected to remain around 3-4% lower than their pre-pandemic projections until at least 2025, according to a Fitch Ratings report.

As such, investors are seeking ways to hedge against this forecast by gravitating towards assets which have historically been able to deliver stable returns and quick recoveries from sudden downturns. In the UK, this has translated into an incredible spike in overseas demand for UK property.

Overseas interest in UK property

While housing in the UK has long-attracted international demand, previously it had mainly been concentrated in the capital; specifically, Prime Central London (PCL) property. However, recently, estate agencies are reporting a surge in interest from Hong Kong buyers in buy-to-let properties in the North of England.

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

This is not to say that COVID-19 has damped international demand for London property. To the contrary, Beauchamp Estates recently reported that they had assisted with $374 million worth of investment into PCL housing from Chinese and Hong Kong residents between December 2019 and June 2020; representing 20% of all property transactions worth above £10 million in the capital.

Additionally, estate agent Dexters revealed that PCL sales for properties worth over £2 million between mid-June and mid-August were 85% higher than during the same period a year prior. This incredible uptick in demand demonstrates how UK property is seen as a safe and secure asset in times of uncertainty across the globe. Dexters also reported that the majority of these transactions were by cash buyers in Hong Kong, Singapore, the UAE, the US, Italy and India.

Why are overseas investors clambering for UK property?

As well as UK property’s historical positive performance, there are three additional benefits for international investors at present.

Firstly, the Stamp Duty Land Tax (SDLT) holiday on the first £500,000 on all property sales across England and Northern Ireland provides substantial discounts compared to previous years. Non-UK-resident buyers can now save as much as £15,000 in SDLT through this tax holiday.

Already, the tax break is having a noticeable impact on the housing market. The first national House Price Index to be released after the introduction of the SDLT holiday revealed an annual price growth of 1.5%.

Secondly, the SDLT overseas-buyer 2% surcharge is due to be implemented from April 2021. Acting now, before the above holiday ends and this additional added cost is introduced, allows for substantial SDLT savings.

Finally, the economic and financial stability of the UK provides many an escape from market volatility they may be experiencing in their own jurisdiction. London in particular is recognised as a global financial capital and bustling cosmopolitan centre, allowing buyers easy access to both further investment opportunities and the luxury lifestyle benefits the capital city can provide.

Property in a time of uncertainty

As 2020 continues and the COVID-19 pandemic plays out, it’s likely that the level of foreign buyer interest in UK property will continue to steadily increase. Overseas investors are becoming more aware of the prime property investment opportunities across the UK.

From a recovery standpoint, this influx of foreign capital is helping to reignite the property market, encouraging buyers and sellers who initially retreated following the introduction of lockdown measures to make a steady return. Supported by the SDLT holiday, this will be vital in supporting the UK’s post-pandemic economic recovery.

BY RYAN BEMBRIDGE

Source: Property Wire

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Benham and Reeves: Foreign buyers should invest in UK property now

With the temporary changes to the stamp duty threshold in place until March 2021, and a 2% surcharge for foreign buyers set to come in from April, now is the time for overseas buyers to invest in UK property, according to Benham and Reeves.

The current stamp duty holiday means that foreign buyers are able to save £14,573 on the average London property purchase.

The April 2021 surcharge will take the average the cost of stamp duty up to £38,579.

For foreign buyers making their move now, this means an additional £24,006 saved in addition to the sum already wiped off by the stamp duty holiday.

Kensington and Chelsea offers the most significant additional saving for foreign buyers transacting at the moment; the cost of stamp duty on a current purchase has reduced from £125,243 to £110,243, a saving of £15,000.

Come April next year, this stamp duty requirement will climb to £153,165 with the additional foreign buyer surcharge, so international buyers transacting before this are saving a further £42,922.

Similarly, foreign buyers looking to buy in Westminster can save £36,699 by transacting now, while Camden (£32,621), Hammersmith and Fulham (£29,943) and Hackney (£27,773) were also found to offer some of the best savings.

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In the last year, house prices in the City of London have fallen by £60,868 on average; combined with the £30,851 stamp duty saving made by buying now, foreign buyers would be £91,720 better off on average at present.

In Brent, a £28,463 reduction in property prices coupled with a £21,287 stamp duty saving means that foreign buyers would be £49,750 better off buying now.

Richmond has also seen property prices decline by £12,875 in the last year; with the addition of a stamp duty saving of £27,670 ahead of April’s surcharge, foreign buyers would be £40,545 better off on average as a result of buying now.

Marc von Grundherr, director of Benham and Reeves, said: “The recently implemented stamp duty holiday has not only rejuvenated domestic buyer demand, but we’re also seeing foreign buyers starting to return to the capital in their numbers. In fact, the vast majority of our buyer interest coming from Asia has only been concerned with homes falling under the £500,000 threshold.

“This has been intensified due to the sour taste of a two per cent stamp duty surcharge on the horizon as the government continues to dampen what is a vital sector of the London property market.

“In any case, the stamp duty savings currently on offer have been heavily bolstered by the additional saving made in comparison to buying from April next year and this has caused an immediate uplift in buyer demand from foreign shores.

“Great news for developers who with stock currently, or due to hit the market in the coming months.

“What’s more, some boroughs have seen property prices reduce over the last year and so foreign buyers are not only able to save considerably where stamp duty is concerned, but they’re securing even better value in terms of the price of the property itself.

“London remains the pinnacle of homeownership for many foreign buyers, and while a ramped-up level of stamp duty will be hard to swallow, it certainly won’t deter buyers in London’s high-end market.

“However, with many rushing to make the most of the savings currently on offer, any negative price trends that have plagued the capital in the last 12 months are sure to be short-lived as demand starts to outweigh supply.”

By Jessica Bird

Source: Mortgage Introducer