Author: Louise

What opportunity in the UK property market for expat investors?

UK property: Sales

As we are nearing the end of the final phase of the Stamp Duty (SDLT) holiday at the end of September (on the first £250k of property purchases) it seemed apt to reflect on how it may have helped or distorted the market.

The volume of UK House sales declined in July after the 1st main SDLT holiday ended. Tax data showed that residential purchases were 63% lower than in June. So the number of housing transactions fell, but what effect did it have on house prices?

A recent article in the Financial Times quotes a study by the Think Tank Resolution Foundation which reveals that the biggest house price rises were in areas that least benefited from the SDLT tax cuts. So the SDLT holiday may not have distorted pricing as much as many people think.

UK property: Rental market

On the rental side, more Institutional Investors are coming into the rental market, attracted by the demand, returns and stability offered. Today’s rental market has changed dramatically. Demand has continued to increase, with 1.7 million more rental households in 2017 compared to 2007, according to the ONS.

Build to Rent

Institutional investors are entering the market at scale with Build-to-Rent. Purpose-built Build to Rent is a new concept in the UK, which started around 2016, but a model common in other countries like Germany and elsewhere in the European Continent. It means tenants rent off a Corporate landlord. In theory tenants are offered a more consistent service level, in return for higher rents when compared with some of the private rentals on the market.

Landlords like: John Lewis, Legal and General and now Lloyds Bank is the latest to enter the housing market with the intention to buy and rent out 50,000 homes in the next decade. They may offer longer tenures that many tenants crave, but are likely to push rental prices up.

Future for UK First time buyers?

In the end the market may be shaped in a different way. Still difficult for First Time Buyers, as prices are so buoyant and inaccessible. Yet with more rental stock potentially becoming available, the UK housing market could start to look a bit more like Continental Europe in nature in the future.

This presents opportunities for investors in the buy-to-let sector. As prices are still inaccessible for many and the rental sector becomes more homogenised and potentially expensive, renters will still want character, individual properties in the right locations. The bigger block build of Build-to-Rent won’t necessarily be in the optimum locations that many individual, resale properties might be

If you want help on your property investment journey then get in contact +44 (0) 1932 849 536 or e-mail info@property-venture.com

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property firm that finds the right investment properties for clients.

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What role does ‘gut instinct’ play in property?

When you make decisions you think things through and tend to have a ‘gut instinct’ about whether the decision is right. Sometimes a decision might be based on instinct, rather than what the logic of our brain tell us.

‘Gut instinct’ or intuition accesses accumulated experiences in a synthesised way, so that judgments are formed and action taken without any logical, conscious consideration.

Think about when you’ve gone to view a property, you might instantly take a like, or dislike, to it from the outside. It may look old fashioned, ugly and run down from the outside and you may know from past experience that this is a good indicator, that the inside is likely to be in bad shape. So your ‘gut’ or intuition, tells you that, based on previously seeing neglected properties this won’t be for you if you don’t want to do any renovation work.

Yet another investor might be drawn to the ugliest properties, perhaps because based on past experience they can generate the highest yields and cashflow if they are in the right area and serving the right tenant type.  

These situations create an ‘emotional tag’ linked to a previous experience which influences decision-making, more than objectively assessing the pros and cons of a situation. This means that to protect decisions against bias, you first need to know when you can trust your gut feelings, confident that they are drawing on appropriate experiences and emotions.*

So when can you trust your gut during property investing?

We often push ourselves outside our comfort zone to achieve things we haven’t achieved to date. This can sometimes create the same sort of feelings of unease we feel when we are about to make the ‘wrong’ decision.

So how do we tell the difference?

I talk a lot about Due Diligence, in essence doing the research and checking things out before making an investment decision. This can play an important role in helping understand if we are feeling uncomfortable because we are stepping outside our comfort zone or because there is a real cause for concern.

Role of Due Diligence on property investment decision-making

Before you part with any money, or sign any legal contract requiring future payments, then it is key that you carry out appropriate checks not only on your potential investment, but also on anyone you might be investing with and the professionals you might use along the way.

Whether that be visiting the local area and comparing comparable prices, rental returns, taking stock of the infrastructure, transport links, schools and health care or checking out a developer’s or builder’s reputation, as well as all the legalities.

So once you have checked things out and taken an objective view of the investment opportunity you can use this to supplement your subjective ‘gut instinct’ and check if the gut instinct is based on:

  • identical or similar situations and whether you have experienced this feeling sufficiently to know that the gut instinct is sound?
  • whether you learned the ‘right’ lessons in the past or are not remembering the situation accurately
  • over-reliance on someone else’s judgement to form your decision, who will have a different set of experiences and judgments.

There is a place for pushing yourself outside your comfort zone as well as using ‘Gut Instinct’ in property investment. The key is to use due diligence tools and techniques to introduce objectivity to the decision-making process and distinguish whether that gut feel of unease is because you are trying something new or because there is a genuine, logical reason for it.

If you want help on your property investment journey then get in contact +44 (0) 1932 849 536 or e-mail info@property-venture.com

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

* Strategic decisions: When can you trust your gut?” published by McKinsey Quarterly in March 2010 based on Nobel laureate Daniel Kahneman and psychologist Gary Klein work

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Prospects for the UK property market beyond tapered SDLT?

House prices seem to be rising inexorably.

House price inflation is at 8.9% – taking the average house price in England to £268,380. The volume of transactions are also up by about 30%.

Yet the monthly price change in April was – 1.9%.* Whilst we should not read too much into a month-on-month change, it might indicate a slowing of inexorable price rises.

UK Housing Manchester apartment block

The UK property market has continued to surprise. Given the country has been through the protracted Brexit negotiations and then had to face the Covid-19 pandemic, it has remained remarkably buoyant.

Arguably housing is often seen as a safe haven asset during times of political and economic volatility, which may explain some of this sustained activity.

Low mortgage rates**, meaning that borrowing is relatively more affordable for property investors and homebuyers alike, has sustained demand. All at a time when there is still a systemic supply imbalance, meaning prices are pushed up.

Anecdotally vendors have been maximising what they can achieve for their homes during the rush to hit the various SDLT holiday deadlines. This may have mitigated any potential tax savings for the buyer by baking them into vendor asking prices.

Timing entering the UK Property market?

There is never a ‘perfect’ moment for an expat to invest for the first time, but often it can come down to an individual vendor’s readiness to negotiate, not the whole market, although the market obviously influences vendor sentiment and price expectations.

There are indications the property market might now be less heated than it was. The latest Land Registry HPI for April shows that monthly price changes in England are down marginally. This coupled with the big SDLT savings being greatly reduced from 1st July may mean the rush and sense of urgency could abate in the Autumn/Winter period.

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

*Office for National Statistics using the latest April data

** Bank of England Base Rate has stayed under 1%, for over a decade, significantly less than during the global financial crash when the base rate in July 2007 was 5.75%

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What works for you Commercial or UK Residential property?

The UK residential property market remains buoyant as a result of the various SDLT holiday extensions and the Furlough scheme supporting employees. Yet some investors have turned to the commercial property market to look for opportunities. Recent and further impending planning Class changes from 1st August 2021, relaxing the rules around converting many types of commercial buildings to residential, have meant investors are embracing the potential opportunities this brings.

UK Commercial and residential buildings

But the commercial property sector also has its inflated price challenges. And it isn’t just the private residential rental market where the government has imposed restrictions on landlords over evictions or seeking to claim unpaid rent. It is also in the commercial sector.

Although some restrictions are lifting like the Residential eviction ban was lifted on 31st May, there are other more lasting changes that will endure. For example new ‘breathing space’ laws, which might affect the types of tenants residential landlords want.

Whichever type of opportunity you are seeking, remember there are some enduring principles that work whichever the sector, particularly when it comes to due diligence.

UK Residential and Commercial Property: 6 Tips

Check UK Property Title

This is useful to do early on in the process, to look for Title defects or covenants and to get an idea of the pricing history, all of which is useful information shaping the decision on whether to invest and also with the negotiation stance

Right area?

Whether commercial or residential, this is important. If for example you are seeking to do a commercial to residential conversion, then it is important to check that the area has a sufficiently residential look and feel for. This will increase the chances the end product will work well and be profitable, either as a hold or sell-on opportunity

Sourcing requires similar skills and sources:

Agents – are useful in both sectors although the type of agents differ in their approaches. Commercial agents may talk more qualitatively about the building rather than the numbers, but all agents are motivated to conduct viewings to be actively promoting a property.

Direct to Vendor is a buying strategy for both sectors. For Commercial property tools like LandInsight and Nimbus are used for Land and commercial and can help when checking Title or identifying the owner to approach directly

Google Street views are powerful to show the history of the building for planning and to show how it has been constructed and extended over time.

Checking Property Floorplans

This is a useful technique for ensuring whatever planned building usage changes, the minimum space requirements are met for residential living

Property Tenant checking

Whilst this is important for residential properties, it tends to come at the end of the Due Diligence process. Whereas for commercial it is one of the first priorities to check out the tenant company. This can be done on Companies House if it is a Limited Company to ensure there is a robust income stream and business model to sustain rental payments.

Property Contractual terms

Are important for both residential and commercial sectors, but more so in commercial as the various Lease clauses change the nature of the contract significantly, more so than for a more standard residential Assured Shorthold Tenancy (AST) contract.

If you would like to talk about residential or commercial opportunities, whether that be Student Accommodation or Hotels then please get in contact or email info@property-venture.com

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® has outlined information in layman’s terms to enable top line comparisons. Property Venture® is not offering advice. With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or adviser will discuss with you up-to-date legislation and costs

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8 ways to Outgazump the Gazumpers?

Approximately 28% of UK transactions fall through each year.* Of these 21% of buyers were gazumped – losing the property due to the vendor accepting a higher offer from another buyer.

Given there are about 1m annual transactions, gazumping accounts for nearly 59,000 transactions falling through.

Other reasons for failed transactions included:

• 27% where the seller decided not to sell their home

• 21% of buyers being unable to complete sales on their own homes

• 21% of buyers finding an alternative home to buy

Gazumping is more prevalent in a buoyant property market when vendors are in a strong position. It isn’t always about more money. Sometimes buyers can get caught in a protracted buying process which means the process can be more susceptible to things going wrong.

Given this is a scourge rearing its head again in 2020 and 2021….

What can you do to protect yourself from Gazumping?

  1. Be as ready as you can be at the outset, for example getting finances organised. Or ensuring you have the ‘right’ professional adviser for the type of transaction you are conducting. A process-driven online conveyancing house is not likely to be the best adviser for a Title split or an Options deal.
  2. Request a Lock-out agreement, if a vendor agrees to it. The benefit is it gives peace of mind on timeframes to the vendor as well as the buyer. The predictability means everyone can plan their lives around move dates, so the transaction is far less likely to fall through. The penalty is whatever the financial commitment has been agreed in the Agreement.
  3. Or Exchange early, say with 1% deposit to secure and lock in the deal
  4. Do your Due Diligence up front – researching the area and property as much as possible before waiting for a lawyer to check it e.g. buy the Title Deed from Land Registry to verify ownership, check historical pricing and check boundaries. Or asking for a management pack for leasehold properties.
  5. Go for speed of transaction – which gives less time for the transaction to falter
  6. Build vendor rapport so there is a human commitment and get the property taken off the market immediately. Strive wherever possible for a transparent transaction, so you are aware of every development in a timely fashion.
  7. Indemnity insurance or Homebuyer protection insurance can protect against wasted fees spent on surveyors and searches
  8. Buying at Auction can help address the gazumping because all the buyer’s information is provided up front and the accepted offer is binding.

There are different buying models in other countries

Scotland’s property buying process

Gazumping is rare in Scotland. Solicitors are bound by their professional body (Law Society of Scotland) which bans the practice of Gazumping and are often involved with the marketing and selling rather than just estate agents. Although gazumping can still occur with smaller boutique agents.

In Scotland a Home Report is provided by the Vendor, a bit like preparing the sale for auction in England and Wales. It contains a floorplan, an EPC (up to 6 month’s old), a Gas Safety Certificate, a Survey by a RICs-qualified surveyor, as well as the Utility Providers.

The former Home Information Packs (HIPs) helped in England and Wales , providing EPCs and the Vendor’s questionnaire, but they fell into disrepute and only the EPCs have survived.

France’s Property Buying Process

In France, the 2 contract system also helps mitigate Gazumping – the deposit is paid on signing the ‘Compromis de Vente’ rather than awaiting the ‘Acte de Vente’ the Final Deed and transfer of Title . On the upside, the buyer’s deposit secures the property by contract, the vendor is not allowed to accept any other offer, at that stage. However there are downsides for the buyer, if the buyer pulls out without adequate cause, for example if the survey reveals serious unacceptable faults, the buyer may forfeit the deposit.

Generally it is easier for Homebuyers to get caught out more than Investors, given they are buying more based on emotion and rather than the numbers an experienced investor is more likely to do.

Inspired by a Clubhouse conversation in Toyin Ayandare’s Room 7th May 2021

N.B. *Sprift, A Which? survey of 2,000 homebuyers in February 2016,

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

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Expat property investor implications of the UK’s Budget

With the biggest contraction in the economy for 300 years (-10%) the Office for Budget Responsibility (OBR) nevertheless predicts a swift recovery from November. The economy – as measured by GDP – is set to rise by 4% this year, up 7.3% in 2022 and increasing by c.1.6% in the following 3 years. The economy is expected to be back to pre-Covid levels by the middle of 2022. 

This bounce back is encouraging news as it supports investor confidence and provides the bedrock for the property market.

Expat Property Investors – what things of note?

Stamp Duty Land Tax (SDLT)

We have all been holding our breath for this one. The SDLT holiday extension is happening as widely trailed, providing an additional 3 months with the nil rate band of SDLT on purchases up to £500,000 to the end of June and a further 3 months on purchases up to £250,000 from July to September 2021. The 3% investor additional SDLT continues as normal during this period.

Devon Housing-near Plymouth

The intention is to maintain confidence in the housing market following the coronavirus (Covid-19) pandemic.

From the 1st of October the ‘old’ stepped system kicks back in with SDLT charges starting at £125,000 threshold.

However the non-resident 2% SDLT surcharge – of which little is announced – is still due to go ahead. More here.

Capital Gains tax (CGT)

No increase was mentioned in this budget – although it was widely expected there would be – but the limits have been frozen along with personal tax allowances which will be increased to £12,570 in April 2021 but held at this level until 2026.

Corporation tax

Corporation Tax is being increased substantially from 19% to 25% from 2023. This is relevant for those of you holding properties in a Limited Company or thinking of doing so. Although smaller companies with profits of up to £50,000 will continue to pay the lower 19% rate, capturing an estimated 70% of companies.

Construction Industry boost?

A new term has been introduced, that of ‘Super Deduction’, whereby companies investing in new plant and machinery can reduce their tax bill by 130% of the cost of the qualifying investment value. This temporary first year deduction replaces previous reliefs and allowances. This will stimulate business investment and help the construction industry.

Mortgage Guarantee scheme for First timebuyers

The Government announced its First Time Buyer mortgage guarantee scheme which enables them to buy with a 5% deposit and 95% mortgage loan. The Government underwrites the risk of the higher loan-to-value. This has brought the big high street brands on board with this scheme.

The Help-to-Buy scheme is being phased out. This ‘Mortgage Guarantee’ is a better deal for First Time Buyers because they aren’t restricted to new builds (which Help-to-Buy did) it applies to resale properties too. Given there is usually a premium attached to new builds and more so with Help-to-Buy new builds, which have a captive market, they are likely to be buying at keener prices all round.

It may be that many First Time Buyers can afford the monthly mortgage payment but just haven’t been able to get the deposit together, particularly in the South East.

Although the incentive for developers to build new housing is diminished, given Help-to-Buy gave developers and builders confidence to build because they had a ready market of First Time Buyers, so may not increase housing supply, it keeps the property market liquid.

The Government’s Levelling up agenda

The government has announced 8 ‘Freeport’ sites across the country. This means there will be tax incentives for businesses to base themselves in these designated areas. For example purchasers of land and buildings situated inside Freeport tax sites located in England will be able to claim relief from Stamp Duty Land Tax, subject to a ‘control period’ of up to 3 years (until 30 September 2026) and the land being acquired and used in a ‘qualifying manner’.

The 8 designated Freeport locations are:

  • East midlands airport
  • Felixstowe & Harwich
  • The Humber
  • Liverpool City region
  • Plymouth
  • The Solent
  • Thames
  • Teesside

What’s more the government announced a new economic campus beyond Westminster, in Darlington for parts or the Treasury, MHCLG and Department for International Trade.

These present opportunities for investors if you include inward investment and infrastructure improvements as part of your investment criteria.

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

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Home buyers and owners in France and Spain – watch out

One of the biggest changes for Britons buying or owning homes in an EU country since the start of 2021 has been the length of time you can stay.

And there is another…… taxes

As non-EU citizens, Britons no longer benefit from EU exemptions. What does this mean in practice?

Let’s take a homeowner in France

A french Gite home

Vendors in France are usually subject to both Capital Gains Tax (CGT) and social charges which fund the services in France – of which there is no direct equivalent in the UK.

Social Charges increase from 7.5% to 17.2% if the seller is not an EU or EEA citizen. More than double the rate for non-EU citizens.

Combined with 19% CGT, it means that a property vendor pays a total of 36.2% in tax, with CGT and social charges combined, on the profit they make from their home at the point of sale.

There are also increased property expenses

As an EU citizen there is no need for a “fiscal tax representative”, which charges around 1% of the sale price to do a capital gains tax declaration. But as a non-EU citizen a Briton is obliged to make a capital gains declaration supported by a tax representative accredited by the French Tax Authority.

There is a glimmer of hope… in bureaucracy and exemptions

With France it is always a good idea to get financial and tax advice, as there are exemptions available to sellers and various ways of buying a property in a ‘Special Purpose Vehicle’ (SPV) of which there are many forms in France, all with upsides and downsides..

Apart from setting up in an SPV, there can be exemptions when buying personally. For example if you’ve held the property for more than 30 years – you are not liable to social charges or CGT in France on the gain.

Or you can plan for this in a similar way to the UK, by moving into the home in France and making France the primary residence, thus in theory enabling a house sale without attracting CGT using the main residence exemption.

As in the UK there are rules around this, so tailored advice is needed.

How about homeowners in Spain?

Another popular country for Britons buying a holiday or retirement home, but where the tax regime is different for non-EU citizens.

Income tax is levied at 19% for EU citizens but 24% for residents of a ‘3rd country’

And whilst it is still ok to get mortgages, banks might not lend as much money against the value of the property. Banks in Spain are tightening loan-to-values and post Brexit mortgage lending is typically at 60% LTV, lower than the 70% LTV for EU citizens.

This means having more cash available as a home buyer in Spain, given a 40% deposit is likely to be needed and along with buying expenses at 12-13% as a home buyer you may therefore need 52-53% of the value of the property in cash.

Increased cross-border visibility of tax affairs 

Whilst Brexit has fragmented our relationships with Continental countries somewhat, we live in a world of increased traceability. It is worth taking note that there is a Directive (2018/822) called DAC6, an EU mandatory disclosure regime that imposes mandatory cross border reporting on tax matters for tax residents in one or more EU State, meaning there is greater cross border reporting of tax affairs.

Double Taxation Treaties are international and exist between the UK and most Countries around the world, meaning you don’t pay the same taxes twice.

Whilst these fiscal changes are more enduring, let’s hope stock blips of British products on the Continental supermarket shelves are only temporary and the logistics and transportation challenges get resolved soon.

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

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What percentage uplift do vaccines provide economies and housing markets?

Faced with severe economic downturns in 2020 (estimated at minus 3.5 percent) and still in the midst of exceptional uncertainty, the global economy is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.

Vaccines have given a fillip of 0.3 percentage point relative to the previous forecast, reflecting increased economic confidence. The strength of the recovery is projected to vary significantly across countries, depending on access to medical interventions, the effectiveness of policy support, exposure to cross-country viral spreading and the state of individual economies on entering the crisis e.g. low-income developing economies, entered the crisis with high debt that is set to rise further during the pandemic.

Property markets have surprised, particularly in the UK..

There was uncertainty with the housing market during the twelve week National Lockdown from 23rd March 2020. Initially it went into hibernation – as buyers, sellers, renters and landlords were told to delay home moves if possible, not to initiate new viewings and follow through pipeline transactions virtually.

It is estimated there were 450,000 buyers and renters with plans on hold, of which 373,000 were property sales with a total value of £82bn (Zoopla estimates). Sales were running at a 10th of the normal level for the time of year, similar to usual sales volumes of a December.

By the 2nd Lockdown on 5th November the housing market remained open for Estate Agents, removal firms and conveyancers abiding by Covid-safety measures in England, but with greater levels of restrictions in Wales, Scotland and Northern Ireland.

City-Scaffolded-Building-UK

At the same time the Pandemic caused transaction delays in England, prolonging Contract Exchange times from 96 to 124 days, a 29 per cent increase (Movewise).

This was followed by a mini housing boom, as a result of pent-up demand and the Chancellor’s stamp duty holiday. The extent to which government Bounce Back Loans (BBLs) were used for deposits on properties is unclear, but anecdotally it was happening and may have contributed in some way.

All of this combined to push prices up and create a property frenzy in some areas towards the end of 2020.

Fears are that the end of the stamp duty holiday, at the end of March 2021, will cause a sharp drop in transaction levels, which can typically lead to price falls. Already house price growth in the year to the end of January 2021 was 5.4 per cent, down from 6.0 per cent in December (Halifax) and new instructions to sell have decreased noticeably.

We are also now entering the 4th and final year of ‘Section 24’ changes to the way landlords calculate their buy-to-let mortgage interest tax relief, which will be fully implemented and reported in 2020/21 Tax Year in Tax Returns filed by January 2022. This tax-relief withdrawal had already had a dampening effect on the property investment market but will be fully felt in this final year.

London, UK, housing market

Whilst London has been harder hit than most of the rest of England, with a number of homeowners and renters migrating outwards, it may not continue a downward trajectory.

Kearney’s 2020 Global Cities Report ranks London as the No. 2 City, after New York, but London tops the rankings when it comes to the outlook based on long-term investments in governance and economics.

Whilst the rankings have been produced without fully taking into account the effects of the pandemic and prior to seeing any visible signs of the Brexit fallout, it provides a reference point. It also means London starts out in a really strong position, particularly rated for the cultural experience offered, the strength of Medical Universities, global service firms, its news agencies and the overall international travel experience.

Conclusion: property market uplift?

Whilst vaccines may have given a 0.3% upward fillip to world economies, how much might vaccines boost the housing market or otherwise?

It is difficult to strip out the myriad of interwoven drivers of house prices in the UK property market. Drivers such as: rising unemployment, – deteriorating after government support to industry is withdrawn, affordability levels, liquidity of the housing market as less stock comes to market post SDLT holiday is scheduled to end. These all hint at prices lowering. There are also more unknowns, such as the level and shape of the tax burden to be announced in the Chancellor’s March budget.

Yet house building rates still fall short of government targets, exacerbated by Covid, thus constricting supply of newer stock on the market.

The vaccine programmes boost morale and confidence, which can only help the country and economy get back on its feet – and this will have a positive knock-on effect on the housing market.

If you would like help finding the right property at the right price for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

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European Homeowners – where has Brexit left you?

We have been waiting a long time to find out about the situation for Homeowners and Homebuyers in Continental Europe, following the 11th hour deal between the UK and EU and what it means for:

  • Travel and moving around the European Union (EU)
  • European Homeowners
  • Finances / Taxation / Pensions
  • Health
  • Spain – a snapshot for homeowners
  • France – a snapshot for homeowners

Travel and moving around the EU

Travelling around the EU

From January 2021 the right to free movement guaranteed under EU rules ended for UK residents, who will only be able to remain within the Schengen-free zone ( most EU member countries), for a maximum of 90 days, within each 180 day period as a tourist. And this is irrespective of whether it is for work or leisure, in that country, or any other in the Schengen zone. There is a 180 day allowance over the entire year.

This is a challenge for people who have got used to homeworking and the idea that work can be non-location specific. This means some employed and self-employed Brits are feeling the draw to move to and work from countries like France, Spain or Portugal.

What if you want to stay longer?

Staying longer than 90 days in any 180-day period, to work or study, or for business travel, you will need to meet the entry requirements set out by the country you are travelling to. This could mean applying for a visa or work permit. Periods of time authorised by a visa or permit will not count towards the 90-day visa-free limit.

Passports and travel

You will need at least 6 months left on an adult or child passport to travel to most countries in Europe (not including Ireland). As a non-EEA national, different border checks will apply when travelling to other EU or Schengen area countries. You may have to use separate lanes from EU, EEA and Swiss citizens when queueing and you may need to show a return or onward ticket.

Different rules will apply to EU countries that are not part of the Schengen area and each country’s travel advice will need to be checked for entry requirements.

Driving Licence

A UK driving licence will continue to be valid to drive in EU countries. The exceptions are people who only have a paper licence, not a photocard one, as well as those with licences issued in Gibraltar, Guernsey, Jersey or the Isle of Man. In these cases an International Driving Permit (IDP) may be needed.

You will need a green card, which is a document you get from your insurer to prove your car is covered if you are driving in Europe. Motorists should contact their insurers six weeks before travelling, to ask for a green card. Separate green cards are needed for trailers and caravans. The green card is only proof of a minimum level of third-party cover – it will not necessarily match the level of cover that you pay for in the UK.

If you want to take a UK-registered vehicle to the EU for longer than 6 months of the year it is likely to be needed to be registered within the country and you may need to pay some taxes.

European Homeowners and homebuyers

Continental European Holiday Home

If the ’90 day’ limit is too restrictive you might consider other options like residency or citizenship. A resident is a person who is legally living or working in a particular locality, a citizen legally belongs to a country. Once you become a citizen of a country, you can then apply for a passport, whereas residency status is usually conditional and you can only apply for a travel document such as an ID card. 

Residency in an EU country will enable you to travel more freely, a bit like a Schengen visa, but  you only have the right to reside in that specific country. Citizenship in an EU country means you have the right to live, work and study in any other EU member country, which opens up access to other EU countries.

There are a number of countries which offer a so-called ‘Golden Visa’ programme, which tend to be conditional on investment in the country of concern which includes investing in property. Residency, offered contingent on buying a property of a certain value, can often be upgraded to citizenship.

Some countries that offer this type of incentive include Portugal, Greece (Residency only), Cyprus, Malta, all at differing investment thresholds.

Finances/Taxation/Pensions

The UK arguably has a reasonable taxation system and some Continental European countries have higher personal taxation regimes. Becoming resident of another EU country can mean being taxed in that country on worldwide income and potentially assets too. If you are not a resident, you will usually only pay tax on income that came from that European country.

If you are a property investor, filing tax returns in an EU country, the UK has double taxation treaties with most countries and this gives protection at an international level (not EU legislation level) that – in essence – you won’t get taxed twice on the same income.

It is worth checking the taxation protocol of the country of concern to see if the tax regime changes for citizens of ‘3rd countries’

Pensions

Whilst State Pension payment should not attract bank charges being paid, expats might incur extra charges for Private Pensions being paid into foreign bank accounts

Health

A replacement for the EHIC card is being introduced – a UK Global Health Insurance Card (GHIC) gives you the right to access state-provided healthcare during a temporary stay in the European Union (EU). In the meantime EHIC cards are valid until the expiry date shown and it’s a question of ensuring travel insurance covers other medical needs which might not be covered.

Spain – Homeowner Snapshot

Spanish Costa Holiday Home

If you were legally resident (and correctly registered) in Spain before 1 January 2021, you will be able to stay.

The Spanish system Tarjeta de Identidad de Extranjero (TIE) is being rolled out to register permanent foreign residents – but there is a backlog. So proof of application is meant to be sufficient at this point in time by way of the ‘Green Certificate’ a green A4 certificate or credit card-sized piece of paper from Extranjeria or the police. This is still a valid document and proves your rights under the Withdrawal Agreement.

You can exchange your paper ‘Green Certificate’ residence document for the new TIE but you are not obliged to. The Spanish government recommends obtaining the TIE because the biometric card is more durable and may simplify some administrative processes.

You will also need your NIE – Número de identidad de extranjero (similar to a National Insurance number).

If you have not yet applied for a residence document, you should carry evidence that demonstrates you are resident in Spain. This could include a tenancy agreement or a utility bill in your name, dating from 2020.

EHIC European Health Insurance Card and State healthcare: S1

If you have a registered S1 form (for Spanish Healthcare) and were living in Spain before 1 January 2021, your rights to access healthcare will stay the same e.g. receiving a UK State Pension

If you are not an S1 holder, but are registered for public healthcare in Spain in another way and are travelling outside of Spain, you may need to apply for a Tarjeta Sanitaria Europea (TSE – a Spanish-issued EHIC)  for travel to countries outside the EU.

You ought to buy comprehensive travel insurance to cover anything not covered by your TSE, or EHIC. An EHIC is not a replacement for comprehensive travel insurance.

Working in Spain

If you were legally resident in Spain before 1 January 2021, you have the right to work, as long as you remain legally resident. If you are planning to go to Spain to work, you may need a visa or permit. You should check with the Spanish Embassy in the UK.

France – Homeowner Snapshot

France Holiday Home Gite

For those of you with homes in France you visit but want to stay for longer periods then the new system in France will be of interest.

British citizens living in France will have to apply for a residence permit. For those living in France prior to 31 December 2020 they can apply online by 1 July 2021 in line with the Withdrawal Agreement. You need to have your new residency permit before 1 October 2021.

British citizens who arrive in France after 31 December 2020 will need to apply for a standard residence permit at a Prefecture de Police.

All UK nationals resident in France need to apply for the new residency permit. This includes UK nationals:

  • with a European carte de séjour (even if it is marked “permanent”, or has no expiry date)
  • without a European carte de séjour (it was previously optional)
  • applying for a second nationality
  • married to or in a civil partnership with (known as PACSed) FR or other EU nationals

If you have been living in France for over 5 years, you will be eligible for permanent residency and a 10-year renewable residency permit. If you have been living in France for fewer than 5 years, you will be eligible for a card with 5 years’ validity. You will need to provide evidence of your personal situation (e.g. employed, financially self-sufficient).

If you are a British national who has already worked in France, you will be issued a residence permit valid for 5 years. If not , you will be issued an APS (Admission exceptionnelle au Séjour), valid for 6 months and renewable once, if actively seeking realistic job opportunities (there is a likelihood of being hired within a reasonable period of time).

Conclusion

Moving around and doing business has become more challenging, but there are ways to make life easier for yourself by becoming familiar with the procedures and paperwork which are necessary.

Over time as officials, travellers and homeowners become more familiar with the process travelling and living in EU countries should become easier

Disclaimer

Please note this information is provided as a guide only and has been expressed in layman’s terms. Definitive information should be obtained from the Spanish or French authorities and the Foreign, Commonwealth & Development Office (FCDO) or the NHS.

This blog provides guidance on the rules – ignoring any prevailing Covid restrictions which change continuously

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From Covid Chaos to Brexit bluster for homeowners abroad

Just at the time we might be able to travel again and move about a bit more freely at some stage in 2021, then another challenge rears its head for Continental European homeowners.

Brexit-Britain-Europe-Hands

From January 2021 the right to free movement guaranteed under EU rules ends for UK residents, who will only be able to remain within the Schengen-free zone (encapsulating most EU member countries), for a maximum of 3 months, within each six month period, regardless of whether a post-Brexit trade deal is done or not.

And this is irrespective of whether it is for work or leisure, in that country or any other in the same Schengen zone. There is a 180 day allowance over the entire year.

This is a challenge for people who have got used to homeworking and the idea that work can be non-location specific, as has become more ingrained in our psyche. This means some Brits are feeling the draw to move to and work from countries like France, Spain or Portugal, potentially still for UK-based enterprises.

However in spite of this, individual EU countries have some discretion, with some offering longer stays for non-Europeans who invest in property above a minimum threshold level. Or in other assets. This arrangement has been dubbed a Golden Visa.

Currently a work-around is for Britons to change their formal residence from Britain to one of the 27 members. Although from 1.1.2021 this becomes more complicated.

There are other also other considerations, like, taxation. The UK currently has a reasonable taxation system and some Continental European countries have higher personal taxation regimes. Becoming resident of another EU country can mean being taxed in that country on worldwide income and potentially assets too.

Then there are healthcare and pensions to consider. On the upside, a replacement for the EHIC card may yet still come, but in the meantime it’s a question of ensuring travel insurance covers medical needs, which we tend to do anyway. Expats might incur extra charges for Private Pensions being paid into foreign bank accounts (although State Pension payment are free).

What isn’t yet clear – given no agreement has yet been reached on the future relationship between the UK and the EU – is to what extent bi-lateral agreements between countries might be reached. Countries like Spain and Portugal have long-standing relationships with the UK and will want to maintain the status quo. London is France’s ‘second city’ on account of the number of French people living in the city, so has vested interests. What are your thoughts?

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