UK nationals living or working abroad and foreign investors from the US, Canada and East Asian countries are cashing on a weaker pound, a price slump in London’s new-build market and renewed confidence in the UK’s economy and vaccine programme.
Meanwhile political turbulence in China and the UK government’s new Visa scheme, open to holders of British National Overseas (BNO) passports in Hong Kong giving citizens the chance to relocate, has also driven up overseas interest in UK property.
Since the start of the year, bank’s say they have seen foreign income mortgage business rise.
Skipton International reported a trebling of mortgage completions from Hong Kong residents purchasing buy-to-let properties in the first quarter of 2021. Furthermore, between January to May the bank saw a 34 per cent increase in enquiries from residents in the EU compared to August to December 2020.
For Hong Kong buyers, both London and the South East of England were the most popular locations closely followed by the North West and Midlands.
Roger Hughes, Skipton International’s business development manager, said investors saw the UK as a “solid and stable jurisdiction”.
Mortgage brokers have also reported more interest from overseas buyers.
London-based broker Richard Campo, managing director of Rose Capital Partners, said between March and April he saw a 137 per cent rise in enquiries about foreign income mortgages.
“We noticed a huge spike in enquiries from buyers living abroad wanting more information about getting a mortgage supported by foreign income, way above what we have seen elsewhere in the business,” he said.
“It’s logical as lockdown restrictions ease and pent up demand is released coupled with the vaccine roll-out going well. What’s interesting though is that they are not super-high-end buyers. We’re seeing a lot of expats and new buyers looking around the £500,000 mark.”
East Asian interest
New-build snagging and property management firm BuildScan said in May it saw an 18 per cent year-on-year rise in enquiries from East Asian buyers who had recently purchased new-build properties in London.
According to the firm’s analysis, the impact of a weaker pound and lower new-build property prices dampened by the pandemic offered opportunities for East Asian investors.
Between January 2020 and December, the health crisis caused new-build property prices in the Capital to fall by 3.4 per cent to £488,371.
But fluctuating exchange rates meant South Korean homebuyers would have benefitted from a 6.8 per cent fall in prices when compared to the average price at the start of the year. Chinese buyers saw a 6.2 per cent drop and Japanese buyers a decline of 5.6 per cent.
Homebuyers from Thailand, Malaysia and Hong Kong would have secured smaller discounts of between 0.9 per cent and 1.8 per cent.
Harry Yates, founder and managing director of BuildScan, said: “Despite the problems posed by the pandemic, we’ve continued to see a high degree of interest in the London market from East Asia.
“This has been driven, in part, by factors such as BNO visa availability for those relocating from Hong Kong, as well as the opportunity to cash in on a stamp duty saving.
“Fluctuating exchange rates have also boosted the affordability of London new-build homes which has also caused many savvy investors to act sooner rather than later. Although the pound has rallied of late, the London market remains an area of focus for many foreign buyers.”
Oxford estate agent Wallers has also reported a rise in enquiries in non-European overseas buyers over the past six to nine months, particularly from the Far East. He also noted a significant proportion of the enquiries were from families from Hong Kong who want to relocate to a different part of the world because of political troubles.
He added: “We have also seen more enquiries than normal from buyers in the USA and Canada, and there has been a sense that they are seeing the UK in more attractive terms now that it is out of the EU, which has been contrary to my own preconceived ideas about what Brexit might do to our property market.”
Lift Mortgages MD David Baker said his firm was being contacted by UK nationals who work or live overseas in the US and Dubai and they want to buy in the UK either for a family member or to rent it out. He is also seeing interest around the £500,000 price point. They have also had enquiries from British citizens working in Paris and Germany.
“We’re seeing lots of business from people not paid in sterling who want to buy in the UK,” said Baker. “I’m doing more of this type of business than ever before.
“The feeling is that the UK is a good place to have your money, and London is a safe bet.”
Baker said while there was a lot of interest in houses with gardens, he was seeing a gradual shift towards flats, which fell out of favour during the height of the pandemic.
He added: “Buyers are seeing the potential for deals to be had because they are not as popular as they once were. And those who are buying to rent out aren’t as concerned about garden space.”