Overseas Mortgage Enquiries Increasing.
The UK property market is completely unique at the moment. Whilst many countries are experiencing a period of depression in their housing markets, the demand in the UK has been at unprecedented levels in the last few months. Much of the demand is from foreign investors and there are many reasons for this. For one, the domestic market has low levels of consumer confidence because UK residents are expecting the economic fallout from COVID-19. However, the biggest contributor to the surge in mortgage enquiries from overseas buyers is the UK’s stamp duty holiday.
According to John Squires, head of mortgages at Liquid Expat Mortgages, ‘Overseas buyers are seeing the once in a lifetime opportunity presented by the coalescing effects of the stamp-duty holiday and reluctance from domestic buyers because of the financial uncertainties caused by COVID-19. Add to this that foreign investors are looking to buy now because of the impending surcharge for foreign buyers and you have the perfect storm to incentivise diving into the UK property market’.
Stamp Duty Holiday
From the 8thof July to the 31stof March, buyers are exempt from paying stamp duty on properties up to a value of £500,000. Before the change, anyone buying a property over £125,000 had to pay stamp duty as follows:
– For properties between £125,001 and £250,000: 2%.
– For properties between £250,001 and £925,000: 5%.
– For properties between £925,000 and £1,500,000: 10%.
– For properties over £1,500,000: 12%.
It’s clear that what the stamp duty holiday amounts to is massive savings for anyone looking to buy a property in the UK.
‘The stamp duty holiday is a really big reason why enquiries are increasing,’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘Potential investors are really taking the incredible opportunity offered to them by the UK chancellor. What the stamp duty holiday presents to them is a massive financial saving, the likes of which we’ve never seen before’.
‘When you take a look at the numbers, someone buying a £300,000 property will save £15,000. The more you’re spending, the bigger the saving. For example, buying a £500,000 property – the maximum value allowed under the new rules – you will make a saving of £25,000.’
The Stamp Duty Surcharge Increase
In April 2021, the stamp duty situation will change again as an additional 2% surcharge will be added for non-UK buyers. This means that, after April 2021, overseas buyers purchasing property in the UK will pay this 2% surcharge on top of stamp duty. And, because many foreign investors are buying a second home or a buy-to-let property, they will also be paying the 3% surcharge imposed on second homes and investment properties. In most cases then, foreign investors will be paying at least 7% extra on any UK property after April 2021. However, this can rise up to as much as 17% for those buying properties in the highest stamp duty bracket.
With this 2021 deadline, overseas investors are desperate to take advantage of the currently favourable market conditions and grab their slice of the lucrative UK property market.
‘Our team at Liquid Expat Mortgages are rising to the challenge of supporting foreign buyers through what can be the difficult task of getting a UK mortgage’ says Stuart Marshall. ‘The criteria for lending is changing everyday so having a team supporting you that’s really tuned in to the developing marketplace can pay real financial dividends for investors’.
Liquid Expat Mortgages
Unit F2, Waterfold Business Park,
Bury BL9 7BR
Phone: 0161 871 1216
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