UK expats are losing £40k when buying BTL property back home

UK expats acquiring buy-to-let property back home are typically squandering £40,000 on unnecessary transaction costs, exchange and loan rates in the first five years, according to a new study.

Joint research by specialist loan packager Thistle Finance and global currency specialist Mercury FX has revealed that specialist currency firms could typically save their clients up to 4% on transaction fees, compared with the average high street bank.

Expats who transfer the equivalent of £500,000 of foreign currency into GBP to acquire a buy-to-let could make a saving of around £20,000.

The research also found that too many expats were wasting additional funds by taking out specialist expat buy-to-let finance without shopping around.

On a £500,000 loan, the interest rate differential between the best and worst rates can conservatively amount to £4,000 annually, or £20,000 over a five-year period.

Mark Dyason, managing director at Thistle Finance (pictured above), said that far too many UK expats purchasing buy-to-let property at home were being hoodwinked by the high street banks when getting their money back into the country.

“They’re then compounding their misery by failing to search for the best finance rates in what is an increasingly competitive market.

“It’s a painful and wholly avoidable double whammy.

“With more and more demand from expats for UK buy-to-let – particularly in Scotland due to the arrival of challenger lenders with significantly improved criteria and rates – it’s vital they do their homework before they transact.

“The result can be savings of tens of thousands of pounds.”

GDPR compliance with Jumbo Bridging

Here at Jumbo Bridging, we value your privacy.

From 25th May 2018, the new EU General Data Protection Regulation (GDPR) will be coming into effect. To comply with the new requirements of this law, and to ensure that we can best continue to serve you in finding new career opportunities, Jumbo Bridging has updated its Privacy Policy.

You can find the updated Privacy Policy on our website, which provides detailed information on how we use and protect your personal information, and your rights in relation to this.

 


 

Retention of your data

We understand our legal duty to retain accurate data and only retain personal data for as long as we need it for our legitimate business interests and that you are happy for us to do so.

We segregate our data so that we keep different types of data for different time periods. The criteria we use to determine whether we should retain your personal data includes:

  • The nature of the personal data.
  • Its perceived accuracy.
  • Our legal obligations.

What are your rights?

You have the right to ask us not to process your personal data for marketing purposes. From May 25th, 2018 we will always obtain your consent before we use your data for such purposes. You can exercise your right to accept or prevent such processing by checking certain boxes on the forms we use to collect your data.

You have the right to request information about the personal data we hold on you at any time. If you would like to make a request for information please email hello@jumbo-bf.co.uk

You have the right to request modifications, updates or removal of your data. We may ask you to verify your identity and for more information about your request.

How do we protect your personal data?

We endeavour to take all reasonable steps to protect your personal data but cannot guarantee the security of any data you disclose online. You accept the inherent security implications of sending information over the Internet and will not hold us responsible for any breach of security unless we have been negligent.

All information you provide to us is stored on our secure password protected systems; robust firewall. We have company policies in place with regular reminders about not clicking on potentially malicious links or attachments to ensure risk from phishing and other malware is minimal.

 

Changes to our privacy policy?

Jumbo Bridging may change this Privacy Policy at any time. If we change our Privacy Policy in the future, we will set out those changes here, so that you will always know what personal information we gather, the purposes we might use it for and to whom we might disclose it. If, at any time, you have questions or concerns about our online privacy commitment, please feel free to get in touch here.

Manchester property prices rising faster than UK averages

With a growing economy, the city is set to continue outperforming national performance forecasts over the next decade.

Summary:

  • Real estate growth in Manchester consistently outstrips average forecasts for the UK property market
  • Property prices in the city grew by 34% in the three years to July 2017, against the national average of 30%
  • Manchester’s vibrant economy and proliferation of FTSE 100 companies cited as a driver of economic development and increasing investment levels

It confirms what a rising number of international investors are already aware of, but new research has found that property growth in Manchester consistently outperforms UK averages.

The report from Cushman & Wakefield reveals that, in the three years to July 2017, property prices in Manchester increased 34% while, nationally, the average stood at just 30%.

Annual returns of between 11% and 20% have also been recorded in both Manchester and the neighbouring borough of Salford during this time.

Looking ahead, the report predicts property prices and yields in Manchester will continue to outperform the national average over the next decade.

Commenting on the findings Julian Cotton, Associate Director at Cushman & Wakefield, noted: “Manchester benefits from a particularly active investor market, with over 52% of the entire housing stock lying in the private rented sector.”

Manchester’s “vibrant and varied” workforce was cited by the report as a key driver of economic growth in the city. So too was the number of FTSE 100 listed companies operating in the area, with firms in the financial services and technology industries key sources of employment for people living in the region.

With its population also forecast to rise faster than the national average in the coming years, the report summarised that Manchester offers a fantastic range of opportunities for investors, ‘particularly for those who are considering their options outside of London’.

Over half of UK investors no longer see property as a good investment

Over half of UK investors no longer view property as a good investment, according to a new survey commissioned by Rathbone Investment Management.

The introduction of an extra stamp duty levy as well as new regulations by the Prudential Regulation Authority affecting landlords has led to many investors re-evaluating property as an investment, according to Rathbone.

Those investors with over £100,000 of investable assets were slightly more optimistic about the property market, the research found, with only 38% viewing it as a poor investment.

The survey showed that a quarter of high net worth investors currently own buy-to-let properties; however, just 7% plan to increase their portfolio.

The Rathbone survey comes in the wake of research by the National Landlords Association which reported in January that 20% of its members planned to sell a property in their portfolio in 2018.

Robert Szechenyi, investment director at Rathbones said: “Recent changes to the tax and regulatory treatment of buy-to-let has caused investors to take a step back and assess the viability of these investments.”

Property has traditionally been a popular investment across the UK, with 49% of Britons surveyed by the ONS saying that investing in property instead of a pension was the best way to save for retirement.

However, Szechenyi said this may be about to change.

“Whilst it’s understandable that property, and in particular residential property, has been a popular investment in the past, it’s now making less and less sense,” he said.

“Not only are the returns now being impacted by an increased rate of tax, but they can also prove high-risk investments due to a lack of diversification.

“Property investments require a large amount of capital to be held in one single asset and landlords will often hold a number of properties within one region.”

The research from Rathbone comes as data from Rightmove published today found that asking prices in London were down 0.2 per cent in May compared to the same month last year.

Brits moving abroad still opt for Spain for cheap property

Three-quarters of a million Brits now live in EU countries outside of the UK and Ireland, and more than a third of these have chosen Spain as their home away from home. The latest figures from the Office for National Statistics (ONS) have found that Spain is still the main destination for British citizens living abroad, particularly among the retiring generation, with 37% of Brits abroad living there – 41% of which are aged 65 and above.

There are a total of 293,500 of us now living in Spain, attracted by the weather, leisure opportunities and Mediterranean lifestyle that many see as the ultimate goal after retirement, although two-thirds of Brits living in the EU outside Britain are of working age between 15-64.

The attractions of Spain

Marc Pritchard, sales and marketing director of Taylor Wimpey Espana, said: “Spain has so much to offer those who are retired or approaching retirement. The Mediterranean climate and diet are well suited to those looking for a healthy lifestyle, while the medical system here is also superb.

“As Spain remains the top choice in Europe for Brits living overseas, it’s important to provide accommodation that suits their preferences and budgets.”

The property market in Spain has been performing strongly since the beginning of this year, with prices increasing by 3.8% between the first quarter of 2017 and the first quarter of 2018, according to a house price index from Tinsa.

The growth was fairly mixed across the country, with the capital Madrid seeing prices soar by 17% over the year, while they rose by 14.7% in the popular tourist destination of Palma de Mallorca.

Barcelona, situated on the east coast which is a top destination for British expats, saw price growth of 11%. However, three areas recorded slight house price falls, with prices in Castilla-La Mancha down by 1.3%, Extremadura down by 0.6% and Galicia down by 0.1%.

A strong market for international buyers

One estate agent, Lucas Fox, said that 66% of all its house sales in 2017 were to international buyers, 10% of which were from the UK – which was very similar to the level seen in 2016 and proof that issues such as Brexit are not a deterrent to most.

Rod Jamieson, head of operations at Lucas Fox, said: “Falling unemployment, low-interest rates and a strong economy have all contributed to the growth in the Spanish property market. Official figures now indicate that the market has recovered from the crash of 2008 with transactions reaching pre-crisis levels in some areas.

“Overall prices, however, remain below the levels of 2007, offering attractive opportunities for investors across the whole of Spain.”

Here are the UK locations where the £1m property market is booming…

The number of million pound homes sold in the UK soared by 73% in a decade while two regions in the north of England experienced ‘exceptional’ growth in this market last year.

House price data from Lloyds Bank Private Banking revealed in 2017 the market for homes worth £1 million or more grew by 5% compared to the previous year.

And the places which saw the biggest growth in year-on-year sales were Yorkshire and the Humber, with 60% more £1 million properties being sold in 2017, and the North West where the market increased by 46%.

In the West Midlands, £1 million house sales increased by 28% in 2017. But in neighbouring East Midlands, million pounds home sales fell by 23% last year. This was the only region where sales in this market decreased.

But it was the data over the past 10 years which showed the most dramatic changes to the top end of the property market. Lloyds’ figures revealed million pound house sales in Great Britain had soared by 73% since 2007.

This included a dip in 2012, when the market experienced a poor year for sales. Indeed the first half of 2017 saw a 1% fall in £1 million plus house sales, but strong performance in the second half prompted a recovery.

Louise Santaana, head of UK wealth lending at Lloyds Banking Group explained: “Overall, 2017 was slow for the UK economy, with high inflation and low wage growth.

“But high end homeowners and investors in many parts of Great Britain are starting to regain their confidence in the market, with exceptional growth seen in Yorkshire & Humber and the North West of England.”

London was the part of the UK which experienced the highest number of transactions in the million pound market last year. But Lloyds figures revealed that growth in the high-end market had begun to slow in the capital.

Santaana thought, with this area of the market is represented strongly by overseas investors, the effects of Brexit could be putting many off from buying.

She added: “2018 will be an interesting year for the million pound property market. With the Government consulting on ways to improve the house buying process, we should see high end homeowners more empowered to engage in property transactions.

“However, the high cost of stamp duty may be an ongoing deterrent in the top end of the market, particularly for those who are looking to invest in property in order to make money, as opposed to buying a home.”

Build a property portfolio with just £50,000: The how-to guide

It is obvious to all investors that there are clearly issues with attempting to build a property portfolio with £50,000, says Haaris Ahmed, founder of property crowdfunding platform UOWN. “When buying an investment property the average amount required for a mortgage is 25%, and using the average for UK houses prices, this equates to £60,000 across the country or well over £100,000 in London.”
In other words, that isn’t a portfolio of investments, but one investment and a pretty static one at that and with no further diversification for your £50,000. As Haaris goes on to point out, the Mortgage Advice Bureau statistics show that the average buy-to-let deposit had also hit £100,000 and given the extra regulatory and tax impediments that have been thrown in the way of that sector of late by the government, it makes that lack of diversification also prone to political interference. So how do you build a property portfolio?Even if you search for cheaper properties – if such a thing exists – you would still likely be using your £50,000 on a handful of properties – and you have to remember, the properties you may be choosing at the lower end of the market might well be cheap for a reason.

“Even if you intend to find that almost mythical ‘doer-upper’, it will still cost you to turn it around or ‘flip’ it,” says Haaris. “As a strategy, it is it fairly high-risk, time-consuming, and it requires a level of expertise.”

How do you build a property portfolio: So, what are the options?

So does that mean the end of your property portfolio dreams at the £50,000 level? Well, no. There are options out there and perhaps the most intriguing is property crowdfunding. “Property crowdfunding should appeal to any investor (even with £100 to invest) that wishes to create a sustainable and diverse investment portfolio,” says Andrew Gardiner, founder and chief executive at property crowdfunding site Property Moose.

“Primarily, our clients see the value of real-estate as part of a balanced investment portfolio but may not have the inclination or capital to participate in the property investment market directly,” he adds. “Even for individuals that have the capital to invest in their own property assets, managing properties is hard work, and property crowdfunding may be a way of removing the hassle from property investment.”

Haaris agrees and points out that a diverse portfolio reduces the risk factor when it comes to rental voids. “If your money is spread across four properties your income stream is far more predictable,” he points out.

“Usually building a portfolio would take months of careful due diligence, securing mortgages, completing the contracts, and finding tenants. With property crowdfunding, you can build a portfolio with a few clicks and you can be earning rental income within minutes.”

And with many of the headaches of being a landlord stripped out, it means that investors also avoid the property management issues that can bedevil anyone considering the buy-to-let route.

House prices tick upwards in sluggish property market

House prices across England and Wales rose a bit more quickly this month after touching a seven-month low in March but they are still expected slow this year, reflecting weak economic growth and possibly higher interest rates, mortgage lender Nationwide said.

House prices rose 2.6% in the year to April compared with a rise of 2.1% in March and in line with the median forecast in a Reuters poll of economists.

Prices rose 0.2% on the month after a drop of 0.2% in March, also matching the median forecast in the poll.

House prices are rising much more slowly than before the 2016 referendum decision to take Britain out of the European Union, which hit consumer confidence and spending as the pound’s fall pushed up inflation.

Nationwide’s measure of house prices was growing by about 5% a year around the time of the Brexit vote and the lender said on Friday it continued to expect house price growth of just 1% in 2018.

“Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” Robert Gardner, Nationwide’s chief economist, said.

The Bank of England has said it expects to continue raising interest rates after making the first increase in over a decade in November. Investors see a roughly 50-50 chance of a hike in May.

However, a shortage of homes for sale is expected to continue to shore up the housing market.

An industry group said earlier on Friday that in 2017/18 financial year, housing starts of 154,698 were 2% lower than a record high in 2016/17.

Prime Minister Theresa May wants construction of new homes to rise to 300,000 a year to tackle a shortage of housing.

Top 10: London boroughs where property demand is highest

While property demand has dipped in the capital, those selling in Bexley are faring better than most, according to online estate agent Emoov. It has been deemed the hottest spot for property demand in London at present in Emoov’s national hotspots index for the first quarter.

The index considers homebuyer demand levels based on the balance of stock listed for sale on major property portals compared with the stock that has already been sold.

London boroughs where property demand is highest

1. Bexley

2. Bromley

3. Barking and Dagenham

4. Lewisham

5. Croydon

6. Hillingdon

7. Waltham Forest

8. Newham

9. Redbridge

10. Hackney

The index found that property demand across the nation has remained static since the fourth quarter of 2017, but it slumped 15% in London over the first three months of the year.The areas that have the highest number of properties sold from the total listed for sale are deemed the most in demand amongst UK buyers.

While Bexley, Bromley and Barking and Dagenham were deemed hotspots for property demand, there were other areas which reported the largest rise in demand since the fourth quarter.

Hammersmith and Fulham had the biggest increase in buyer demand – up 43% since the fourth quarter of last year. That was followed by Newham and Kensington and Chelsea, and then the City of Westminster, up 30% and 17% respectively.

London boroughs with the steepest rise in property demand

1. Hammersmith and Fulham

2. Newham

3. Kensington and Chelsea

4. City of Westminster

5. Lambeth

6. Camden

7. Lewisham

8. Croydon

9. Bromley

10. Bexley

As for the London commuter belt, demand levels remained fairly robust but still dipped 5% in the first quarter. Ashford in Kent was home to the highest level of buyer demand, followed by Folkestone, Rochford, Stevenage, and Colchester.Lambeth was dubbed the least in demand area, followed by the City of Westminster, though interest from homebuyers has been picking up there, as well as in Southwark.

Emoov founder Russell Quirk said:

There are plenty of pockets across the nation that continue to see strong levels of buyer interest, however, market uncertainty has seen many sellers refrain from selling and in turn, the lack of varied stock has seen buyer demand remain restricted for the large part.

As we now enter the busiest period of the year for home sellers and buyers, we should see demand across the board stabilise and along with additional factors, such as the intended improvement in the regulation of estate agents, confidence will start to return to the UK property market.

UK house prices are going up, despite Brexit uncertainty and possible interest rate rises

Homeowners across the UK have had an average of £7,500 added to the value of their property over the past year, and experts expect house prices to continue to rise in the country’s more affordable areas.

The national average sold house price is now £225,000, which is 4.4% higher than a year ago, according to the latest Land Registry figures. But the national picture disguises regional variations, with London recording its first price fall since 2009.

FASTEST GROWING AREAS

Northern Ireland, Scotland, and Wales all reported higher house price growth than England. Prices in each of these regions were around £100,000 lower than in England.

With high employment and Office for National Statistics showing the year-long squeeze on wages may be coming to an end, economists believe there is still room for house price growth in the UK’s less expensive areas.

LONDON

London was the only region to experience house price falls. Prices in the capital were 1% lower than a year ago, the first annual price drop since the financial crisis began to affect the London property market in September 2009.

However, at £472,000, homes in the capital still cost more than double the UK average.

Jeremy Leaf, north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “We are seeing a two-tier market developing, with higher national property prices masking stagnating, or even falling prices, in London.

“As a result, the old north-south divide is turning on its head, with northern areas steaming ahead much faster than the rather sluggish south.”