British expats, Hong Kongers and astute overseas investors are flocking to buy UK properties. Previously focused on London, the regional cities are now attracting a lot of interest.
British expats in Asia are driving sales back home. James MacKenzie of estate agency Strutt & Parker reports that investors “are coming back in droves”.
Driven not by one, but by several tailwinds, UK property is high once again on the priority lists. Mortgage interest rates are at an all time low. The fall in the value of sterling has more than made up for the second home stamp duty surcharge and the Chancellor's recent decision to implement a holiday on the standard rates has pushed purchases by overseas investors to levels not seen in several years.
Interest from Hong Kong has risen sharply given the UK Government's announcement on 22nd July of a new route to citizenship for 300,000 British National Overseas passport holders. In the last two weeks of July, one agent in Manchester sold seven properties to Hong Kong buyers. Normally, he would sell one every six months.
Domenica Di Lieto, CEO of Emerging Communications, believes we could even see a Chinese buying boom because of the currency situation. “The fall in sterling more than makes up for [the stamp duty levy], and the UK still compares well with overseas buyer tax rates in competing locations, such as Hong Kong (15%), Canada (between 15 and 20%), and Singapore (20%).”
Regional centres like Manchester and Birmingham are proving to be very popular with overseas buyers. Interest has been increasing in recent years as London has fallen slightly out of favour. While still a top city in which to invest, the capital’s house prices have stagnated, along with rental yields. By contrast, the UK’s second-tier cities are showing better capital appreciation prospects as well as higher rental returns. As more national and international businesses look beyond the capital, rental demand in the second tier cities continues to rise, adding to the attraction for overseas investors.
Are there uncertainties ahead? Indeed there are. However, many international investors are dealing with that by locking in today's low interest rates, favourable Sterling exchange and a known level of stamp duty rather than deal with whatever next year might bring.