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Bank of England to suspend market operations for State funeral

The BoE said CHAPS will be closed on 19th September, in line with its normal bank holiday arrangements.

CHAPS handled around 174,000 payments each day, in the year to February 2021, with an average payment value of £2.1m. That works out at around £367bn each working day.

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CHAPS is used by banks and large corporations to settle high-value money market and foreign exchange transactions, by companies to pay taxes, and by solicitors and conveyancers to settle property transactions.

The Bank’s Real Time Gross Settlement (RTGS) service, which underpins large transfers between bank accounts, will also be closed.

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Back in 2014, RTGS collapsed for most of a day, putting thousands of housing market transactions on hold.

Last week the BoE said the sale of corporate bonds held by the Asset Purchase Facility will be delayed by a week, to 26 September, following its decision to delay its next interest rate decision by a week (to 22nd September).

Source: London Loves Business

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I could have fixed my mortgage rate for years longer. I’m a fool

I have been having flashbacks. Not the kind I used to have, of when I went hiking in Yosemite National Park without a map and ended up sliding down a bear-infested trail on my backside in the dark. No, these flashbacks relate to a time in my more recent life, and an ill-fated conversation with my mortgage broker in July last year that led to a severe financial misjudgment.

My wife and I had just sold our house while juggling careers and three small children, and it was time to choose a mortgage for the new one. Should we take a two-year fixed-rate deal or a five-year one?

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The five-year mortgage was with Santander, and the two-year with the West Brom building society. Both had interest rates of just over 1.2 per cent, and our broker pushed for the two-year deal. The Bank of England base rate was 0.1 per cent, and he said he would be stunned if the base rate or mortgage prices went up significantly by summer 2023, when we’d be due to renew. Plus (and after this week’s 0.5 percentage point rate rise, this is makes me squirm the most) he reckoned being stuck with a five-year deal and its hefty early repayment charge was the riskier option.

The clincher was that the West Brom would lend us £40,000 more than Santander would because it had a more relaxed affordability calculation, and we wanted that money — the place needed some work. It was an interest-only mortgage, which appealed because the repayments would be low while my wife was temporarily out of work. The two-year deal it was.

Fast forward a year and . . . yes, I know, I’m an idiot.

Since we took out our mortgage the base rate has risen six times, now sitting at 1.75 per cent. It is heading in only one direction, and could be as high as 3 per cent when our two-year fix term ends.

Lenders, of course, follow the base rate when setting their rates. According to the data firm Moneyfacts, the average two-year fixed-rate deal has gone from 2.55 per cent to 3.74 per cent since we took out our loan, and the average five-year fixed rate is up from 2.78 per cent to 3.89 per cent. Next summer we may be offered 4 per cent, which could mean paying £1,000 more each month than we do now.

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So what can we do about it? Work is about to begin on the downstairs of our house, and it’s becoming ever more expensive because of inflation — we’ve now scaled back our plans and are leaving a tumbledown garage in place. We’ll mitigate the impact of our bigger future mortgage payments by setting aside money each month, and perhaps overpaying on our existing deal. We’ll burn through our savings.

However, for many borrowers coming off fixed rates next year, the prospect of a deal at a much higher rate is going to trigger a “payment shock”, as the broker Andrew Montlake puts it. Of course, at this time of pandemic, war, rising inflation and heatwaves, planning anything is difficult — from when to remortgage to how often to water the garden. I’ll be far from alone in facing nasty flashbacks over the coming months.

By DAVID BYERS

Source: The Times

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Knight Frank: Scottish commercial property investment hits pre-pandemic levels in first half of 2022

Scottish commercial property enjoyed its best first half of the year for investment volumes since 2018 as the market continued its recovery from the Covid-19 pandemic, according to new analysis from Knight Frank.

The independent commercial property consultancy found that £1.2 billion of commercial property deals were agreed between January and June 2022, up 54% on the same period last year. The figure is also 21% ahead of the five-year average – albeit, this was skewed by low investment volumes during 2020 and, to a lesser degree, 2021.

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Overseas investors represented more than two-thirds (68%) of the total investment figure, equivalent to £843 million, with UK property companies the second most active buyers totalling £296m – 23.9% of overall investment volumes.

Investment in retail assets increased by more than 55% on 2021, rising from £148m to £230m with retail warehousing accounting for £165m of the total figure. Offices were the most popular asset class with £410m worth of deals, boosted by the sale of HFD Group’s 177 Bothwell Street in Glasgow, in what is believed to be a record transaction for Scotland.

Edinburgh saw £400m of investment, while Glasgow accounted for another £329m. Deal activity in Aberdeen continued to pick up, reaching £189m, largely from the sale of two retail warehousing assets.

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Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The first half of the year has underlined a couple of key trends that have emerged over the last two years: retail warehousing and industrials remain in high demand, while prime offices are highly sought after – underlined by the deal for 177 Bothwell Street.

“Similarly, overseas investors accounting for such a high share of investment during the last six months also highlights the strength and depth of the buyer pool for Scottish commercial property.

“An uncertain macro-economic outlook will likely cool deal activity over the next couple of months. However, commercial property has typically acted as a hedge against inflation for investors and, with yields in Scotland’s main cities comparatively good value and supported by strong occupier markets, we expect interest to remain strong in the second half of the year.”

Source: Scottish Construction Now

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Foreign owners hold £90.7bn worth of property in the UK

Overseas nationals own almost 250,000 homes across England and Wales, the latest research by London lettings and estate agents Benham and Reeves shows.

In the current market, that is £90.7bn worth of property, suggesting that the UK remains a safe haven for foreign homeowners.

On a regional basis, London is home to the highest value of foreign owned homes, with the 85,451 properties belonging to overseas homeowners equating to a total value of £45.3bn.

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Westminster ranks top, with foreign owned homes commanding a current market value of £11.8bn, while in Kensington and Chelsea this total sits at £10.7bn.

Tower Hamlets ranks third, although some way off the top two, with overseas homeowners sitting on £3.7bn worth of property, followed by Wandsworth (£3.3bn) and Camden (£3.2bn).

Outside of the capital, Buckinghamshire is home to the highest value of foreign owned homes at £31.1bn, while Tandridge (£1.6bn), Liverpool (£1.4bn), Salford (£1.1bn) and Manchester (£1.1bn) also make the top 20 list.

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Director of Benham and Reeves, Marc von Grundherr, commented: “It’s not just domestic homeowners who have benefited from some extreme rates of house price appreciation in recent years and despite attempts to deter foreign interest, the value of homes owned by overseas buyers remains considerable, to say the least.

“While London is home to the highest concentration of foreign owned property market wealth, it’s certainly not confined to the boundaries of the capital alone, and overseas buyers remain an important segment of the market across England and Wales.”

By MARC DA SILVA

Source: Property Industry Eye

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Property market investment is crucial to economic recovery

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jamie Johnson is chief executive of FJP Investment

By Jamie Johnson

Source FT Adviser

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Lam Ka-sing

Source: SCMP

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Expat mortgage market growing as lenders expand offerings

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

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

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

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

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New expat mortgage opportunities for 2022

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

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

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

Buy-to-let from abroad

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

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

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

Where are overseas investors buying?

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

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

By Eleanor Harvey

Source: Buy Association

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Overseas investors snapping up UK property investments

Wealthy overseas investors are still honing in on the UK property market as a key investment location, with Hong Kong buyers leading the trend.

Property investors based abroad are continuing to see the benefits of the UK housing market as a “safe haven“. New data based on HM Land Registry statistics shows that foreign ownership of UK property has gone up by around 180% in 11 years. Furthermore, it found that almost a quarter of a million homes were registered to buyers with a correspondence address abroad in August.

The research also shows that more of these overseas investors are individuals rather than companies. The buyers were spread over 20 different countries, with Jersey, Guernsey, Isle of Man, British Virgin Islands, south-east Asia and the Middle East all top locations for foreign investors.

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Hong Kongers still investing in UK

The UK housing sector has long since been a popular option among Hong Kong residents looking for investments abroad. The latest statistics show that the biggest spenders in UK property from overseas are from Hong Kong, purchasing more than 21,300 homes since 2010. In August, a total of 51,866 property titles were registered to those with addresses in the region.

Since the recent changes to the UK BNO visa, there has been more interest from overseas investors from Hong Kong seeking property in this country. The new system gives nationals more opportunities to live and work here, as they can apply for two periods of five years to stay in the UK. For many, this makes purchasing property in the country even more appealing.

Favourable exchange rates are another attraction for investing in UK property right now.

Stephen Ludlow, chairman at Ludlow Thompson, said earlier this year: “Fears that Brexit might dampen the appeal of UK property amongst overseas investors have been unfounded, with the number of overseas landlords reaching a record high.

“Many canny investors took advantage of the temporary drop in Sterling’s value to purchase properties in the UK and benefited from both an increase in property prices and a recovery in sterling.”

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Which areas are overseas investors targeting?

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

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

“Rising house prices in the UK are often attributed in part to purchases by overseas buyers. However, gaps in published official data hamper our understanding of such purchases, with previous analysis of the number and effect of overseas buyers being based on small samples or anecdotal reports,” CFPData added.

By Eleanor Harvey

Source: Buy Association

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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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