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What do high rates mean for HNWIs seeking mortgages?

Interest rates have dominated the headlines in 2023. As inflation remains sticky and well above its 2 per cent target, the Bank of England’s monetary policy committee has voted on 14 consecutive occasions to hike the base rate.

The impact on mortgage customers has garnered a great deal of political and media interest.

Understandably, the fate of high-net-worth individuals seldom enters the conversation, but within the mortgage market we cannot afford to overlook the issues affecting such borrowers.

Indeed, now is an opportune moment for lenders and intermediaries to take stock of the challenges that HNWIs face when looking to secure, and in the current climate repay, a mortgage.

Moreover, we must consider what can be done to ensure wealthier borrowers are offered suitable support in the higher interest rate environment.

The challenges involved in HNW mortgages

It may seem entirely counter-intuitive to think that HNWIs will regularly struggle when it comes to securing a mortgage. Yet this remains the reality; they run a surprisingly high risk of being turned away by conventional lenders.

For context, Butterfield Mortgages conducted research in the past, surveying more than 500 UK adults who all had a net worth in excess of £1mn. We found that 12 per cent had been rejected for mortgages in the preceding decade.

But why are so many HWNIs turned down for a mortgage?

It comes down to the often complex and diverse nature of HNWIs’ wealth – their income, investments and liquidity.

As a rule of thumb, the wealthier an individual is, the more complicated their income structure and finances are likely to be.

For instance, HNWIs tend to have their capital locked up in illiquid assets, spread across multiple jurisdictions. Meanwhile, they may have irregular or no formal source of income, and perhaps have not built up an attractive credit profile by repaying regular debts.

As a result, the process of applying and being approved for a mortgage can be far more complex for these individuals.

The standard ‘tick-box’ methodology applied by many high street lenders can pose unexpected complications, simply because how HNWIs make, spend and invest their money typically differs significantly from most prospective borrowers.

Further, HNWIs may not be UK residents, and they may also differ in the reasons they want or need a mortgage, both of which would create additional obstacles.

Many lenders will not supply finance for a property that will not be an individual’s primary residence, nor to an overseas buyer.

As such, HNWIs seeking finance for a buy-to-let investment or a second home will often struggle to find a mortgage on the high street.

Lenders and brokers require skill and experience

HNWIs being rejected for mortgages remains a prevalent issue.

As noted, they are ill-suited to the methodology that many mainstream, high street lenders apply to assess mortgage applications.

Meanwhile, their desire for a loan to purchase an investment property naturally rules out a swathe of other lenders.

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Clearly, HNWIs need to find specialist lenders and brokers who are well-versed in this type of client.

More specifically, they need lenders and brokers that have the skill, experience and resources to review each borrower and application on a case-by-case basis; to take in the full picture of the person’s financial profile, to understand the type of property they want to buy and why, and to assess their ability to repay a loan.

In essence, a more bespoke approach is required when working with HNWIs.

Lenders and brokers reliant on processing huge volumes of applications will, generally speaking, not have the structures and processes in place to operate in such a flexible manner.

Returning to the matter of rising interest rates – this economic shift over the past 20 months has only heightened the challenges that exist for HNWIs, thereby placing a greater onus on lenders and brokers to assist wealthier borrowers as they seek to navigate the mortgage market.

How higher rates affect HNWIs

For more than 13 years – between March 2009 and May 2022 – the BoE’s base rate resided below 1 per cent. It was never going to remain at such historic lows, which were largely indicative of economic turbulence stemming from the global financial crash, Brexit and the pandemic.

That rates would rise at some point was a given. As many who are longer in the tooth would also note, a base rate of 5 per cent or higher is also normal in the grand scheme of things – this was the general benchmark for much of the 1990s and 2000s, while the 1980s saw a base rate predominantly in double figures.

However, while a higher base rate is by no means atypical, the speed at which it has risen has undoubtedly created challenges for borrowers.

Jumping from an all-time low of 0.1 per cent in December 2021 to 5.25 per cent by August this year is a sharp rise, and coming after a prolonged level of such low rates, has placed a strain on many people who will have purchased properties with little consideration as to how such a shift could impact them.

HNWIs are no exception here. Again, while not featuring in the general discourse around higher rates and the impact on mortgage customers, HNWIs warrant attention and support.

Broadly speaking, HNWIs direct their investments towards high-value properties, such as those in prime central London. They may, for example, require a £5mn mortgage for the purchase of a £7.5mn townhouse in a prime central London postcode.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Coupled with the size of the mortgages HNWIs take on is the length of their terms. HNWIs investing in a second home or BTL property may take on mortgages that have five or 10-year terms, unlike the 25 or 30-year terms that most UK homebuyers will be able to access.

If not on a fixed-term loan, the hikes to the base rate since the end of 2021 will have taken a notable toll on even very wealthy borrowers. With less time to spread out increased costs on an already large mortgage, some HNWIs will be struggling to make repayments.

Again, the complicated nature of their finances and investments comes into play. HNWIs might be asset-rich (owning all manner of assets) but have limited access to liquid cash.

Seeing their mortgage repayment skyrocket will require them to release equity from other investments or access cash from other sources.

As with the application process, it is important that preconceptions do not cloud the due attention that HWNIs require. Those lenders and brokers who are used to operating in this space will likely be acutely aware of this point.

Improving support for HNWIs

Butterfield Mortgages recently conducted a survey of mortgage customers in the UK. It revealed that just 44 per cent of borrowers feel they have received satisfactory guidance and communication from their mortgage providers since the initiation of the interest rate hiking cycle in December 2021.

This underscores the importance of lenders working with borrowers to recognise potential issues as they arise and, whenever possible, bringing forward solutions.

The necessity for this aid extends to HNWIs regardless of their affluence, and lenders must be unwavering in their dedication to aiding borrowers who need to continue to invest in property with a sense of assurance.

Alpa Bhakta is the chief executive of Butterfield Mortgages

By Alpa Bhakta

Source: FT Adviser

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Hong Kong buyers dominating foreign homeownership in England & Wales

House hunters from Hong Kong have been found to be the most prolific overseas buyers operating in the nation’s residential market, accounting for over 13% of all foreign-owned homes in England and Wales, according to newly released market analysis.

London lettings and estate agent, Benham and Reeves, submitted a Freedom of Information request to the Land Registry to ascertain the 50 most prominent foreign nations represented among individual residential property owners in England & Wales, and how many properties they own.

According to the data, buyers from the 50 most represented foreign nations among owners of homes in England & Wales combine to own 187,275 properties.

Hong Kong buyers most prominent nation

Buyers from Hong Kong own the largest proportion of these properties, with 24,759 homes representing 13.2% of the aforementioned total.

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Buyers from Singapore own 15,752 properties or 8.4% of the total; while buyers from the U.S. account for 6.4%.

Buyers from the UAE account for 5.7% of the total, while buyers from Ireland (5.3%), Malaysia (5.2%), China (4.6%), Australia (4.4%), Kuwait (4.3%), and France (3.7%) are also strongly represented on the national housing market.

Increase in foreign buyer numbers

These figures come after the total number of properties owned by buyers from the top 50 foreign nations increased by 3.8% between January 2022 and January 2023.

Ownership for Chinese buyers has increased the most in the past year, rising by 18.8% to own 8,736 properties.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Hong Kong nationals have increased their presence by 11.6% since 2022, and Israeli buyers have increased their footprint on the national housing market by 9.8%.

Significant increases have also been recorded among buyers from Gibraltar (6.7%), Austria (6.7%), Turkey (6.7%), Egypt (6.3%), Norway (5.1%), Germany (4.8%), and Sweden (4.7%).

Among the top 50 most represented nations in England & Wales’ housing market, three have actually seen their ownership proportion decline in the past year.

Buyers from Ireland now own -3.5% less property, buyers from Taiwan have reduced ownership by -3.3%, and Russian buyers now own -0.5% less property than they did at the start of 2022.

Director of Benham and Reeves, Marc von Grundherr, commented:

“It’s no secret that England & Wales is a hugely attractive market for overseas property buyers, with London being a particularly desirable location. The stability of our property market offers reliably a profitable space for investment buyers, and our country, with its rich history and culture, has long held great appeal for people looking to buy outside of their home countries.

“Many experts believed that Brexit would result in there being fewer overseas owners as access to the EU was reduced and the anticipated economic struggles removed some of the profitability of investing in our great nation. Our exclusive research reveals that none of this has come to fruition and that, in fact, our market has only become more popular.

“While this popularity isn’t limited to one single nation, it’s certainly being driven by Hong Kong buyers who continue to be the most prominent foreign nations operating within our bricks and mortar market.

“This is certainly no new trend and Benham and Reeves has had a local Hong Kong office since 1995, helping those who are looking to purchase in England and Wales. However, it’s fair to say that our team of experts in Hong Kong have never been busier and we expect this to remain the case going forward.”

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.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

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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The Perfect Rental Storm Continues for UK Expat and Foreign National Investors

A shortage of rental homes and huge numbers of renters in the market are combining to create the perfect rental storm for UK Expat Investors.

The ‘Perfect Rental Storm’ continues for UK expat and foreign national investors in 2023 as a shortage of rental homes combine with huge numbers in the rental market to make for a very profitable rental landscape.

Shortage of Rental Homes

There are currently less than half the normal number of homes available to rent at the moment and this is contributing to fast-rising rents. This equates to the typical estate agent having only 8 available rental properties. The pre-pandemic average was 16, which shows how much rental availability has suffered in recent years.

The low number of rental homes is being driven by high consumer demand and high mortgage rates, which mean that prospective buyers are struggling to get onto the property ladder and are consequently stuck in the rental market. This situation means that rental prices are rising quickly amidst fierce competition. In practice, the average rents for those starting a new tenancy have risen by 12% in the last year.

With cities proving even more popular in the rental market, places like Manchester, Birmingham, and Cardiff have risen as much as 15%. Even renters who are choosing to stay put are facing increases of around 4%. This is largely because many existing renters are in fixed-period rental contracts and landlords aren’t looking to increase prices in a bid to maintain tenancies. Because of the much lower price-increases for renters who stay put, many renters are choosing to stay where they are to avoid risking higher rents. According to data from the English Housing Survey, the average length a renter stays in a property has now risen to 4.4 years, which is up from only 2.7 years in 2012. This means that the flow of available homes into the market is very slow and is further exasperating supply constraints.

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Sky High Rental Numbers

In addition to the shortage of rental homes, there are also sky high numbers of people in the rental market, with the proportion of people in the private rental sector jumping by 28% in the last ten years. According to the government’s latest housing census, 5 million households are now renting their home in the private sector. This is likely a result of affordability constraints caused by house price growth and lower first-time buyer numbers, as well as many of the factors mentioned above. Crucially, the number of households has also increased, with the number of new properties being built not matching this increase.

The huge numbers of households renting at the moment is good news for UK expat and foreign national investors, as the shortage of rental homes is being further exasperated by ever-increasing numbers of renters. These factors will both contribute to constant increases in rental incomes and rental yields, meaning big profits for UK expat and foreign national investors with the right property.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

What Does This Mean for UK Expat and Foreign National Investors?

‘The problem of high rents and low rental availability is unlikely to go anywhere as a huge increase in rental supply will be difficult as a result of higher borrowing costs and regulatory changes’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘But for those who do manage to invest in property, the rewards are likely to be huge. The number of households in the rental market has grown massively over the last ten years and it’s likely to keep growing, with the number of new homes being built continually falling short. Rental demand is consequently bound to stay high, and this will feed big profits for UK expat and foreign national landlords.’

‘Competition is also lower for UK expat and foreign national landlords who choose to invest in UK property now. This is due to new tax and regulatory changes in the buy-to-let sector which have impacted landlords’ bottom lines and contributed to lower levels of investment into the rental sector. In turn, this has contributed to landlords selling their existing rental properties as investors look to cash in on capital growth profits, especially given the massive price rises in the last few years.’

‘While there are obvious difficulties for UK expat and foreign national investors to navigate when investing in UK property, things are not as difficult as they once were’ says Stuart Marshall. ‘The advent of specialist UK expat and foreign national mortgage brokers has been a hugely positive change for many UK expat and foreign national investors as these brokers can help investors to navigate the inherent difficulties of investing in UK property. Not only will they help to smooth the process and make completion as quick as possible, but they can also help to advise UK expat and foreign national investors in the process of choosing a property for their specific investment goals.’

To maximise the quality of the investment, UK expat and foreign national investors should keep abreast of the popular types of property and what is appealing to renters at the moment. In the most recent housing census, it’s clear that the popularity of flats has seen a huge increase over the last few years, with 500,000 more households living in flats compared to ten years ago. This demand for flats also lines up with the popular properties for UK expat and foreign national investors at the moment. Namely, energy efficient properties with lower management and running costs because they can assure a stability of rental income. In fact, much of the recent focus for UK expat and foreign national investors is shifting away from capital growth and back to solid rental incomes. This is because the rental market is booming but huge rises in property value over the last few years have contributed to low capital growth potential. City centres have also become incredibly popular for renters, which again favours flats in the rental market. Flats are also highly mortgageable, which is good news for UK expat and foreign national investors, as there are a range of excellent UK expat and foreign national mortgage products available at the moment.

Source: EIN News

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Overseas buyers are flocking to London due to dollar strength, says agent

Carter Jonas predicts that 2023 will be an exceptional year for the prime central London (PCL) market following a recent spike in the number of cash buyers registering to purchase property in the heart of the capital.

Most recently, the Marylebone and Mayfair office has seen all cash buyers, many of whom are dollar buyers utilising the good exchange rates to purchase in prime central London, Next year is expected to continue on this trajectory, the estate agency says.

Carter Jonas predicts that the prime central London property market is set to out-perform the rest of London – and the country – in the coming months as overseas Dollar buyers from the US, Middle East and Asia flocking to the Capital to take advantage of the weak pound.

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Samuel Richardson, head of sales at Carter Jonas in Marylebone and Mayfair, commented: “We are anticipating that 2023 will be a very good year for the prime London property market. At the end of September this year, UK property was 25% less expensive for these buyers than in June 2021 and this is a trend we expect to continue. 80% of those that purchased via our Marylebone office in prime central London in the last quarter of 2022 have been from overseas. 50% have been Dollar buyers, the majority from America, followed by those from the Middle East and Singapore. Interestingly, 90% of American buyers were Californian.

“The major prime central London boroughs will remain desirable investment locations next year. Mayfair, Marylebone, Kensington and Chelsea are set to outperform all London markets as these buyers are purchasing in cash for purely investment purposes.

“Areas such as southwest London will likely be more heavily impacted, as those who bought there in recent years will be affected by the rising interest rates. This could see a drop in property values, as many people may sell up.”

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Richardson added: “I am almost certain that prime central London will outperform all other London areas in 2023. Despite there still being high demand and lack of supply, the soaring rental market will see the return of the investor as they take advantage of better rental yields. Savvy investors are also taking advantage of discounts from developers who are selling remaining units in new build developments and are happy to discount to cash buyers.

“Buyer demographics are varied from international and domestic professionals buying pied-a-terres in convenient, high traffic areas, to those purchasing short-term investments or properties for children whilst studying in London. We’re also seeing many families looking for a more permanent and long-term abode. These buyers are spending anywhere from £800,000 to upwards of £70m.

“If the dollar remains strong, I believe that prime central London will outperform the rest of London next year. The reason for this is due to high demand and a soaring rental market which will appeal to investors taking advantage of the good exchange rates.”

By Marc Da Silva

Source: Property Industry Eye

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London rental properties letting within minutes

One lettings agency in London says that tenant demand is so great in the capital for rental properties that many homes are being let within minutes of becoming available.

Benham and Reeves point to demand created by the return of professionals and international students, along with the growing shortage of available properties to rent, for creating a ‘challenging market’.

Tenant enquiry levels have continued to increase over the summer, across the firm’s 19 branches.

They say this is the ‘Most competitive London rental market that we have ever known’.

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Many branches have had almost no stock
In addition, tenants are finding that many branches have had almost no stock available, at best one or two apartments available to rent.

In a market update, the agent says: “Many properties are renting within hours – and some within minutes – as applicants immediately make an enquiry as soon as a property goes live on our website.

“This is swiftly followed by a full asking rent offer and once agreed, a holding deposit – so anxious are they to secure a property.

“This of course is great news for buy-to-let investors who, in many parts of the capital, are seeing their rental properties let immediately with voids at an absolute minimum. Sometimes just a day or two.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

London is now a ‘landlord’s market’
The update also makes clear that the imbalance between supply and demand means that London is now a ‘landlord’s market’ with property investors expanding their property portfolios.

And rents are rising to pre-pandemic levels – some are now 10% higher.

Investors from overseas are also finding that the weakness of sterling makes London property considerably more affordable, while the shortage of rental properties means demand is the highest that the agent ‘has ever seen’.

Professionals returning to live and work in London, along with international students, are fuelling demand.

In some areas, including the City and east London, around 85% of applicants have been international students.

With the rental market so competitive, tenancy renewals remain at an all-time high – often more than 90% of existing tenants are renewing because they see there is a limited choice of properties available.

Source: Property 118

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Overseas buyers’ interest in UK housing market rising

‘Visa’ was the most searched term by brokers in April, shows data provided by Legal & General’s SmartrCriteria tool.

This is the second month in a row that Visa has topped this chart, with search volumes falling by only 4% on a monthly basis.

Visa was also the most searched term overall in 2021 and in 2020, according to Legal & General in a report released in January this year.

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The firm also notes a “surge” in searches for self-employed borrowers, with searches using average or the latest years’ accounts shooting up by 64% on a monthly basis, while searches using account evidence or multiple years’ worth of accounts overtook this, going up by 80%.

Meanwhile, searches for self-employed sole-traders increased by 43%.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Searches that incorporate environmental criteria also rose, by 24%, although this was “from a low base”, Legal & General says.

Legal & General Mortgage Club director Kevin Roberts says: “Today’s findings are another reminder of the resilience of the UK property market.

“Despite wider economic pressure, demand so far has remained steady, and in some areas of the market is even rising.”

By Gary Adams

Source: Mortgage Strategy

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Brokers see uptick in expat mortgages as Covid regulations soften – analysis

Brokers have reported an increase in expat mortgage enquiries over the past few months as borders reopen and Covid restrictions are rolled back, with expectations for the market will grow more in the near future.

Anthony Rose, co-chief executive of LDNfinance said it had seen a “healthy increase” in expat mortgage enquiries, and said when it compared increasing enquiries against timelines it could be attributed to post-Covid borders opening up with looser restrictions on international travel.

Daniel Yorke, managing director at Expat Mortgages UK which is specialist division of Commercial Finance Network, said it had seen a “gradual increase over the past 12 months” but this had become more pronounced over the past three months.

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Chris Sykes, associate director and mortgage consultant at Private Finance, added that expat enquiries had fallen during the pandemic due to travel restrictions, but there had been an “uptick” in such enquiries in recent weeks.

According to figures from Knowledge Bank, expat residential searches increased by seven per cent from 2020 to 2021, and 16 per cent for buy-to-let (BTL) searches over the same period.

Matthew Corker, operations director at Knowledge Bank said it had 24 categories covering various criteria and it had been growing them as expats looking for UK properties had risen.

Corker said: “While the growth has been steady in residential searches, there has been a significant increase in ex-pats look for BTL properties. Partially driving this interest is the volatility in the stock market, coupled with UK house prices exceeding all growth expectations.

“Lenders are also reacting to this trend and there have been more and more adding products for expat borrowers. With house prices and rents looking set to keep increasing, we anticipate this growth to continue in 2022.”

Primis’ figures for Q4 also show that expat lending, which includes residential, BTL borrowers and foreign income lending, grew in Q4. This was partially attributed to the return of high loan to value (LTV) BTL mortgages for expats and a softening of criteria to apply for these products.

Yorke said there were multiple factors in the increase in enquiries, which included Covid-19 becoming more normalised, interest rates staying “exceptionally low”, Brexit leading expats to return to the UK and the UK property market’s strong growth and activity.

Sykes said he believed the growth in enquiries was due to the UK’s “light touch approach to Covid” in terms of restrictions, which meant it was the “least restrictive place in Europe”.

Rose added: “Most of our enquiries have been expats returning to the UK looking to buy, or they’re refinancing their existing UK properties. However, we have also noticed that the end of the stamp duty holiday and strong property market post-Covid has played a vital role in clients obtaining expat mortgages for BTL properties.”

Challenges of lender choice and case complexity

Rose said one of the biggest challenges for brokers in sourcing expat lenders was the number offering suitable products.

He explained: “It’s a small, niche space which can involve placing square peg clients in round holes. Often, expats have bespoke circumstances that require providers to have a flexible approach to lending.

“A classic example is intended date of return home; some lenders require a specific date whereas others need some ballpark timelines. Naturally these times can change so it’s difficult for clients to pinpoint precisely. Lenders need to be mindful of this.”

Sykes said another issue was the “very manual process” to find a lender for an expat mortgage.

He said lenders needed to consider more factors such as what country the client is a resident in, what country they are domicile and pay tax in and what currency they are paid in.

Sykes added that some lenders needed borrowers to be employed at a “blue chip company” earning £50,000 or more, whereas others were more flexible on earning structure.

He also noted that along with the added complexity, some brokers would not have relationships in place with international and expat lenders to source the most competitive expat mortgage deal.

“If you don’t know who you are asking to narrow down these products then you cannot quote the most competitive deal,” Sykes said.

Yorke said on the biggest challenges were the increase in interest rates and LTV reductions which made it harder for expats to borrow money.

He added: “Complicated income structures make it harder for clients to be able to secure funding, or at least at the level they would ideally hope for. We overcome this by working closely with our clients to help educate them and make aware of exactly what documents & figures the lenders will need for an application.”

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Expat mortgage market expected to grow post-pandemic

Sykes said that expat enquiries had fallen during the pandemic due to travel restrictions but it “remains to be seen” if there would be a return to pre-pandemic levels or if there is a “great deal of pent-up demand” after two years of restrictions in the UK and globally.

However, he added: “We do now see this as an area that we expect to grow post-pandemic, especially as London returns to life and with prices having stagnated in the capital, this could be an attractive time for expat buyers and importantly investors.”

Yorke said Expat Mortgages UK received over 20 expat mortgage leads per week and it planned to double this volume in the next six months and double it again in the last six months of the year.

He continued that it was a growing market as expat mortgages tended to have high value properties and loan values. He also said expat mortgages encouraged a deeper relationship with the client and there was less competition in the market.

Sykes said the average size of an expat case was usually higher than a normal first-time buyer case due to the increased complexity.

Rose said despite the lengthy and complex process of an expat mortgage the “job satisfaction” advisers got from completing these mortgages made it “worth the time and effort”.

He added: “Each client has a unique story to tell which keeps our job interesting and exciting. In delivering an excellent service, we can also benefit from the referrals we receive off the back of them.”

He also noted that clients who used LDNfinance for an expat mortgage were more likely to return when it came to remortgage their UK residence when they returned home.

By Anna Sagar

Source: Mortgage Solutions

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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.

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.

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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