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Foreign investors eye UK property ahead of stamp duty surcharge

A growing number of international property investors are expected to increase their presence in the UK buy-to-let market over the next few months despite the impact of the coronavirus pandemic.

The fall in the value of the pound, which has grabbed plenty of headlines over the past few months, has made it cheaper for overseas investors to buy property in the UK, while many foreign buyers and British expats are looking to act now by snapping up property in the UK before the 2% stamp duty surcharge is introduced in April 2021.

The tax hike will come into effect for non-UK residents purchasing property in England and Northern Ireland from April 1, 2021.

The stamp duty tax savings announced in the chancellor’s summer statement has also provided an added incentive to invest now. 

Many national and international buy-to-let investors are looking to take advantage of the stamp duty holiday on properties up to £500,000 before the window closes in March next year. 

Legal & General Mortgage Club has revealed new data showing a significant rise in mortgage searches by advisers around ‘visas’ and non-UK residents.

Data from the SmartrCriteria tool, which helps advisers to determine whether a particular lender would consider a mortgage application from their client, shows that searches related to applicants on a visa have risen by 146% since the announcement in May of a stamp duty surcharge for overseas buyers, which will take effect in April 2021

Kevin Roberts, director, Legal & General Mortgage Club, said: “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. 

“Our SmartrCriteria tool is tracking some of the key industry trends in the mortgage market’s new normal and shows recent announcements from the government have clearly gained the attention of non-UK based buyers. 

“Many are now looking to take advantage of the stamp duty holiday while also investing in the market before the 2% surcharge for overseas customers takes effect.” 

Growth in visa-related enquiries coincides with increased interest from Hong Kong-based buyers as they turn their attention to the UK housing market amidst growing political uncertainty in the territory.

Recent industry data has shown a surge in demand from Hong Kong based buyer, which could grow further following the Government’s announcement on 22nd July of a new route to citizenship for 300,000 British National Overseas (BNO) passport holders.

Roberts added: “Our latest figures also coincide with increased interest from Hong Kong buyers, who are now looking to the UK housing market as a ‘safe haven’ amidst political uncertainty in the territory. 

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

“Lending criteria is changing every day in the mortgage market at the moment, and advisers will be key in helping these borrowers and others to cut through the noise and find the best product for their particular circumstances.”

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