On the currency markets the pound continues to be weak as investors look to the dollar for safety. Other currencies are also performing better during the turmoil bought on by the Coronavirus pandemic an example being the Hong Kong dollar. This has made UK property look even more attractive to overseas investors as they are able to get better value for money.
Furthermore, many Ex Pat and foreign investors live in parts of the world where the impact of Covid-19 has be less significant and which have recovered more quickly than the UK and Europe. Specialist brokers have seen an increase in enquiries from investors in areas like Singapore, Malaysia and Hong Kong looking to get finance in place so they are ready to move once restrictions on movement are lifted.
At Glenham we are well used to working with investors from all over the world and would suggest that and individuals looking to enter the market have everything in place so they can move fast as this may mean they are best placed to benefit from the release of pent up demand when it comes.
So let’s take a look at what an overseas investor needs to get onto the starting blocks.
Make sure your support team is in place.
Firstly, instruct a specialist property accountant who can investigate any tax implications. All investors really should be looking into their own tax position so they can come up with the best strategy for investing. There are all sorts of ways of structuring purchases from buying in a person’s own name to setting up a special purchase vehicle (SPV). Getting the basics right at the start can save significant sums down the line.
Secondly, make sure you have a professional mortgage broker who understands BTL and specialist overseas and Ex Pat products. We don’t want to see deals fall over because of financing issues and unfortunately a less experienced or weak mortgage broker will often be the cause of the problem.
Finally make sure that you have instructed a responsive and effective solicitor who understands working with overseas clients and also the residential investment market. Once you have found the solicitor make sure that the requirements for know your client and UK anti money laundering have been met.
At Glenham we can help facilitate all of the above by introducing clients to our network of trusted partner firms an which also makes the whole process of buying far easier.
De-risk and act fast
Anyone who is interested in accessing the market really should have a professional asset management company working with them who knows the local market intimately and really understands residential property investment. They will have their finger on the pulse and will be able to react quickly to find the best opportunities. They should be able to analyse any potential investment focusing on risk mitigation and maximising returns.
Glenham are experts in the market, we understand property as an asset class and are well versed in sourcing the best deals for our clients that offer them the best opportunity for a return while at the same time seeking to keep risks to a minimum.
Cash will be king
We expect Mortgage lenders to be quite conservative post COVID-19, so adjust your expectations to a 60% LTV if you require debt. Many lenders have retreated to this level in recent days and we think it’s prudent to assume that this will be a new market level until a recovery has become more widely established, by which point you’d have probably missed out on the best deals.
Make sure you stay in close contact with your mortgage broker as the situation is dynamic and fast moving so a deal that was available a week ago may not be now.
Cash buyers will be in the driving seat, as there’s expected to be a big backlog of bank surveying work once isolation measures are reduced, which will slow down mortgaged buyers and make them less attractive to sellers.
Our expectation is that demand for rental property will remain high post lock down and may even increase. Historically rents have been more resilient and less volatile than house prices.
Although no two crises are the same, it’s interesting to note that whilst headline property values across the UK fell sharply in 2008, rental levels were generally maintained and in cities like Edinburgh actually increased and yields began looking rather more attractive. It is also worth pointing out that Edinburgh also didn’t see the massive drops in values during the global financial crisis that other parts of the UK did.
To make sure that void times are kept to a minimum and an investor generates the best possible ROI from their assets it is critical that a professional letting agent is instructed to manage the property.
At Glenham we are proud of our track record that we have built up over many years of working with both domestic and overseas investors. We are investors ourselves and understand property as an asset class. We are focused on finding our clients opportunities for strong yields and capital uplift. We offer a “one stop shop” for investors from sourcing the asset through facilitation the purchase, preparation for let, marketing and finally managing the property during the hold term.
Please click on the link to download our overseas investor service brochure.
Or if you would like to chat over how we can help please do get in touch and we can schedule a Skype or Zoom call.