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UK house prices rise at fastest rate since January 2023

UK house prices rose 2.5% in the year to January, recording the biggest increase since January last year, as lower mortgage rates and fading inflationary pressures led to increased buyer and seller confidence, Halifax has said.

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January marked the fourth consecutive monthly rise, with a 1.3% uplift on December, the UK’s biggest mortgage lender said, with the average home costing £291,000, £3,900 more than in December.

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Kim Kinnaird, the director at Halifax Mortgages, said: “The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers.

To view full article please click the link below.

Source: The Guardian

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Exploring the UK Property Market and Recent Mortgage Rate Cuts

The UK property market has long been a hub for both domestic and international investors, characterized by its resilience and dynamic nature. Recently, a significant development has emerged in the form of mortgage rate cuts, particularly notable with HSBC’s decision to offer rates partly under 4% for the first time since the TRUSS mini budget.

This move reflects a broader trend in the UK’s financial landscape and opens new avenues for potential buyers, including foreigners, to consider property acquisition in the UK. The following sections will guide you through the intricacies of buying a house in the UK as a foreigner, considering current market conditions and regulatory frameworks.

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Who Can Buy Property in the UK?
In the UK, there are no legal restrictions on who can buy property, regardless of nationality or residency status. This openness makes the UK a particularly attractive market for international investors and homebuyers. Whether you are a resident or non-resident, foreigner or citizen, you have the equal right to purchase property. However, foreign buyers should be aware of certain financial and legal considerations, including potential additional taxes and the need for thorough legal advice to navigate the UK’s property laws.

Can Foreigners Buy Property in the UK?
Yes, foreigners can buy property in the UK. The process for foreign buyers is straightforward, though it involves specific steps, such as obtaining a National Insurance number and opening a UK bank account.

Foreign buyers must also comply with certain financial requirements and may face additional scrutiny, especially in terms of funding sources.

It’s advisable for non-residents to seek advice from property experts and legal advisors familiar with the UK market.

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Impact of Brexit on Foreign Property Buyers
Brexit has introduced changes that affect foreign property buyers, especially those from the European Union (EU). While the fundamental right to buy property in the UK remains unaffected, EU citizens no longer enjoy the same ease of movement and residence rights.

This change means that EU citizens might need to comply with immigration controls and visa requirements. However, Brexit hasn’t dampened the appeal of the UK property market to foreign investors, and the market continues to see robust interest from overseas buyers.

Source: Talk Business

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Expat property enquiries up following rate holds

Offshoreonline, an online mortgage adviser for expatriates, has observed a significant upswing in expat mortgage enquiries, attributing this to the Bank of England’s decision to hold the UK Base Rate steady in November.

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At the same time, a straw poll of estate agents conducted by the expat online mortgage broker revealed a steep rise in enquiries during the second week of November, indicating a growing interest in the UK expat buy-to-let market and house buying in general.

The current stability in the UK Base Rate has created a favourable environment for potential buyers of UK buy to let properties in 2024, according to Offshoreonline.

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With this positive outlook, expat mortgage holders are presented with a critical decision—whether to opt for a fixed or variable rate mortgage, the firm said.

Source: Best Advice

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UK Expat and Foreign National Investors Use Re-Mortgage Products to Improve the Energy Efficiency of Buy-to-Let Property

As we move into the colder months in the UK, energy efficiency starts to become a bigger consideration for tenants. This is not an insignificant consideration, with many tenants still concerned about the rising cost of energy, in addition to high inflation and the rising cost of living more generally.

‘A low energy efficiency rating is enough to dissuade many desirable tenants from renting a property’ says Stuart Marshall of Liquid Expat Mortgages. ‘This means that owning a property with a bad EPC rating can be very costly for UK expat and foreign national investors because of a loss of rental income. Further, the need for good energy efficiency is likely to be reflected in legislation too. While the government recently announced that it was scrapping its requirement for rental properties to have an EPC rating of a C or above by 2025, it’s likely that this plan will be replaced by other, similar legislation if the UK is to reach its target of net zero by 2050.’

Because of the increasing focus on energy efficiency in rental properties, it’s important for UK expat and foreign national investors to make their property as energy efficient as possible. This will make sure that their investment property remains attractive to desirable tenants, while also making sure that the property is compliant with any potential environmental legislation.

5 Ways UK Expat and Foreign National Investors Can Make Their Investment Property More Energy Efficient.

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  1. Switch Lightbulbs. Switching to LED lightbulbs is one of the simplest ways to increase the energy efficiency of a rental property. Not only do they last five times longer than traditional halogen lightbulbs, but they also use significantly less energy to produce the same light, while emitting lower carbon dioxide emissions.
  2. Draught Proof. Another very easy and affordable way to improve energy efficiency is to reduce heat waste through draught proofing in common problem areas like doors, chimneys and skirting boards.
  3. Energy Efficient Appliances. Replacing old appliances with more energy efficient ones is another very easy way for UK expat and foreign national investors to improve the energy efficiency of their rental property. Appliances with an A+++ rating are the best performing. Having higher rated appliances will improve the property’s EPC rating and will also improve the energy efficiency of the property.
  4. Insulation. Improving insulation is one of the most common ways for UK expat and foreign national investors to improve the energy efficiency of their property. There are many ways to do this, from improving insulation in roofs and cavity walls to installing double glazed windows and thermally efficient doors. An easier way to improve insulation is to install thick curtains or have existing curtains lined.
  5. Replace the Boiler. A more costly way to improve the energy efficiency of a property is to replace the boiler with a more efficient one. While this is more expensive than many of the other methods mentioned above, installing an efficient boiler can make a significant difference to the energy efficiency of the property and equate to massive savings for potential tenants.

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Utilise a Re-mortgage Product.
While improving the energy efficiency of an investment property is pretty much essential now, conducting a number of renovations can be costly for UK expat and foreign national investors. This is especially true for portfolio investors who have a number of properties that require green renovations.

‘One of the best ways to fund these renovations is through a re-mortgage’ says Stuart Marshall. ‘This is a course of action that we’ve discussed with many of our clients looking to conduct green renovations. This is because there are plenty of quality re-mortgage products available for UK expat and foreign national investors. These products allow UK expat and foreign national investors to utilise their existing equity in their property to raise capital for green renovations. But using a re-mortgage product can also pay dividends elsewhere as increased equity can make it easier to negotiate a better mortgage deal. So, UK expat and foreign national investors can often benefit from green renovations and also from reduced mortgage rates and lower monthly repayments.’

‘Utilising the services of an expert UK expat or foreign national mortgage broker is the best way to negotiate a better deal and gain access to exclusive broker-only deals. This can really make all the difference in maximising the quality of an investment venture. But we’ve seen re-mortgage products work time and time again in improving the terms of buy-to-let mortgages while also raising capital to conduct green renovations that will pay dividends long into the future.’

By Ulysses

Source: EIN News

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BTL mortgage drought hits UK expats

A growing number of UK homeowners working overseas are finding themselves grappling with skyrocketing mortgage rates when renting out their properties, the Financial Times reports.

The newspaper says that these individuals are often required by lenders to switch from standard residential loans to ‘consumer buy-to-let mortgages’ – usually at higher interest rates.

In recent months, these rates have experienced a sharp increase, fuelled by the expectation that the Bank of England will push up rates to tackle inflation.

The situation is further complicated by the falling number of products in the expat mortgage sector.

Banks discontinued expat mortgages in early 2020

The FT says that many major banks discontinued expat mortgages in early 2020, as the UK’s exit from the EU imposed fresh regulatory challenges for British banks providing financial services throughout the bloc.

When expat borrowers reach the end of their fixed-rate agreements and seek refinancing, they may encounter interest rates as steep as 8% or 9%, according to lenders and mortgage brokers.

Some banks have even started rejecting expat remortgage applications or requests for larger mortgages.

And while some banks continue offering mortgage transfers – where borrowers receive a new rate offer from the same lender – the rates are significantly higher than before.

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BTL mortgage market for non-UK residents

Lorraine McLean, head of BTL mortgages at Skipton International, which is based in Guernsey, said the bank had seen strong demand from expats who had been offered ‘a ludicrous rate’ when renewing – or nothing at all.

The bank said it had seen a 40% rise in completions in the first quarter of this year, compared with last year.

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UK-based lenders lost the so-called ‘passporting’ rights

The FT article says that when the UK left the single market for financial services, UK-based lenders lost the ‘passporting’ rights that saw them to do business in any EU country with minimal extra authorisation.

One director at a major lender told the newspaper that before Brexit, lenders in the UK lending to EU or UK citizens across the EU had to show they were following lending rules in the UK.

Now they must follow the regulations in the borrower’s country of residence – and lenders don’t have the appetite or capacity to do this.

The lender was offering transfers on expat buy-to-let mortgages, the director said, but no longer offered loans to new expat customers and did not allow expanded mortgage borrowing for current customers.

Source: Property 118

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BTL mortgage drought hits UK expats

A growing number of UK homeowners working overseas are finding themselves grappling with skyrocketing mortgage rates when renting out their properties, the Financial Times reports.

The newspaper says that these individuals are often required by lenders to switch from standard residential loans to ‘consumer buy-to-let mortgages’ – usually at higher interest rates.

In recent months, these rates have experienced a sharp increase, fuelled by the expectation that the Bank of England will push up rates to tackle inflation.

The situation is further complicated by the falling number of products in the expat mortgage sector.

Contact us today to discuss Expat Mortgages and how we can assist you.

Banks discontinued expat mortgages in early 2020

The FT says that many major banks discontinued expat mortgages in early 2020, as the UK’s exit from the EU imposed fresh regulatory challenges for British banks providing financial services throughout the bloc.

When expat borrowers reach the end of their fixed-rate agreements and seek refinancing, they may encounter interest rates as steep as 8% or 9%, according to lenders and mortgage brokers.

Some banks have even started rejecting expat remortgage applications or requests for larger mortgages.

And while some banks continue offering mortgage transfers – where borrowers receive a new rate offer from the same lender – the rates are significantly higher than before.

BTL mortgage market for non-UK residents

Lorraine McLean, head of BTL mortgages at Skipton International, which is based in Guernsey, said the bank had seen strong demand from expats who had been offered ‘a ludicrous rate’ when renewing – or nothing at all.

The bank said it had seen a 40% rise in completions in the first quarter of this year, compared with last year.

Discover our Expat Mortgage Broker services.

UK-based lenders lost the so-called ‘passporting’ rights

The FT article says that when the UK left the single market for financial services, UK-based lenders lost the ‘passporting’ rights that saw them to do business in any EU country with minimal extra authorisation.

One director at a major lender told the newspaper that before Brexit, lenders in the UK lending to EU or UK citizens across the EU had to show they were following lending rules in the UK.

Now they must follow the regulations in the borrower’s country of residence – and lenders don’t have the appetite or capacity to do this.

The lender was offering transfers on expat buy-to-let mortgages, the director said, but no longer offered loans to new expat customers and did not allow expanded mortgage borrowing for current customers.

Source: Property 118

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Buy-to-let mortgage repayments up 32% in the last year

The cost of maintaining a monthly buy-to-let mortgage interest payment has climbed by 75.7% in the last year, with those making a full mortgage repayment each month seeing an increase of 31.6%, according to new research from Octane Capital.

Octane Capital analysed the current cost of the average buy-to-let mortgage and how this monthly repayment has increased in the last year as interest rates have climbed.

The research shows that currently, the average buy-to-let investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.

With a current average buy-to-let mortgage rate of 5.32%, this would see the average investor pay back £1,312 when making a full monthly repayment.

The average mortgage rate has increased by 2.12% in the last year alone, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.

However, many buy-to-let investors will opt to simply maintain the mortgage secured on an investment property by way of monthly interest-only repayment

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The figures from Octane Capital show that in the current market, the average interest-only monthly repayment has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.

Despite this increased cost, investor appetites for buy-to-let investment remains strong and previous research by Octane Capital shows that the total value of loans issued to buy-to-let investors has climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.

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CEO of Octane Capital, Jonathan Samuels, commented: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week, with buy-to-let investors also seeing the cost of borrowing climb substantially.

“These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.

“Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”

By ROZI JONES

Source: Property Reporter

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Foreign homebuyers sheilded from rising property prices due to weakening pound

Despite house prices climbing considerably over the last year, buyers from overseas currently looking for UK property are saving huge sums due to the weaker pound with discounts as high as £40,000.

The latest research by lettings and estate agent, Benham and Reeves, looked at current property market values and how they compare to this time last year, with the research showing that since February 2022, the average UK sold price has increased by 7.8% to £294,329 today.

Even in a slower London market, the average value of a home has increased by 4.8%, commanding £543,099 in current market conditions.

However, while domestic homebuyers have had to contend with the increasing cost of climbing the ladder, exchange rate fluctuations and a weakening British Pound compared to some currencies have presented an opportunity for foreign buyers to secure a saving.

In February of last year, the average UK house price of £273,066 would have required a buyer from the United States of America to spend $369,459. Today, however, the higher average UK house price of £294,329 would see them spend just $355,079, a saving of $14,381 (3.9%) or £12,161, despite the increased value of UK bricks and mortar.

This saving is even higher in a more inflated London market, where purchasing at the current London average of £543,099 would require them to spend $655,195 versus the $700,993 they would have spent in February of last year, a difference of $45,799 or £38,730.

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Buyers from the UAE have also benefited to the same extent, saving -3.9% or AED 52,717 on their purchase, climbing to AED 167,986 (-6.5%) in London. That’s the equivalent of £12,142 saved on the average UK home or £38,690 on the average London home.

The UK continues to be a popular destination of choice for Hong Kong homebuyers and they too have seen the cost of purchasing a UK home fall, down by -3.3% when compared to this time last year, a saving of HK$95,145 or £10,254.

Again, in London, Hong Kong nationals are enjoying savings as high as 6% on the average cost of a home in the capital, reducing their purchase price by HK$325,801 or £35,111.

However, not all foreign buyers are benefiting to the same extent. The Euro has failed to provide a discount on the average UK house price, with European buyers paying 1.9% more today versus a year ago, while those looking to London are seeing a marginal saving (-0.9%).

Foreign buyers from China are paying the equivalent of £10,868 more today versus a year ago on the average UK home, With Japanese buyers also paying the equivalent of £5,391 more today.

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Marc von Grundherr, Director of Benham and Reeves, commented: “We’re yet to see any notable reduction in house prices and, in fact, the latest sold price figures show that they have continued to climb across both London and the UK as a whole. This demonstrates the tenacity of the property market even during times of economic uncertainty and highlights why so many foreign buyers look to the UK when investing in bricks and mortar.

“We’ve seen a steady stream of foreign interest returning to the market, particularly across London, pretty much since Covid travel restrictions were lifted. However, a weakening pound has enticed them to an even greater extent, as many are now enjoying a substantial discount when purchasing versus the price they would have paid a year ago when property values were lower.”

Source: Property Reporter

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Four-day week ‘would not work for mortgage market’ ‒ analysis

A four-day working week is a good idea in theory, but not really compatible with the workload of a typical mortgage broker, according to intermediaries.

Last week saw the publication of the results of a trial into a four-day week, with the majority of firms stating that not only had it improved performance but that they were continuing with the structure.

However, when quizzed by Mortgage Solutions, mortgage brokers were split on the idea of a four-day working week. Advocates argued it had helped them to be more productive, working smarter during the week, though there was scepticism about the impact it could have on delivering adequate service to clients.

Boosting productivity

One mortgage broker who is already working a four-day week is Samantha Bickford, mortgage and equity release specialist at Clarity Wealth Management.

She said that since going self-employed, she has worked on the basis of usually having Frdays off, arguing that it leads to a healthier work/life balance.

“This encourages me to be more productive, work harder and smarter during the week, knowing I am taking a day or even an afternoon or few hours for myself at the end of the week. Especially with those dedicating their weekends to their children and family time, this means you have a day for yourself and your own mental health,” she explained.

Gary Boakes, director of Verve Financial, said that he too had been working a four-day week until recently, noting that he “felt I needed the extra time during the day to work on the business rather than in the evening”.

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Maintaining service levels

Stuart Powell, managing director of Ocean Equity Release, said that while he was all for a four-day working week in theory, it presented a challenge for smaller firms in ensuring such a structure did not impact their customer service levels.

“Many firms give people different days off, however for firms with less than five staff, this may reduce coverage for clients and be an issue in holiday times,” he added.

Bickford agreed that fitting in with client expectations and lender service challenges can make picking working hours more challenging.

She said: “If the working week dictates I need to work on a Friday ‒ for example, if this is most convenient for the client or if the week is so busy it is not possible to take the Friday off ‒ I will of course, but in general I believe a four-day week encourages productivity. I have no qualms about working slightly longer days during the week to have this balance.”

Are we working at capacity?

However, not all brokers believe it is a workable option.

There is “no way” a business that interacts directly with the public could succeed with a four-day week, according to Craig Fish, director of Lodestone Mortgages & Protection, who noted that there are times when even not working on a weekend will have an impact on a broker’s business.

He added: “Lenders could make things easier by improving their systems, but the costs involved to do this are likely prohibitive, so I fear that brokers will find themselves working ever longer hours to ensure that the client is getting a first-class service.”

If advisers are able to do the same amount of work in four days that they were doing in five, then they are not working close to their capacity, suggested Andy Wilson, director of Andy Wilson Financial Services.

He added: “I believe most brokers will work quite long and unsociable hours if they want to meet their own and the business’s targets. I also feel most would exceed the four days just to get jobs done and get cases through more quickly.”

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It might work for other industries, but not mortgages

Dominik Lipnicki, director of Your Mortgage Decisions, said that he was sceptical of how practical a four-day week would be for most businesses, noting that while he was a fan of flexible hours, “our clients would rightly expect to be able to be assisted at the very least five days per week”.

He continued: “I am not sure that many mortgage businesses would be able to afford to hire more staff to cover the extra day and if they did, surely, it is the clients who ultimately pay? I think that for some businesses, a four day week might work but that would very much be driven by the type of business that it is.”

This was echoed by Benjamin Blyth, director of Houz Mortgages, who suggested a four-day week does not really suit the mortgage industry as a whole. “We need the engine running seven days a week, but if a four-day week can be scheduled into rotas, it’s great for staff. I can never tie myself to four days because client demand will always vary across the seven days in a week.”

Working smarter, not harder

While many brokers were unconvinced about the merits of a four-day week, there was near consensus that technological developments had given them more control over the actual hours worked.

Chris Barker, managing director of Manchester Money, said that technology today means brokers can “pretty much work what hours they want, and from wherever they want to be, as long as it fits with their clients’ needs”.

Paul Seed, mortgage and insurance adviser at Mortgages 4 U, noted that meeting client expectations was now more about the response times rather than the hours or days worked.

He continued: “Speed of response, especially with live applications, is increasingly critical to maintain a client’s trust. People want to know that they are in safe and responsive hands.”

Embracing the benefits of flexible working can also deliver a better standard of service, too, some suggested. For example, Kylie-Ann Gatecliffe, director at KAG Financial, said that her firm is smarter now in working around clients, removing the need to pull 70-hour weeks.

She continued: “We actually produce higher results, coming in feeling fresh and motivated. Whilst clients can still have appointments on an evening and on a weekend when required, we plan our diaries so the whole team have a balanced week, rather than everyone being stressed and under pressure trying to juggle life/work balance.”

By John Fitzsimons

Source: Mortgage Solutions

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London’s Luxury Residential Market Booms Defying UK’s Home Sales Slowdown

Even though the UK is now seeing the steepest slump in property prices since the 2008 financial crisis, London’s luxury residences are managing to defy Britain’s housing market downturn, reported The Business Times.

Fifteen homes in Central London valued at £5 million or higher were registered as sold in the fourth quarter of 2022—which is 63% higher than the pre-pandemic average, according to researcher LonRes. “It’s not surprising, therefore, that it tempted would-be sellers to put their homes onto the market,” said Anthony Payne, managing director at LonRes.

UK Housing Market Poised for Disruption

The UK’s housing market is facing a ‘perfect’ storm as it tries to eke out growth while coping with the surging cost of living, hiking mortgage and inflation rates, and the risk of recession.

The result: rapid cooling in property demand and sales activities leading to a selloff in the UK’s housing market.

Let’s look at how much the British housing market and buyer demand have been impacted by current economic setbacks:

  • British home prices slid in December 2022 by the most in 13 years and are predicted to slip by a whopping 20% in 2023 if the UK’s base rate continues to hike, according to The Guardian.
  • The Bank of England has been raising the base since the beginning of 2022 as part of its effort to return inflation to its 2% target level. The bank rate has gone up to an annual rate of 4.0% in February 2023—a jump of 0.5% from 3.5% in December 2022.
  • On the other hand, surveyors registered a net balance of -47% for new buyer inquiries in January 2023, plunging from -40% in December 2022.

In such a circumstance, analysts have unanimously agreed that the UK’s property market is facing more turbulence this year.

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Wealthy Buyers Are Snapping Up London’s Luxury Property

Despite the present economic upset throughout Britain, luxury sales in London are skyrocketing, outshining the UK’s housing market.

But why?

First off, even though the interest rate and mortgage rate have hit an all-time high this year, millionaires and elites are less likely to get affected by the impacts of the increase, as they’re less dependent on borrowing.

Secondly, Britain’s pound continues to tumble sharply against the US dollar, dropping a full cent to around $1.20.

Part of the weakness of the pound sterling is the increase in power of the US dollar which is attracting more international investors and wealthy buyers to flock to London’s priciest homes.

Case in point: In the first half of 2022, overseas buyers purchased 48% of the total luxury home purchases in Prime London—a jump from 13% from 2021.

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That said, the demand for luxury property management services offered by agencies like The London Management Company is getting a push, with ultra-high-net-worth buyers investing in upscale properties in Central London.

Offering bespoke services—from maintenance to upkeep and housekeeping—a class-leading agency ensures a client’s luxury property is well-managed, squeaky clean, and always ready for their arrival.

However, in the final quarter of last year, home sale activities decreased in Greater London due to climbing mortgage rates, soaring inflation, and high base rates.

“The final quarter of the year saw a change of direction,” stated the managing director at LonRes. “We’ll be keeping a close eye on how the market unfolds in the months ahead.”

Wrapping Up

Outperforming Britain’s housing market, London’s luxury houses are seeing substantial growth this year.

Source: Digital Journal