Preparing for overseas demand
A significant trend that has driven growth and maintained activity levels in the past few years has been the presence of overseas buyers looking to make real estate investments in the UK.
This trend has been accelerated this year, with the UK’s domestic turmoil resulting in a devalued pound and favourable exchange rates.
Should the BoE decide to ease its rate hiking cycle and lower the base rate in 2024, analysts anticipate further depreciation of the pound, particularly if the BoE makes its move before the US Federal Reserve or the European Central Bank.
With this in mind, interest rate cuts in 2024 could result in intermediaries seeing renewed interest from overseas as investors look to capitalise on the opportunities that advantageous exchange rates could create.
Such borrowers present unique challenges to lenders – indeed, many lenders will not serve non-UK residents.
So, brokers and advisers will need to ensure they have relationships with lenders that specialise in delivering loans to overseas property investors, if indeed this remains an active part of the UK property market (and especially the London market) next year.
Stability after election
On a similar note, with a general election brewing, both major political parties have begun to unveil their plans for managing the property market and housing crisis should they win the election.
One policy that has been put forward is to place a stamp duty surcharge on purchases made by non-UK residents, so we could see an influx of activity from overseas as investors attempt to make their investments ahead of any potential regulations that may be brought in by the next government.
Again, if this policy were to come to fruition, intermediaries will also need to ensure that their overseas clients can find the finance they need to meet the additional cost that a surcharge would bring.
On the topic of the election more generally, one might expect a cautious atmosphere to be created by the prospect of regulatory changes and their repercussions on the housing sector.
However, following almost a decade of political turbulence, the election may actually induce a sense of stability, empowering investors to devise and implement long-term investment strategies with heightened confidence.
In other words, the short-term uncertainty in the months preceding the election could then result in greater stability in the long-term once the vote is complete.
Consequently, this positive outlook might lead to brokers experiencing increased activity levels within the UK property market from investors with long-term investment strategies in place.
