After weathering volatility and uncertainty, the property sector is primed for a purchasing storm and it looks like the time is right for foreign buyers.
With the Get Brexit Done election mantra translated into an 80-seat majority for the Conservative Party, overseas buyers have stopped their nervous stalling and started making moves. The next few weeks are a window of opportunity – they need to act quickly before the predicted additional levy on foreign buyers purchasing property in the UK will come into effect.
Overseas buyers have viewed the UK property market as a stable investment. High population growth, coupled with housing supply at a 100-year low, have led to rising rental yields, showing great returns on UK property investment opportunities for the overseas buyer. Aside from Brexit the UK has largely been a haven for political and economic stability. By taking advantage of the current market landscape, buyers can pick up properties with high rental yields and long-term capital appreciation.
Prime Minister Boris Johnson announced a potential 3% levy charge on UK property purchased by overseas buyers, thus adding £30,000 in tax to the purchase price on a £1million property. With little time before this tax hike – expected to be announced in the March Budget – foreign investment in UK property could escalate in the coming weeks.
Says Adrian Fardini from Mortgage Brokers Alexander Hall: “With the potential tax change on the horizon, it stands to reason we will see a short-term rush in purchasing beforehand. With this in mind, alongside the more complex underwriting involved in obtaining finance for clients based outside of the UK, it is crucial to take advice from a mortgage specialists such as Alexander Hall. It is also important to do so as early into the process as possible to achieve the best chance of success”.
Sterling Expected to Continue Rising
In recent times the Pound has been volatile and undervalued, given Brexit’s effect on the once stable currency. Following December’s Conservative victory, Sterling has enjoyed a time of stability and growth and is now hovering around the 1.30 mark against the US Dollar, and planned fiscal expenditure expected from the March budget could see Sterling appreciate in value.
And with the potential 3% increase in stamp duty levy, current market conditions are ideal for that same group to snap up property before these changes come into effect.
Says Privalgo’s Daniel Fozard “Now that the political and economic landscape are beginning to settle, Sterling is likely to maintain its steady climb, especially when trade agreements with the EU and other partners are ratified.”
It is worth noting that despite the pledge’s disappearance from the Conservative manifesto, it is unlikely that the Government will soften a tax that has proven to be a money-maker.
As the gap closes, it’s always advised that a buyer speak to a professional about their next steps in taking advantage of current opportunities.