Fiery foreigners take the property lead over timid Brits

Fiery foreigners take the property lead over timid Brits



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Britain’s doom and gloom outlook leaves the housing market wide open for the more positive foreign investor.

Homeowner confidence in the market hit its lowest point in two years in December, with one in three expecting property prices to fall this year and 92% believing that mortgage financing is no easier to obtain now than it was three months ago.

Meanwhile, overseas buyers are looking upon low prices and a favourable exchange rate as the perfect time to invest in UK property.
Andrew Elinas, director of Sandfords, told the Financial Times: “We have seen a surge of interest in property in prime central London as a result of the Eurozone crisis, with 60 per cent of properties sold over the past month in London W1 going to cash-rich Europeans.”
And it seems that it is not just London that is reaping the benefits of foreign funds. Extensive research from Harrods Estates showed that the value of the traditional country estate also rose in 2010 due to increased interest from overseas buyers who like the ‘British country life’.
British lenders, like the rest of the nation, also remain pessimistic about the property market and are still wary about lending on high LTV mortgages.
Paul Hunt, managing Director at Phoebus Software, said: “A drop in the availability of high LTV mortgages shows that lenders are seriously concerned about the UK’s economic prospects.”
Mr Hunt explained that the reluctance of lenders coupled with the inability of borrowers to put together a sufficiently large deposit had led to a two-tier housing market where the best opportunities were reserved for those with the biggest deposits and those with less cash, e.g. first time buyers, were squeezed out.
And while almost all lenders require a large deposit, many don’t appear to be concerned about whether the money comes from home or from away as many private lenders are opening their doors to the foreign borrower.

 Mark Harris, Managing Director of Savills Private Finance Limited said: “A number of Private Banks offer mortgages to overseas buyers. Savills Private Finance operate in this area and deal with all Private and Offshore Banks. A buyer may take a mortgage because he needs one or for tax purposes (remitting funds to the UK can trigger tax).”

He also said that transferring money from abroad was a straightforward exercise and that many buyers could also protect against currency fluctuations by forward booking the exchange rate. 

Coupled with a newly regenerated interest from European investors, the UK housing market, and in particular London property, continues to attract investors from the Asian market.

By Katie-Jill Rowland

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