London’s post-Brexit property market: a boon for foreign investors
Brexit dealt a crippling blow to
However, the troubled state of the London market offers a bounty of opportunities for savvy investors. As such, foreign investors are swooping in and snapping up choice properties amid the market downturn.
In this article, I will explore the issues currently ailing the London property market, and then address the reasons that despite its woes, the market is ripe for foreign investors.
The London property market: what went wrong?
Market of property in London is currently grappling with economic struggles, a weakened currency, decreased demand, tumbling real estate prices and tax hikes.
Economic struggles and a weakened currency: the morning following the Brexit referendum, the FTSE 100 dropped by more than 8% and economists abruptly slashed their growth forecasts for 2017 amid rampant uncertainty.
In the months that have passed since, the British pound fell
Decreased demand and tumbling real estate prices: The Brexit decision also brought about a swift decline in real estate market activity. Amid looming uncertainty, investors postponed pending transactions, ushering in plummeting residential property prices.
One key issue here is that of supply and demand. Specifically, whereas demand recently outpaced supply by a great deal, supply and demand have recently leveled out, increasing pressure on developers to lower prices. Savills reported in the Autumn 2016 edition of its Spotlight Prime London Residential Markets report that between 2011 and 2015, sales surpassed construction completion rates by an average ratio of more than
In general, London real estate prices have fallen by some
Tax hikes: In addition
Favorable conditions in disguise
Hidden among the above difficulties are a slew of opportunities, many of which are unique
Russian buyers in particular are eager for a bargain. Tranio.com received the same volume of London property requests from Russian buyers in the first nine months of 2016 as it had in the first nine months of 2014. The key difference, however, is that in 2014 the medial budget was EUR 1 million, while in 2016
Likewise, the falling price tags exacerbated by the supply and demand issue described above do not represent a market decline in the traditional sense; rather they represent a market correction. According to data obtained from British financial institution Nationwide Building Society, between 2000 and 2015, the average price of new constructions in London surged
As such,
Meanwhile, those wary of tax hikes can take comfort in knowing that by properly structuring your purchase, you can significantly reduce your tax obligations. In particular, commercial property purchases – including purchases of offices and shops – carry a stamp tax ranging
The table below outlines sample stamp duties associated with the acquisition of various types of property worth
Object | Buyer | Tax sum, GBP |
---|---|---|
Residential property(second and subsequent property owned) | Individual | 663,750 |
Residential property (any) | Legal body | 663,750 |
Residential property (main residence) | Individual | 513,750 |
Commercial real estate | Individual, legal body | 239,500 |
Evergreen factors that make London an investor favorite despite Brexit
In addition to the current market conditions described above, a number of more enduring factors ensure that London will remain an investor favorite despite present difficulties.
First, even after exiting the European Union, London will remain a global financial center.
Second, London remains one
Finally, London offers affordable loans.
For all of these reasons, despite all appearances
Elena Milishenkova and George Kachmazov, Tranio.com managing partner
Originally published on londonlovesbusiness.com
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