We shouldn’t take international demand for UK property for granted
By Alpa Bhakta -
Just when we thought the end of Brexit was in sight, it looks as though the deadline to leave will be pushed back for the third time to January 2020.
There’s no denying that the entire process has been coloured by uncertainty and frustration..
The UK is, in many ways, in uncharted territory. Take London property prices in September, for example: counterintuitively, they picked up over the course of the month because sellers are hesitant to list their properties, stymying supply.
As such, the economic landscape is clearly rife with complexity. To help understand the current state of affairs, Butterfield Mortgages Limited (BML) recently commissioned a survey of property investors to find out how they are approaching property investment.
The study, which explored the views of 1,000 UK-based property investors, found that not only were they concerned about Brexit, but also that the vast majority (82%) consider international investors vital in making the UK property market competitive.
The UK is globally renowned for its bricks and mortar investments, and BML’s research shows that domestic investors are aware of the important role foreign capital plays.
However, the aforementioned research also revealed that 55% of UK investors fear Brexit has deterred international buyers from considering UK property investment.
A new market challenge appears to be forming and needs to be addressed.
So, what can the government do to encourage more international investment?
As with most questions of this nature, the answer is not immediately obvious or simple.
While there is a clear recognition of the importance of foreign investors, BML’s research revealed that the domestic market also has concerns.
A majority (58%) of domestic property investors want to see a cap on the number of properties international investors can purchase, whilst two-thirds want to see an increase on the stamp duty payable by non-UK residents.
Either reform would be a radical change to the status quo, and are paths that require a great amount of consideration before being trailed.
Looking forward, a shift in the UK’s position as a world player is inevitable however Brexit finally plays out over these coming months.
But there is nothing to guarantee that foreign investors will be deterred or attracted to the UK as a hub for investment in the years to come.
The ultimate outcome will be influenced by future government policy that strikes an effective balance between the needs of domestic and international investors.
It’s no small task, but something that needs to happen as a consequence of Brexit.
Alpa Bhakta, CEO, Butterfield Mortgages Limited