A study has revealed that up to 80 percent of new-build Thames-side homes in London are being purchased by foreign investors, according to The Guardian. The main injection of foreign investment is from the Far East and Middle East, and some properties have even been marketed in Hong Kong and Singapore before being promoted in London. There is also an influx of investment by buyers from countries whose economies are unstable, such a Russia, that regard London property as a safe option.
This has of course caused many buyers from the United Kingdom to complain that there is a severe shortage of properties available, because it seems impossible to compete with multi-millionaire cash buyers from abroad. However, the Mayor of London, Boris Johnson, has pledged to make homes in London more available to domestic buyers. He plans to develop 500,000 new homes within the next 10 years.
In light of these plans, it is important to remember that buyers should always be extremely careful when investing in property; because there are significantly more stipulations and considerations involved than when buying a home that you will live in. Below are some examples of those:
- Interest rates have an immediate effect but rent can only be increased at the end of a fixed-term tenancy or in accordance with the terms of the tenancy
- Consideration should be given to a possible loss of income, resulting either from a period between tenants or when tenants fail to pay rent or damage the property
- Possession proceedings can be costly and time-consuming and it can be very difficult to collect rent from previous tenants
- Even if the property is unoccupied, it will still have to be brought up to the standard required under the Housing Health and Safety Rating System
- Buying a property and leaving it unoccupied when letting seems too difficult is no longer an option because Local Authorities can now, in certain circumstances, step into the shoes of owners manage the property themselves
- Mortgage repossessions are highest in the buy-to-let market
- You should give consideration as to where you market your property. By advertising at schools, hospitals, etc., you are more likely to get professionals as tenants.
If you are looking to invest in property or purchase a new home and you would like further advice on the implications of doing so or the process as a whole, please feel free to contact a member of our professional team on 01279 755777.