UK property - #trend or wise investment?

Imagine you have come into a financial windfall; whether that’s from an investment that’s matured, an inheritance that has come your way or you have had a lucky streak at the casino, what would be your first 3 purchases?

Now, after conducting a quick poll (by asking two of my colleagues who were within listening distance), their first three purchases are as follows:

A: House, car and dog.

B: House, dog and trip around the world.

I’m guessing most of us have “house” in there as our top 3 purchases, and we may vary between getting a fluffy 4-legged friend, but a house and car are strong contenders for top answer.

Jackpot joy and empty pockets

At the end of 2016, according to RightMove; the average price paid for a flat in London was ￡518,511.00 and the average price paid for a terraced property was ￡649,613.00. If you compare these figures to the average price of a flat in Manchester which is, ￡170,162.00 and the average semi-detached property going for ￡185,293.00 – that is a HUGE difference.

It’s a harsh reality, and I hate to be the bearer of bad news – but the vast majority of us will not win the lottery, however more of us may marry rich; so, there’s always that prospect, but for the most of us – we continue to power through with our working incomes.

Before you stop me in my tracks and say, “London is too expensive” and take yourself off the interest list – let me say this. Yes, the property market in London is on a double-edged sword however, for foreign investors, London and the UK as a whole, is NOW the sexiest place to invest in. Let’s review:

02nd January 2016: 1 USD = ￡0.67 GBP.

Today, August 2017: 1 USD = ￡0.77 GBP.

02nd January 2016: 1 EUR = ￡0.73 GBP.

Today, August 2017: 1 EUR = ￡0.90 GBP.

 That exchange rate is a whole lot more attractive today for those holding USD and Euro right now.

Compare the market: Then Vs. Now

There’s no point living in the past, but let’s not be ignorant to the lessons it can teach us. So, let’s make a comparison!

Using a comparison of these flats in London, let’s look at the potential ROI. For a 1 bedroom flat in a sought-after postcode of SW1V – the property I have used has great links to transport too. Now back in June 2011, this property was purchased for ￡298,000. Today, it commands a selling price of offers in the region of ￡629,500. I understand, a property is only worth what someone will pay for it, but in the last 12 months for that postcode in particular (SW1V), flats sold on average for ￡1,519,887.00.

Let’s say you hold Euro currency, and you decide to invest in this property – if we just look at the property price and for the sake of this overlook taxes and stamp duty, at todays (10th August 2017) exchange rate, that would be: €696,164.05 EUR.

Today: 1 GBP = 1.10590 EUR.

If you had purchased that exact property with the same price tag of ￡625,500.00, with the conversion rate from that date, you would have paid (again, excluding tax and stamp duty etc): €856,271.08 EUR.

02nd January 2016: 1 GBP = 1.36024 EUR.

That’s a massive difference! Again, those figures are excluding taxes but on currency alone that’s a whopping difference.

When is now the best time to invest in UK property?

We can see that on currency alone, for those who are not holding GBP – this is an absurdly amazing opportunity. Carpe Diem, seize the day, YOLO.

There are a wealth of benefits for purchasing property now in the UK, so why are foreign investors doing this in increasing numbers? Well, naturally us Brits are world renowned for our cuisine – because who doesn’t love jellied eels, marmite and tea with milk? Naturally, one of the overwhelming reasons is due to the fall in Sterling against international currencies post-Brexit.

There has been a spike in interest amongst our clients who are looking to purchase in the UK, don’t get me wrong, there has always been an interest and a desire – but the urgency has gained momentum, especially this year. A lot of expatriates send their children to British universities, and have their children stay in those properties for the duration of their studies, or they use this as a second residence, use UK property as an addition to their property portfolios, diversification of portfolio, allows access to GBP and more beneficial reasons.

Some foreign investors believe that by purchasing property in a country outside of your home automatically gives you all the rights that a citizen of that country has. In some countries, depending on which nationality you are, the price of the property you have bought and your future intentions are – this has been the case in SOME places but make no mistake, this is not the same as gaining automatic residency.

Alternative residency and citizenship is certainly something that has had a correlation with purchasing property overseas, and more information on this will be given at a later date (alternatively, you can contact me for more information, stats and help in obtaining this).

Stop running us out of our homes

As a Londoner and a millennial, I for one can’t afford to buy property in London right now. I’m also an expatriate who lives overseas, so do I have a right to be bothered about this? Well, yes I would like to buy property in my home city in the future, of course I would! Most of my friends and sisters are renters, it’s just the way of the world for now and this is a BIG problem for us Brits clambering towards the property ladder. Our generation were slapped hard in the face with an increased working age, reduced pension, crippling university tuitions and that was at birth! It makes me think twice about having kids myself, it’s hardly a carefree and “fun” existence to be born into. Does that mean I’m not tough or my generation wants too much? No. Let’s not forget which generations have contributed to this debt and disparity!

But, before this article goes off-piste, for Londoners and Brits do we want foreigners investing into our country? Well, I for one don’t have a problem with it, because let’s see this for what it is – us Brits didn’t have a problem with buying abroad in places like Spain, Portugal or Greece when the exchange rate was in our favour. The tables have turned.

There are options for our generation, are they easy? No. Does this mean that foreigners are to blame? Don’t be silly, no!

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What next?

If you want more information in regards to:

Expat mortgages,

Buying property overseas,

Residency and Citizenship.

Feel free to contact me by email or LinkedIn message.