Holiday let and overseas buyer demand growing

  • 06/08/2020
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Holiday let and overseas buyer demand growing
Brokers have been increasingly seeking lenders that offer mortgages for holiday lets and overseas buyers as the effects of the lockdown and stamp duty changes begin to take effect.


Knowledge Bank noted it had seen “a spike in searches for holiday lets” in the buy-to-let (BTL) market in July.

“This has undoubtedly been boosted by the introduction of the stamp duty holiday, and by coronavirus impacting consumer habits, making holiday homes increasingly desirable,” it said.

The trend has also been evidenced by the resurgence of lenders which has seen several re-entering the market during the last month.

However despite this growth, limited company lending remained top priority for brokers researching the BTL market – this was followed by first-time landlords and the requirement to be a homeowner.

For residential searches, Knowledge Bank found the criteria relating to the Covid-19 crisis including temporary maximum loan to value (LTV) and furloughed workers were causing interest.

Self-employed borrowers with one year’s accounts also remained a high priority for advisers.


Overseas investors soaring

Meanwhile, data from Legal & General Mortgage Club found growing interest in the UK property market from overseas buyers, including those with a visa and non-UK residents.

It noted that BTL searches for applicants on a visa have risen by 146 per cent since the confirmation of the stamp duty surcharge for overseas buyers, which will take effect in April 2021.

Criteria searches related to visas were the fourth most searched term by advisers during the first week of June and by 27 July ranked as the most searched term by advisers.

The club said the rise coincided with increased interest from Hong Kong-based buyers as a result of the growing political uncertainty in the territory, and also reflected the incoming stamp duty surcharge and temporary cut.


Dual stamp duty effect

Knowledge Bank lender relationship manager Matthew Corker said: “More people are looking into holiday lets as the desire to travel abroad is falling among UK citizens while Covid-19 continues to impact the travel sector.

“I expect this to become a trend in the coming months as travel bans are enforced and air travel remains limited. Let’s not forget the stamp duty holiday will further encourage consumers to take the plunge.

“Throughout June and July, we have seen indicators that the housing market is moving, and the stamp duty holiday is one of the sources that will provide the economy with the boost it needs.”

Legal & General Mortgage Club director Kevin Roberts added: “Britain’s housing market is bucking the trend and has faced unprecedented levels of demand since reopening in May, and now figures show that a growing number of overseas buyers are also taking interest in UK property.

“Many are now looking to take advantage of the stamp duty holiday while also investing in the market before the two per cent surcharge for overseas customers takes effect.

“There is an opportunity for advisers to support many of these buyers, particularly if they have little to no credit history in the UK,” he added.


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