With the stamp duty holiday coming to an end in late March, a suite of vaccines giving hope to the longer-term economic outlook, and the UK moving forward after four years of Brexit ambiguity; it is a great time to invest in London property. But with uncertainty still at large, it is understandable to have concerns around making a significant investment of this kind. Here we address some of those concerns.
I am still worried about the uncertainty surrounding Brexit
It’s true that the UK has work to do in terms of overcoming the negative repercussions of Brexit, but global businesses continue to back the UK. Indeed, Unilever (owner of brands such as Marmite, Cif and Dove) recently announced they had chosen London over Rotterdam for their European headquarters, and that was before the trade deal was announced (www.theguardian.com/business/2020/jun/11/unilever-picks-london-as-its-home-over-rotterdam). London is very much open for business. Early last year, the London property market had already started to brush aside Brexit woes before the global pandemic hit, which means we have another year of pent demand to assert itself.
Will there be a mass exodus from London since working habits have changed due to Covid-19?
Before the global pandemic took hold, London had an enormous problem on its hands. There was far too much demand, and not nearly enough supply. Even if there is a slight trend towards people moving away from the capital, it’s unlikely to be felt in property prices since supply is still well below where it needs to be. One noticeable trend because of Covid-19 is that renters are seeking properties with outdoor space, and room to work. We are taking this into consideration when sourcing investment properties for clients.
Have I already missed the boat now that property prices are rising again?
While some people might time the market to perfection and then dine out on their fortune for years to come, most of us simply aren’t that lucky. But investing should not be about luck. Like any type of investment, it’s dangerous to invest in property for short term gain. If it’s long term, resilient capital growth you are looking for, history suggests that London is still very hard to beat. After the credit crunch, the average London property increased by 10.35% in the first year of recovery (2010). It then rose an average of 7.87% a year after that, until Brexit happened in 2016. Clearly the earlier in the recovery you buy the better, but if you are investing for the longer term, you might wait a long time before you find a better moment than now.
What if interest rates rise?
Predicting the future of interest rates can be based on several factors, but most reports suggest that low interest rates are here to stay. Here is an example of one such report: www.bloomberg.com/news/articles/2021-01-05/ultra-low-interest-rates-here-to-stay-2021-central-bank-guide. There are also some excellent fixed rate mortgage deals out there, which we can help you source.
Am I too late to make the most of the stamp duty holiday?
Not yet – but you need to be quick! The stamp duty holiday ends on 31st March and you will save up to £15,000 if your purchase completes before then. For overseas investors there is the double incentive of buying before the government increases rates for international buyers by a further 2% on 1st April. The alternative would be to buy with cash savings, and re-finance once you have owned the property for 6 months to release your equity back to you.
Should I worry about currency fluctuations?
If you are an overseas investor, you have the added incentive of investing before Sterling recovers its Brexit losses. The UK pound is still cheap relative to its history, but as confidence in the UK builds, it may well recover sooner than you think.
Get in touch
It’s a big decision investing in property, and it’s hard to know where to start. We can help you find a property in an area with excellent rental demand and investment potential. We’re not tied to one estate agent or builder, which means we can be entirely focused on finding the right property for you. If the sale falls through – which often happens in London – we don’t charge you any extra. We just start the process again on your behalf. We arrange all the finance for you, dealing directly with a mortgage broker to find you the best deal. You only pay us a deposit until we have successfully bought you a buy-to-let. Once the sale is complete, we can manage the property on your behalf at a rate that under-cuts most high street estate agents.
If you would like to invest in property, and would like to discuss some of these findings in more detail, please email me at email@example.com or call us on +44 (0)20 3819 6070.