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.”
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With a growing economy, the city is set to continue outperforming national performance forecasts over the next decade.
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 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.
Costs for hiring bankers, accountants and lawyers from outside Britain will soar after Brexit and threaten London’s standing as a global financial centre unless the immigration system is urgently reformed, a report said on Monday.
The report from TheCityUK, which promotes Britain as a financial centre, and consultancy EY, said that attracting and retaining the best people is a top priority.
“Losing this could undermine Britain’s position as the world’s leading financial centre,” TheCityUK’s Chief Executive, Miles Celic, said in a statement.
The financial sector is quick to remind the government that it is Britain’s biggest economic sector, raising more than 70 billion pounds annually in taxes.
But other sectors like health and agriculture are also calling for unhindered access to international hires after Brexit.
Across Britain, 7.5% of banking and related professional staff are European citizens and 4.7% are from non-European countries, rising to 16.9% and 11.4%, respectively, in London where one in four staff in the sector are non-UK citizens.
Banks, insurers, asset managers, and the lawyers and accountants that support them, can currently hire from across EU states without visas but must use the “Tier 2” work visa system for citizens from outside the bloc.
If Britain fails to secure a bilateral agreement with the EU on the movement of people, the sector will have to use the Tier 2 system for all non-British hires.
Applications for certain categories of Tier 2 visas are routinely oversubscribed and rejected due to caps on numbers, the report said.
The resulting increase in visa applications, combined with planned hikes in visa application fees, would result in a 300% rise in costs for hiring international staff, the report said.
“Simply applying the current immigration system for non-European citizens to European citizens after Brexit will not work,” Celic said.
Britain could adopt some of the report’s recommendations unilaterally.
It calls for the British government to make the Tier 2 system more “dynamic” by introducing a “shortage occupation list” that reflects actual shortages being faced, including digital and cybersecurity skills.
As reported by Reuters, the report calls for a new short-term immigration category to allow international staff to work in Britain for up to six months without needing to apply for a visa first, similar to a system already used in Canada.
Banks and insurers are already starting to shift some staff and operations to the EU to be guaranteed of serving customer there after Britain’s departure from the EU next March.
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.”