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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 →

Changes to Stamp Duty On December 4th 2014 stamp duty on property purchases was reformed by the Government. At the time the Chancellor George Osborne stated around 98% of purchasers in England and Wales would pay less after stamp duty reform. Changes to stamp duty meant people who buy homes for under £937,000 would pay less in tax when compared to the old system. From April 2016 a 3% Stamp Duty Land Tax surcharge has applied to purchases of buy to let property and second homes. In Scotland a similar LBTT 3% surcharge applies to additional property transactions from April 2016. Old Stamp Duty System With the old system before December 2014, stamp duty was considered to be a “slab tax” where higher rates were incremented and applied to the whole property purchase price. The old system meant there were sudden increases in stamp duty liability as the purchase price rose above the next threshold. This had a negative impact for both purchasers and vendors with costs increasing or values artificially diminishing around each threshold. New Stamp Duty System Since December 2014 the tax system has become “progressive” and rate increases are applied between stamp duty thresholds only.This means stamp duty rate increases are no longer applied to the whole purchase price. Because of this progressive nature, the new system has been compared to income tax. The updated stamp duty thresholds range from £125,000 to £1.5 million. Changes to Stamp Duty in Scotland Following on from changes to Stamp Duty in England Wales and N.Ireland, stamp duty in Scotland was reformed on April 1st 2015. Stamp duty in Scotland has been replaced by Land and Buildings Transaction Tax (LBTT). LBTT in Scotland works in a very similar way to Stamp Duty in the rest of the UK. LBTT is a progressive tax with slightly different thresholds ranging from £145,000 to £750,000. Buy to Let and Second Homes Levels of stamp duty for buy to let property and stamp duty for second homes has now changed. Changes were announced by the chancellor in his 2015 Autumn statement and came into effect from April 2016. The stamp duty changes introduced a significant rate increase for property being purchased in addition to a main residence. From 1st April 2016 a 3% surcharge has been applied to buy to let and second home purchases with a new lower initial threshold of £40,000. Given that the vast majorityRead more →

Consultation On Property Wear And Tear Allowance In the Summer Budget 2015 the Government confirmed its intention to introduce measures to improve how landlord’s businesses are taxed. The new measures which are detailed in the full Consultation Document are designed to provide consistency and fairness in the taxation of rented properties. However, you still have until 9 October to submit your comments and responses to the consultation. An outline of the new measures is given below and we’ve also produced a handy fact sheet which you can print out: The changes The current 10% Wear and Tear Allowance which allows landlords to reduce the tax they pay, regardless of whether they replace the furnishings in their property, will be replaced. From April 2016 landlords will only be allowed to deduct the costs they actually incur for replacing furnishings in their rental properties. Eligibility All landlords will be eligible for the relief respective of whether they let their properties on an unfurnished, part furnished or fully furnished basis. However, Furnished Holiday Lets and commercial premises are excluded. NOTE: The relief will only cover replacing existing furnishings – landlords cannot claim for the initial purchase of furnishings (i.e. when they buy a new property and furnish it for the first time). How it will work Landlords will be able to claim for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use; such as beds, wardrobes, tables, sofas, fridges, washing machines, carpets, curtains, cutlery and crockery. However, if the landlord sells the item being replaced, the sale price of that item must be deducted from the purchase price of the replacement and the tax relief can only be claimed on the remainder. Further, landlords cannot claim for ‘improvements’. If the replacement item is an improvement on what was there before (i.e. a washing machine is replaced with a washer-dryer), then only the cost of a like-for-like replacement can be claimed. NOTE: Fixtures integral to the building (i.e. baths, toilets and boilers) that are not normally removed by the owner if the property was sold are not included. The impact Landlords will no longer need to decide whether their property is sufficiently furnished to make a claim as the relief because applies to all rented properties no matter the level of furnishing. With the current 10% allowance, the higher the rent, the larger the tax relief. In some areas of the country, 10%Read more →