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The housing market is changing once again. As instructions increase, it seems like 2022 will be the ‘summer of sales’, a change that can only benefit UK expat and foreign nationals who will profit from the increased choice while looking to invest in UK property.
‘Summer of Sales’ Begins to Bite.
Much of the discussion in the sales market in recent times has been about the mismatch between supply and demand for homes. In short, there has been far more demand for homes than the number of homes available. This has contributed to the conditions that we have talked about for quite some time: namely, there are more people in the rental market who cannot afford to buy, and the price of property has become massively inflated. However, there are signs that the number of sales is increasing and so the supply-demand mismatch is starting to re-align.
According to Rightmove, in the two weeks approaching July 6th, there was a 14% increase in the number of properties for sale when compared to the same period in 2021. In June, Rightmove also reported their busiest day for property valuations since May 2021, which was also the fourth busiest day that they have ever recorded.
What Does This Mean for UK Expat and Foreign National Investors?
‘The increased number of instructions and the growth in valuations indicates that the sales market is changing again, and UK expat and foreign national investors will have more choice when deciding on an investment property. Further, demand has also fallen slightly from the highs we were seeing in 2021. This means there is increased choice and a slower market. This is good news for UK expat and foreign national investors as both of these factors will work to reduce prices and the reduced pressure also means that UK expat and foreign national investors can better tailor their property choice to their precise investment goals.’
‘This change in the marketplace comes at a great time for UK expats and foreign nationals, who are already benefitting because of reduced competition from domestic buyers and investors. The increases in the Bank of England’s base rate are reducing buying power for those in the UK as high street lenders increase their interest rates and affordability rules become stricter. In contrast, UK expat and foreign national lenders are not increasing interest rates in the same way for their customers. This is in a bid to drive business from this highly competitive and lucrative sector of the market. Further, many UK expat and foreign national mortgage users are paid in non-sterling currency, meaning they are also benefiting from a more competitive exchange rate when compared to domestic buyers.’
What Should UK Expat and Foreign National Buyers Consider with the Increased Choice?
Because of the increased choice, UK expat and foreign national investors are now more able to tailor their investment property to their specific needs. ‘There are so many things to consider’ says Stuart Marshall. ‘And of course, speaking to an expert UK expat or foreign national mortgage broker will be the most expedient way to improve the quality of the investment and gain access to a host of deals from specialist lenders. But, in general, the most important considerations will be the property area, property type and investment type. While investors might have had to compromise slightly on one or more of these attributes because of the busy market, satisfying all three to some degree should be easier with reduced demand, dampened buyer power and an increased supply of available properties.’
Choosing a location for an investment property is one of the most difficult decisions to make for UK expat and foreign national investors. It will be largely dictated by the target market of the investment, which will massively narrow down the search parameters for the investment property. ‘Unless there’s a specific goal in mind, appealing to the youth market is key at the minute’ says Stuart Marshall. ‘They’re the ones that are putting the most money into the rental sector right now so if UK expat and foreign national investors are looking to quickly start seeing a return on their investment, a property that appeals to a younger market will be key’ adds Stuart Marshall. ‘With this in mind, big, city-centre hubs will be a great starting point when it comes to a location. Of course, an expert broker can help with choosing a location. There are also many great guides to choosing a location in our news section.’
Property type is also important. However, at the moment there are a few types of properties cropping up in our discussions more frequently than any others. These are city-centre flats and newbuild properties. At the moment, the cost-of-living crisis is driving many renters to prefer newbuilds as these properties are typically more energy efficient. In fact, according to Zoopla, 80% of new build properties have an EPC rating of an A or a B. This compares to just 3% of older properties. This translates to running costs of up to 52% – or £629 – less per year which is significant for cash-strapped renters looking to move. Buying newbuilds will also save UK expat and foreign national investors the lengthy and often-costly process of conducting energy efficient renovations to bring the rental property in line with the incoming EPC rules. Further, these properties are highly mortgageable, meaning that they are a very attractive choice to use in conjunction with one of the excellent UK expat or foreign national mortgage products available at the moment.’
‘City centre properties are also of interest at the moment, largely because the rental sector is being driven by the youth market who are, by-and-large, returning to cities to be in proximity to their workplace or to social hubs. City centre properties are also usually ticking a lot of the boxes that newbuilds tick as they usually have reduced running costs due to their smaller footprint, as well as lower EPC ratings as they are often more recent developments.’
Because of their popularity at the moment, both newbuilds and city-centre flats are a great starting point for UK expat and foreign national buyers looking to invest using a UK expat or foreign national mortgage.
Lastly, the investment type will also be important. In general, the most popular choice will be a long-term buy-to-let. This is an excellent choice and very typical in the UK expat and foreign national mortgage market. However, for more experienced investors, or those investors who want to diversify their property portfolio, holiday lets and student properties are also great options. ‘We always recommend buy-to-let as we often find this to be the simplest and most rewarding type of investment for UK expat and foreign national mortgage users. However, specific investment goals necessitate different strategies, and some UK expat and foreign national investors might find that another type of UK property investment might suit them better for their specific purposes. That’s why it’s always best to speak to an expert UK expat and foreign national mortgage broker who can help to determine the best route for any UK expat or foreign national investor.’
Liquid Expat Mortgages
Ground Floor, 3 Richmond Terrace,
Ewood, Blackburn
BB1 7AT
Phone: 0161 871 1216
www.liquidexpatmortgages.com
Any media enquiries please contact Ulysses Communications.
sergio@ulyssesmarketing.com
+44 161 633 5009
