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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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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.”

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

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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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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Securing an expat mortgage for a UK property

In 2019, the United Nations estimated that 13.1% of the total population of Spain were migrants, some of whom are British expats living in Costa Blanca and Costa Calida. Despite moving overseas, these expatriates may wish to retain a property in the UK as a form of rental income or as a personal dwelling if they plan to eventually return to the UK.

Despite various uncertainties, such as Brexit disrupting the UK’s economic climate, domestic house prices continued to rise in recent years. No matter the reason, if you are considering making a financial investment, purchasing a property in the UK could still be a viable option.

Can an expat get a UK mortgage?

Since the introduction of the Mortgage Credit Directive (MCD) in 2016 by the European Commission, applying for a UK mortgage whilst living abroad is no longer a simple and straightforward process. Volatile exchange rates have caused many high street lenders to turn away from offering foreign currency mortgages, as their computerised systems deem expats as high risk and lenders are unwilling to monitor many exchange rates at one time.

However, this does not have to be a cause for concern if you are considering applying for a mortgage on a UK property as there are other options available to you. Specialist lenders, such as building societies, are able to offer expats mortgages using various foreign currencies.

What is an expat mortgage?

After reviewing each case individually, these specialist lenders can fundamentally provide two different types of mortgages to expats; a residential mortgage or a buy to let mortgage. Residential mortgages are reserved for those intending to use the property as their primary UK residence or for family remaining in the country, whereas buy to let mortgages allow overseas landlords to rent out their property and generate an income whilst living and working in Spain.

Borrowers can expect to pay a higher deposit and overcome considerably more obstacles than when applying for a regular, residential mortgage. Hurdles include:

  • Credit rating: being able to prove you have a good credit history is a good indicator that mortgage repayments will be met. Make sure you update your address details on your bank accounts so lenders can evidence your address history when applying for finance.
  • Deposit currency: when it comes to expat mortgages, fluctuating exchange rates can cause major issues when determining the size of your income in relation to the GBP loan you are applying for. Lenders will ask you to provide evidence of how you accrued your deposit, e.g. the accumulation of savings over time through bank statements.
  • Repayment currency: exchange rates can also give the impression that your salary seems unstable, thus alluding to a high-risk investment. By reviewing each case individually and using an approved currency list, specialist lenders can often see past these complexities. When it comes to buy to let mortgages, the rental payments you will be charging your tenants will be assessed to see if this provides adequate cover for your prospective mortgage repayments.

Should I seek independent financial advice?

When applying for an expat mortgage, you will soon discover that the process can be significantly more complex, demanding and stricter than a regular mortgage application. It may, therefore, be beneficial to seek independent financial advice or do a comprehensive comparison of specialist lenders. The process used to approve mortgages by these specialist lenders allows them to assess your individual situation appropriately rather than relying on an impersonal and automated process, increasing your chance of success.

Source: The Leader

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Getting An Expat Mortgage Is Not As Easy As You Would Think

British expats with home thoughts from abroad find getting a mortgage is a challenge.

Many of the 4 million Brits choosing to live overseas want to keep their options open by owning a home in the UK.

But a government-initiated squeeze on mortgage lending has confined expats to seeking loans from a small group of niche lenders.

Although lenders say the number of expats wanting to borrow is increasing, government restrictions are keeping a lid on the market.

Expats are cash-rich as they often pick up tax-free salaries in locations like the Gulf States.

They are likely to be paid in US dollars, which has an attractive exchange rate against the Pound, and probably have the bill for accommodation costs picked up by their employer.

This leaves them with money in the bank.

Property is an ideal investment

British buy to let property is seen as an ideal investment, with good capital growth and often a queue of tenants willing to pay the rent.

Many mortgage applications fall at the first hurdle.

Only a few lenders want expat customers – top of the list are Kent Reliance, Al Rayan Bank and Market Harborough Building Society.

They operate strict underwriting procedures to determine identity and affordability.

Expats will also find they have to put down a minimum 25% deposit against the property value and will probably pay a higher interest rate than UK borrowers – and higher mortgage arrangement fees as well.

Expat tax status at risk

But beware. Not all countries are accepted as suitable places for lending to expats. Each lender will have their own list and may exclude many African and Asian countries with a reputation as money-laundering trouble spots.

If an expat is not paid in US dollars, this could impact their borrowing as the lender will want to safeguard the loan against exchange rate fluctuations.

Another issue to consider is tax.

If you buy a property in the UK for your family to live in and stay there when you visit Britain, you could find your non-residence status as an expat at risk with HM Revenue & Customs, so consult a tax adviser before making a mortgage application.

Source: Money International