UK Regulated Expat Mortgage Brokers for over 25 years

Contact Us

UK property market: Green shoots, or should you fear the frost?

UK property market: Green shoots, or should you fear the frost?

The data on the state of the UK housing market continues to flow thick and fast, but for those looking to buy, the question remains, has the market hit the bottom yet? Buy to let landlords are clearly not hanging around to find out and many are now committing significant sums to snap up cheap property while lending costs remain at an all-time low. According to the Council of Mortgage Lenders figures, 2011 saw 124,000 buy to let loans advanced, up 32% on the previous year to represent nearly 13% of all home loans in the UK. Anecdotal evidence from parts of London explains why this may be the case, according to expatriate property search consultants One of the booming sector at present is the one bed flat, with rents ranging from around £900 per month before Christmas to £1150 in many of the better quality parts of South West London in late February. Spurred on by tax incentives, cash rich landlords are now snapping up one bed flats in the sub £250,000 bracket, before the Stamp Duty holiday ends in little over a month.

The demand for rental property is certainly strong: last year, more than 275,000 new tenants registered for private rental accommodation, up 24% on the previous year according to estate agents Countrywide, as many cash strapped UK residents put buying plans on hold.

With UK banks still showing little evidence of easing onerous lending terms to UK based buyers, the overall imbalance in the market looks set to remain for some time, thinks,

Meanwhile, there is a conspicuous absence of competition in the expatriate mortgage market, with two banks dominating activity in a sector which has traditionally seen some of the highest quality lending, according to Tim Harvey explains, “Expatriates are generally on long term contracts and often have generous packages which may include school fees or accommodation of both. The net result is that they have a high disposable income and so represent a very good lending prospect – stable, known salaries and a good savings ratio are the holy grail for struggling banks looking to lift the quality of their lending books. Yet the banks and building societies seem asleep to this opportunity. At a time when many need to rebuild profitability, high quality lending is going begging.”  Mortgage are  available for expatriates willing to contribute a 30% deposit, though, with rates falling as deposit sizes increase to as low as 3.49%, giving potential landlords a comfortable margin of around 2% on the rental yield alone.

Rents now in well-connected commuter hotspots in South West and North West London such as Kentish Town and Clapham and Wimbledon are frequently running at rates of 5% or more, with the added advantage of a capital gains potential, particularly in the higher quality locations. Average housing data release therefore hides a more complicated local picture, with many districts booming, whilst the overall average picture can be more sober.

Meanwhile data just realised by Housing market specialists Hometrack for January has showed that buyer are returning to the market in their droves, with the number of those registering to buy with agents rising 18% in January. At the same time the number of properties listed with agents rose 10%. In the longer term, this renewed interest from buyers will underpin prices.

Share this content with friends...
« Back to News