Posts with tag: foreign investors

Foreign Investment is Pushing London House Prices Out of Reach of First Time Buyers

Published On: July 27, 2017 at 9:30 am

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Foreign investment into new build second homes and buy-to-lets in London could be pushing house prices way out of reach for the capital’s first time buyers, found the latest research by eMoov.co.uk.

Using recent data from the Land Registry, the online estate agent looked at the gap between the average first time buyer house price in the capital and the average price of a London new build since 2012. The analysis found that, not only has there been a consistently increasing deficit of 11-13% between 2012 and 2016, so far this year, that gap has already escalated to over 18%.

Despite recent hikes in Stamp Duty for second and buy-to-let homes, and Britain’s decision to leave the EU, a report by York University on behalf of the London Mayor, Sadiq Khan, has found that foreign investors are snapping up thousands of new build homes, which are suitable for first time buyers.

Foreign Investment is Pushing London House Prices Out of Reach of First Time Buyers

Foreign Investment is Pushing London House Prices Out of Reach of First Time Buyers

The boroughs with the highest percentage of foreign buyers were Westminster, Tower Hamlets and Greenwich, with between 9-11% of all London homes sold overseas.

Kensington and Chelsea (8.4%), Southwark (8.4%), Hackney (7.4%), Lewisham (6.2%), Hammersmith & Fulham (4.2%) and Newham (3.7%) also ranked in the top ten.

Over 50% of all London properties sold abroad were also below the £500,000 mark.

In 2012, the average first time buyer in the capital paid £264,682 for their property, however, the price of the average London new build was already over £30,000 more than this threshold, at £297,587 – a difference of 11.06%.

As London’s market continued to over-inflate, this gap grew marginally but consistently larger, stretching to 11.89% in 2013, 12.34% in 2014, 12.59% in 2015 and 12.98% in 2016. However, the recent influx of foreign investment may well have widened the gap beyond reach as, so far in 2017, the difference between the affordability of a London first time buyer and the capital’s new build homes is now 18.21%.

Largest current deficit 

Newham is by far the worst offender in terms of the gap between the borough’s average first time buyer house price and the cost of a new build. Since 2012, the gap has exceeded 22% (22.5%), again growing steadily from 22.76% in 2013, 22.72% in 2014, 22.81% in 2015 and 23.26% in 2016, before accelerating to 27.91% in 2017 alone.

Westminster is home to the second largest gap, currently at 16.87%, having sat between 10.79% and 12.43% since 2012.

Greenwich has the third greatest deficit, at 16.18%, having yo-yoed between 10.77% and 11.82% since 2012.

Southwark (15.37%), Wandsworth (14.72%), Lewisham (13.60%) and Hackney (12.11%) also have a current gap of over 10%. Hammersmith & Fulham (7.39%), Tower Hamlets (7.33%), and Kensington and Chelsea (1.82%) are home to the smallest differences.

Biggest changes

Although currently home to some of the smallest differences in price, prime central London has seen the greatest turnaround in the first time buyer to new build price gap over the past five years.

The high cost of property in Kensington and Chelsea means that the average first time buyer house price in the borough has actually been higher than that of a new build – over 6% higher in 2012. However, this gap has slowly closed and finally reversed in 2017, with new build prices now exceeding first time buyer costs by 1.82% – the biggest turnaround of all boroughs.

In 2012, the average first time buyer house price in Hammersmith & Fulham was also marginally higher than a typical new build (0.33%), but has since been outstripped by a consistent increase in new build house prices – the second largest turnaround in the capital.

Lewisham has also seen one of the greatest changes in the last five years, with a 129% change and fourth largest in the last year, at 66%.

Tower Hamlets ranks third behind the prime central London boroughs, with the gap widening by 134% since 2016 alone.

The Founder and CEO of eMoov, Russell Quirk, says: “Worrying signs for London’s first time buyers and signs that aren’t just restricted to London’s high-end market, with Tower Hamlet’s seeing some heavy levels of overseas investment as one of the capital’s more affordable boroughs.

“It’s clear that new build affordability has been an issue for first time buyers over the last five years, but this gap seems to have exploded over 2017 alone. Yes, foreign investment brings with it many benefits, including a trickle-down effect of funding for other housing initiatives at lower levels and, in fact, the nationality of a buyer is not the issue.”

He explains: “The issue is a buyer utilising a property as a second home or a buy-to-let in an already cutthroat rental market, while aspirational buyers remain in the doldrums of said rental market, prohibited from making that first step onto the ladder as a result.”

With these findings, it is no surprise that one in four young Londoners plan to move out of the capital to buy their first homes: /young-londoners-plan-move-capital/

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Foreign Investors Snapping Up Rental Properties in the North West

Published On: February 9, 2017 at 11:04 am

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Foreign investors are snapping up rental properties in the North West of England, according to new research from The Mistoria Group, a specialist in high-yielding property investment.

Foreign Investors Snapping Up Rental Properties in the North West

Foreign Investors Snapping Up Rental Properties in the North West

The firm believes that foreign investors are taking advantage of the weak pound, high yields and excellent occupancy rates in the region’s university towns and cities.

The study found that there has been a surge in foreign investors purchasing student properties in Liverpool and Salford, up by 42% year-on-year. The vast majority of investors are from China and Hong Kong, followed by the UAE, Russia and Singapore.

Chinese buyers are especially keen on apartments and Houses in Multiple Occupation (HMOs), says The Mistoria Group, many of which have high rental yields. The Government’s ambition to create a Northern Powerhouse is also helping to drive foreign investors to the North West, the firm believes.

Mish Liyanage, the Managing Director of The Mistoria Group, comments: “The Brexit vote reduction in the value of sterling against the dollar and the yuan has boosted Chinese investment in the likes of Salford and Liverpool.

“The Chinese are not alone in their enthusiasm for newly-affordable UK bricks and mortar. The Brexit effect means that British property is 20% cheaper for many foreign investors, and there are no signs that this is likely to be reversed in the near future.”

He continues: “Many foreign investors buy student accommodation in the North West for their children who are studying at university. Indeed, foreign investors need to look no further than Salford and Liverpool for great investment opportunities, with yields far exceeding those found in London and the South East. Investors enjoy lower property prices and minimal void periods in many towns and cities in the North West. Both in Salford and Liverpool, we have already achieved over 80% occupancy for 2017/18 academic year with more than six months still left in this year to fill up the rest of the rooms.

“Last year, we were only at 55% at this time of the year. This clearly shows the keen interest students show in going for high quality refurbished properties, managed by a reputed student management company.”

He concludes: “Both Salford and Liverpool are undergoing a significant redevelopment, and this is providing jobs and boosting tenant demand. Investors can acquire a high quality three-bed HMO which will house four students from £120,000 onwards. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth).”

How will Brexit result affect the property market?

Published On: June 24, 2016 at 11:13 am

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Markets across the world have nosedived this morning, following the shock result that Britain is to leave the EU.

The pound is at its lowest level since 1985, following the narrow victory for the leave campaign in an historic outcome.

Shock result?

However, perhaps the result shouldn’t come as that much of a shock. Just yesterday, a poll of over 2,800 homeowners by PropertyPriceAdvice.co.uk gave Leave a substantial lead, of 49.1% to 41.5%.

PPA’s Peter Sherrard noted, ‘as predicted by PropertyPriceAdvice earlier this week, the UK has voted to leave the EU. This shock vote will have far reaching ramifications for the residential property market in the UK during the rest of year.’[1]

Housing market fears

With uncertainty rife, James Roberts of Knight Frank noted, ‘while we need to wait to see precisely what impact a Brexit will have on the UK housing market and wider economy, early indications are that the fall in the pound’s value, as well as the stock market, could very well lead to a new recession, which in turn may result in a cult in interest rates and possibly even further quantitative easing.’[1]

‘The chances of a technical recession, as business investment is curtailed, is high, and exporters and financial services firms will be in the forefront of the downturn. In the light of the above risks we expect the Bank of England, seasoned by the experience of Global Financial Crisis, to respond quickly. An interest rate cut of 25 basis points is a strong possibility at the Monetary Policy Committee’s July meeting, or perhaps earlier if required. We may also see a return of quantitative easing, if there are signs that investment is deteriorating. This should in our opinion help restore confidence as the summer progresses,’ Roberts added.[1]

Halts

Ian Westerling, managing director of Humberts, warns that, ‘housing market professionals will need to brace themselves for a new norm in market dynamics, underpinned by the ongoing unknowns. The wait and see period could lead to some price adjustments; the onus will be on the government to act swiftly to avoid the property market becoming paralysed which would have a knock-on impact on the rest of the economy.’[1]

Adam Challis, head of Residential Research at JLL, believes there will be a slowdown in the housing market for a couple of years.

He observed, ‘price growth will be flat over 2016, reversing gains from the first half of the year, while our central expectations of price falls between 3% and 5% in 2017 and 2018 are based on the best case scenario of a relatively orderly adjustment to our new political realities. It is crucial that UK politicians and civil servants push hard to regain transparency early on over the terms of our trading relationships with key European Union partners.’[1]

How will Brexit result affect the property market?

How will Brexit result affect the property market?

Opportunity knocks?

Britain’s decision to leave the EU has not ben widely condemned across the whole industry. The out vote could open doors for investors, particularly from overseas, to take advantage of the weak currency and potential house price drops.

Robin Paterson, joint chairman and CEO of UK Sotheby’s International Realty, urges people to embrace the result, ‘whole heartedly.’

‘This opens new opportunities for investment, we may have fewer European investors in the coming months but we believe there will be significant inward investment from Asia, as well as from the US. Buyers from these regions will undoubtedly be looking to snap up bricks and mortar in the UK with the predicted fall in sterling,’ Paterson said.[1]

Edward Heaton, founder and managing director of property buying and search agent Heaton and Partners, is also optimistic, saying, ‘there is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/6/leave-win-historic-referendum

Foreign investors unhappy with agents fees

Published On: June 22, 2015 at 3:59 pm

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Concerns over letting agent fees are growing, with a leading buying agent claiming that overseas investors are left surprised with the perceived high costs.

Henry Sherwood is managing director of The Buying Agents, an agency which helps wealthy overseas purchasers find property, says that many are put off by high fees.

Add-ons

‘Foreign clients are delighted for a buying agent to find a property and negotiate a good price in return for a 1.5% fee,’ said Sherwood. However, he went on to say that, ‘they then let it out and can’t believe the 10 or 20 per cent charges they receive from letting agents.’[1]

In comparison, Sherwood believes that the majority of UK landlords take these fees as mandatory. ‘Most don’t even look at what the charges are for,’ he said. ‘Smaller items of a few hundred pounds are often lost amongst bigger costs of 10 per cent for this and 6 per cent for that.’[1]

As a result of these fees, Mr Sherwood says that he prefers agents of property management services that offer alternatives.

Foreign investors unhappy with agents fees

Foreign investors unhappy with agents fees

Happy Tenant

An example of a company that does things differently is Happy Tenant. Founded by media lawyer Jonathan Monjack, the organisation levies an annual fee, with a one-off charge when a new tenant moves into a home. Next, the company flexes its bulk purchasing muscles to secure cut priced services from mainstream agents to find tenants, alongside a variety of services to handle EPCs and everyday maintenance.

Sherwood believes that the result is a membership-style agency that charges less than a traditional agent for very similar services.

‘We have also heard of situations where landlords actually think agents are inventing jobs during quiet periods to increase their revenue,’ he stated, before going on to say in many cases, ‘the landlords does not even know it is happening, they simply think they have bought a dud or are abroad so have no way of checking.’[1]

 

[1] http://www.lettingagenttoday.co.uk/breaking-news/2015/6/agent-says-foreign-investors-cannot-believe-uk-letting-agent-fees

 

 

Enquiries for home loans from overseas rising

Published On: May 18, 2015 at 10:24 am

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Categories: Landlord News

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A leading mortgage provider in the UK has suggested has made the remarkable claim that three out of four home loan enquiries during the first quarter of 2015 were made by British expats.

deVere Mortgages feels that the strong performance of the pound, combined with the ever-growing demand of rental accommodation are two of the main contributing factors in the surge in activity.

Increased activity

The firm has stated that much of the increased activity has predominantly come from expats living in locations such as Russia, the Middle East and the United States.

Kevin White, UK Head of Financial Planning at deVere, commented that, ‘we knew demand would always be strong from expats because of the distinct investment advantages and because expats, typically have a higher level of disposable income than those residing full time in the UK.’[1]

Enquiries for home loans from overseas rising

Enquiries for home loans from overseas rising

Changes in currency dynamics have been labelled as one of the major contributors to the upturn in foreign interest in the UK market. Britain’s strong economic recovery and surging demand for rental accommodation have made a number of expats want to invest in their country of origin.

London was also found to be cheaper for international investors than other major cities around the world. With this said, deVere noted that it is becoming more difficult for first-time buyers in London to enter the market. Lack of supply, soaring rents and huge asking prices are all contributing factors. As a result, many overseas investors are looking elsewhere in the UK for higher returns in regional property investment.

[1] http://www.selectproperty.com/2015/04/surge-in-british-expats-making-uk-property-investment/?utm_content=buffer7019a&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

 

Chinese investors to target UK market

Published On: May 13, 2015 at 4:16 pm

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Categories: Landlord News

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The Conservative election victory has seemed to please most landlords, agents and potential buyers within the property market. In addition, the news has seemingly given more foreign investors the confidence to invest within the UK market.

Buying China

Experts have suggested that wealthy Chinese investors will be the next foreign nationals to spend heavily in the British market. Paul Welsh, founder of Largemortgageloans.com suggests that China’s struggling economy, combined with further initiatives from the UK government, could see increased investment from the far-east in coming years.

‘China and Chinese investors coming to the UK is the next big thing, ‘said Welsh, ‘the British Government has been wooing big business and high net worth individuals in the country in a big way.’ ‘If you also take into account China’s flagging economy and a potentially unstable political environment, London is seen as a safe haven for foreign money. It’s an escape and access to a European passport,’ he continued.[1]

Welsh added that, following the election outcome, ‘we will see a lot of action a the result of pent up demand for property in the £1m-plus bracket.’[2]

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Super prime market shift?

Previously, investors from Russia and the Middle Eastern have dominated the so-called, ‘super prime’ market, with as many as one in five high-value properties in certain parts of London and the South East sold to foreign nationals.

Welsh believes that Chinese investors worth anywhere in between £200m to £1bn could be targeting the British market. Largemortgageloans.com stated that they saw a 1, 150% increase in traffic from China to it’s website between February and March. This figure is expected to grow.

Additionally, Welsh thinks that house prices will grow overall following the Conservative’s election victory. He commented that because of the result, ‘people will be able to buy and invest with confidence. We will see another five years of house price growth, aided by the removal of the threat of a mansion tax, pension reforms and non-dom rules staying the same.’[3]

[1-3] http://www.ibtimes.co.uk/chinese-investors-set-pile-into-uk-property-following-david-cameron-election-victory-1500768