Monthly archive for September 2019

A UK new-build property Should you buy a UK new build property or an existing property already built? You often see news in the press moaning that not enough new homes are being built in the UK and that there’s a vast shortage of  housing. In fact, government figures show 162,180 were built last year (2018). That isn’t enough to fix the housing shortage but it does mean most of us will come across a brand-new property when we are out house hunting. Here are some pros and cons of buying a brand sparkly UK investment property new home straight from the developer against an existing home already built and for sale on the market. Pro’s of buying a new build property in the UK Unpack and go – A new home is a blank canvas with fresh tiling, paintwork, kitchens and bathrooms. This means there should be very little, if anything, you need to do to it. You can simply unpack your belongings and start enjoying your new home. A boost to buying – For many first-time buyers a new build home is the only way they can get onto the property ladder. That’s because schemes such as Help-to-Buy and Shared Ownership are only available on the purchase of a new home. Incentives – Some developers will throw in extras in order to get a sale. This could mean paying your stamp duty or covering the cost of carpets. Modern living – Top-spec new builds have all the latest technology. Many offer ‘smart home’ features and open-plan layouts. Some also have shared services such as a gym or concierge. Design a home – Buy off-plan and you may be able have a say in the design. The builder may let you choose fittings and perhaps even the layout. Low bills – New build homes have to comply with the latest building regulations. This means they are far more energy efficient than older properties. Data from Energy Performance Certificates shows over 80% of new homes have the highest A or B ratings. That compares to just 2.2% of existing properties. Chain-free – As you’ll be the first owner you won’t have a chain of buyers above you. This can take away one of the main stresses of buying a home. Warranties – Most new builds come with a warranty, which you don’t get with an existing home. But, a warranty

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Getting A UK Mortgage With Foreign Income If you are a British expat living and working overseas and you are paid in a non sterling currency, you may experience difficulty securing a mortgage on a UK investment property property or remortgaging with an existing lender. The positive news is that there are lender options for UK expats and foreign nationals when it comes to remortgaging or purchasing property in the UK. It is possible to get a UK mortgage from abroad using foreign currency or a combination of Sterling and a foreign currency, typically US Dollar or Euro. Foreign currency mortgages are available Despite the seemingly overly restrictive regulations and the influence they have over traditional lenders’ appetite for lending to those with foreign currency income, it is still possible to access the funds you need to purchase a property in the UK. The lenders who are willing to provide mortgage of this type often work through specialist brokers (intermediaries). Therefore, if you require a UK expat mortgage or UK refinance, then it is advisable to contact a specialist expat and foreign national mortgage broker like Premier Expat Mortgages. Proof of income There are still lenders that are prepared to provide UK mortgages to those paid in foreign currency. One of the biggest hurdles that you will face in the application process for a foreign currency UK mortgage is providing proof of your income. Documents Required The documents that you have to provide will vary from lender to lender, however as a rule of thumb you should expect to require: Your employer’s details A number of months’ payslips Information regarding the property you want to buy Personal details including proof of address A letter from an accountant and tax returns (if you are self employed) Documents in foreign languages The majority of lenders we work with will require the documents that you have to be written in English. However, there are some lenders that are willing to accept documents that are in a foreign language. Examples of this is if we use a Chinese bank to secure your mortgage and the client lives and works in China. The lender will have staff on hand that can read Chinese and so there will not be a need for the documents to be translated. In the event that your documents are in a foreign language, you will have to have them translated

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What is life insurance? Life insurance can pay your dependents money as a lump sum or as regular payments if you die early whilst you are working and in employment. It’s designed to provide you with the reassurance that your dependents will be looked after if you’re no longer there to provide for them. The amount of money paid out depends on the level of cover you buy. You decide how it is paid out and whether it will cover specific payments, such as mortgage or rent. You may need to think about whether receiving a payout will affect any means tested benefits your dependents might otherwise be eligible for. There are two main types of life insurance: Term life insurance policies: run for a fixed period of time (known as the ‘term’ of your policy) – such as 5, 10 or 25 years. Some policies can run longer upon request from your life insurance company. These kinds of policies only pay out if you die during the policy. There’s no lump sum payable at the end of the policy term. A whole-of-life insurance policy: will pay out no matter when you die, as long as you keep up with your premium payments. What isn’t covered with life insurance? Life insurance usually only covers death – if you can’t provide for your family because of illness or disability, you won’t be covered. Some life insurance policies provide a terminal benefit, although these are not automatically granted. A terminal benefit will pay out on diagnosis of a terminal illness. Check the terms and conditions of your policy to see if you’re covered. Most policies have some exclusions (things they don’t cover). For example, they might not pay out if you die due to drug or alcohol abuse, and you normally have to pay extra to be covered when you take part in risky sports. If you have a serious health problem when you take out the policy, your insurance might exclude any cause of death related to that illness. You can buy other insurance products for these issues, which cover: long-term illness critical illness cover, or total and permanent disability. Do you need life insurance? If you have: dependants, e.g. school age children a partner who relies on your income, or a family living in a house with a mortgage that you pay – a life insurance policy can provide for

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Why Invest in Property in the UK? Why Should Overseas Investors Invest In UK Property? Bricks and mortar have long been seen as a prudent way to invest with the phrase ‘an Englishman’s home is his castle’ revealing just how deeply entrenched in the British psyche investment property is. The UK investment property business is a financially rewarding and exciting business which can produce great rewards. It can produce a consistent income, even once you have retired. Historically, property prices have been on a strong upward trend since the 1970’s despite some volatility during the recession and credit crunch . New research has revealed that houses prices have grown faster in the UK than any other Europeans country. In fact, since 1988 house prices have gone up by a staggering 333%. This represents an average rise of 12.3% per year. Many home owners have benefited from the rising housing market and have seen their property increasing in value over the years. No wonder property investment is now seen by many as the best way to provide long term financial security. Why should you invest in property NOW? 1. House prices will carry on increasing The UK still has a serious shortage of housing caused by a number of social and demographic factors. Unlike other European countries, our population is expanding significantly and it is predicted to reach 70 millions by 2020 compared to 63.7 millions today. More people living in the UK means that the demand for housing will carry on increasing therefore driving up the price of property for the foreseeable future. According to the Office of National Statistics there will be an annual shortfall of housing in the UK of over 100,000 properties each year for the next decade. This could mean a 1 million housing shortfall by 2025 if current trends continue. 2. High rental demand, high rental returns. A number of factors have combined to push up rental demand including an increase in immigration, more people living alone and rising house prices stopping first time buyer onto the ladder. This is excellent news for landlords who are finding that their Buy to Let properties are being let extremely quickly while their rental income keeps increasing. 3. Low interest rates Interest rates have been at an all time low for 6 years making borrowing increasingly cheaper. With mortgage payments currently at their lowest, and ever increasing monthly

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What is a secured loan? A secured loan requires you to pledge an asset, such as your home, as collateral for the secured loan. In the event of missing a payment or defaulting on the loan, your bank or lender can then collect the collateral and repossess the property as a matter of last resort . This type of loan generally has a lower interest rate because the bank has less risk since it can easily collect the collateral if you default on payments. On the positive side, a secured loan can be a good way to build credit if you go through a reputable lender like a mainstream high street bank. Types of Secured Loans Mortgages are secured because your home acts as collateral for the loan. If you miss payments, you can go into forfeiture and lose your home. Car loans are also secured loans. Similar to a mortgage, the car itself is asset for the loan. If you default on payments, the car can then be repossessed. Secured credit cards are another type of secured loan. The bank will usually require you to make a deposit against the card’s limit, which guarantees the loan. Banks will do this for customers who are trying to build their credit history, or for those trying to improve bad credit. The Good: Benefits of Secured Loans Generally, secured loans are meant for those who have been denied unsecured loans. When used correctly, they can help build your credit score and credit history so that you can approach high street lenders again. Banks also like them because there is less risk involved. Lower interest rates are another advantage of choosing a secured loan. When choosing a secured loan, you should carefully consider what you will use as collateral. In addition, you should ensure that you are able to make payments in full and in a timely fashion, as not to be faced with losing your asset. As mentioned, a secured loan is a great way to build your credit. However, it is important to make sure you pay everything on time so that you can see a difference in your score. The Bad: Beware of Losing Your Collateral The danger of a secured loan is that you may lose whatever you set up as collateral if you fail to make your payments on time. Also, taking on too much debt may make it difficultRead more →

Weak Pound Fuels Property Investment The continued weakening of the Sterling Pound is creating massive buying opportunities but most of these are from overseas property investors mainly based in Asia. Right after the Brexit vote, the value of the pound significantly plummeted and most overseas investors snatched this opportunity to secure properties in Britain to make significant investment savings. Since 2018, as much as 57 percent of homes located in the prime central London area were bought by foreign investors according to the data provided by Hamptons International. Similarly, EU investors were among the largest group of foreign buyers investing in the said area. EU investors bought as much as 19 percent of properties in the second half of 2018, up from 10 percent during the same period in 2017. Overseas investors now own as much as 36 percent of properties in the Greater London area. In the past year alone, foreign investors from India rose by 3 percent while international buyers from Hong Kong and Russia increased by one percent. This increase in the number of overseas investors was also due to a significant drop in buy-to-let investors. The weak value of the pound has made it much more affordable for overseas investors to purchase UK properties as a form of investment. A property which used to cost an EU investor approximately £1 million would be cheaper by at least £124,000 or more in the years to come as pound value continue to depreciate. Prior to the 2016 referendum, a Sterling pound was worth US$1.50. It has depreciated to as low as US$1.24. After the no-deal Brexit announcement, it dipped 14% more to as low as US$1.10. Hong Kong investors believe Brexit and the weak pound is a buying opportunity. This is following a drop in London property prices in the first quarter of 2019. Foreign investors will continue buying properties in UK major cities such as Oxford, Cambridge, Edinburgh, London, and Birmingham since it will be easy and pretty convenient for most investors. Investors Buying More Student Flats The UK may have fewer students but this does not stop foreign investors in buying students flats. In Plymouth, one block of student flats is now owned by Middle Eastern companies following a multi-million-pound deal. A group of Qatari investors bought a Coombestone House block and are looking for more property investments in the city. Similarly, a Singaporean company also paid £180million toRead more →

Weak Pound Fuels Rich Foreign Investors’ Rush To Buy Student Flats Student numbers may be declining but foreign investors are lining up to buy Plymouth’s student flats with one block already being snapped up by a Middle Eastern consortium in a multi-million pound deal. The Coombestone House block, in Hastings Street, was bought by Qatari investors, according to industry insiders, earlier this year and other investors from the oil-rich nation are investigating opportunities in the city. Meanwhile a company from Singapore paid £180million for five huge Plymouth student apartment blocks which were offloaded by Unite. And two other blocks are said to have been gobbled up for “more than £1million” according to industry sources. Other properties are owned by businesses from Malaysia and South Africa, among others, and delegations from Kuwait, Israel, Spain and China are sniffing around the city. Nationally wealth funds and investors are snaffling property left, right and centre, despite Brexit uncertainty and global trade wars. But the reason for this activity is likely to be Brexit related – a huge decline in asset prices since the referendum vote. Sterling devaluation has made properties throughout the UK, including Plymouth, an attractive proposition. Henry Hutchins, chief executive of Clever Student Lets, the South West’s biggest student lettings firm, said properties are now changing hands at a 20% discount on a few years ago. Qatar is leading the way, having invested £3billion in the UK, and plans to splash another £2billion. Mr Hutchins said the Qataris nabbed Coombestone, a four-storey, 60-bedroom block, for “a few million”. Plymouth-based Clever Student Lets, the largest single office student accommodation firm in the UK, advises investors looking to put cash into bricks and mortar, whether new builds or older converted properties, and is involved in brokering deals. “We are seeing hardly any investment from UK companies,” Mr Hutchins said. “But we are seeing serious interest from Kuwait and Qatar, and others in the mid east. Every deal we have at the moment is foreign.” Mr Hutchins said his firm had been in talks with companies from Spain, Hong Kong and Israel in 2019, and clients from Malaysia had been scouring the city for opportunities. He added: “We advise and broker deals, they come to see what is available. The Qataris are still looking.” He said potential investors include high-wealth individuals, companies, pension funds and bankers and said: “It’s surprising. We get inquiries fromRead more →

Attracting Investment For Property Oliver du Sautoy, head of research at LSH, believes what we have seen this year will be a tough act to follow, but is optimistic for future growth. “Healthy levels of active demand and an analysis of forthcoming lease events point to another year of above-trend activity and take-up across the region in 2018,” he said. “Investors and developers must therefore take heed of the rapidly changing dynamics within the Northern Powerhouse office markets if we are to continue to support home-grown businesses and attract greater inward investment. “Solid asset management strategies and refurbishment of poorer quality stock will be key to securing the best occupiers and boosting returns in the coming 12-18 months.” There is a lack of supply in the regions – total availability has shrunk by 12% since the start of this year – and this has encouraged “steep increases in rental levels for existing space in some markets”, according to the LSH report. This could result in more opportunities for developers looking to bridge the supply and demand gap, as well as higher yields for investors. There are almost four million British people live abroad according to the latest figures from the Office for National Statistics. Despite choosing to settle in another country, many expatriates wish to retain a link to home in the form of investment property in case they return or even for investment purposes. But getting a mortgage in these circumstances can be more challenging than expected compared to being based in the UK. Tougher identity checks, a comparatively small number of available lenders and restrictions on certain countries can all prove a significant stumbling block for expatriates based overseas. The number of expats looking to buy property in the UK is growing, according to Gerard Ward, of  Premier Expat Mortgages based in Asia, a mortgage broker which works with expats. “We are speaking to a lot of expats at the moment,” he said. “It’s picked up recently from countries like Dubai, Canada and the US. “A lot of expats are paid their salary and aren’t paying as much, if any, tax because of where they live. In places like Dubai your work will often pay for your accommodation so they have a lot of cash in the bank and buying a property in Britain and renting it out is attractive.” There are fewer lenders and you will pay a premium OneRead more →

Housing: Stamp Duty, Supply And More Central to this is housing, which the Government has seen as essential to both its political and policy agenda. While housing has played a key role in the Budget formulation, this has predominantly been focused on the domestic market, looking for new ways in which to boost home ownership, particularly amongst young people, rather than focusing on overseas investors in UK property. The most eye catching announcement was the cut in stamp duty for first time buyers. Philip Hammond said he would abolish stamp duty on homes priced up to GBP300,000. This is very much restricted to first-time owner-occupiers who reside in the UK, which, although seen as a positive move to aid younger people getting on to the first rung on the property ladder, is also seen as a potential catalyst for rises in prices by some analysts. In full, the key announcements by the Chancellor consisted of a GBP44 billion package of measures to deliver 300,000 homes a year by the middle of the next decade – an increase from the 217,350 homes supplied in 2016-2017. The money will be spent on a range of measures including financial guarantees to support private house-building and purpose-built private rental homes, government working with private developers on new towns, and regeneration schemes and loans to support small and medium-sized building companies. WHAT CHANGES WILL THE RECENT BUDGET HAVE ON FOREIGN INVESTMENT? This year, the Budget’s focus was most definitely on the domestic scene, meaning not much has changed for foreign investors. For residential property, investors were actually given a small level of relief – in a single measure. For investors seeking to divest assets, a delay of one year in the plans to make investors pay capital gains tax within 30 days of selling a property were announced, deferring until April 2020. The Government is still relying on private investment to further boost a much-needed supply in housing, so we believe they will still be keen to provide a fairly advantageous regulatory environment. Along with this, the Government has focused more on the buy-to-let market and the Private Rented Sector (PRS) due to the acknowledgement that home ownership is not achievable for many. As a result, there may be some encouragement for investment, if this can significantly contribute to the aim of building at least 300,000 homes a year. As a result, the market is expectedRead more →