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Home > News > The case to invest in London residential property against other major Cities

The case to invest in London residential property against other major Cities

Tuesday, April 7, 2020

Despite a collapsing £ Sterling and the four year fallout from endless Brexit drama Knight Frank stated that strong demand across the globe meant that London remained the world’s most active residential real estate market in 2019.

The City attracted more overseas capital than any other global city – almost three times more than second, placed New York and more than Paris, Frankfurt, Berlin and Amsterdam combined. The appeal of liquidity, transparency, high-quality stock in large lot sizes and landlord friendly leases – is clearly undiminished.

All this, despite Brexit uncertainly leaving us to examine the reasons why investment in this City is so attractive.

Strength of Legal Title

UK legal title is clear and clean. A foreigner can enjoy direct ownership of residential property with no restrictions. The title itself and the purchase and sale procedure are totally transparent. Legal checks on title are extensive and allow a buyer a comprehensive line of ownership. No short cuts, as in the USA with insuring title if someone gets something wrong, are taken. This makes the security of ownership absolute and inspires confidence in buyers.

Access to easy leveraged Finance

No restrictions on foreigners exist for buying residential property in London and buyers can get up to 75% borrowing or as the Banks like to call it, loan to value ratio.

The Banks themselves are often based in the buyers country of origin and currently the GIHLondon mortgage desk have over 120 Banks available to those seeking London financing.

Loan to value ratios in other major cities follow:

Paris 50%

Berlin 55%

Tokyo Unavailable

New York 60% (Here with very high entry fees)

 

Strong yields/low vacancy

UK unemployment runs at 3.8%. This compares very favourably against Europe. France is at 8.5%, Spain is at 14.2%.

This impacts on the rental market and in London we see almost no unemployment (3.8% average is the whole of UK) resulting in strong rental books.

Our group company, Regent Letting, in London has experienced 98% occupancy over the past two years. Currently we have 800 properties available for letting in Central London, 750 of these are fully let, the other 50 are coming on-stream from a Wembley project GIHLondon are completing over the next three weeks and will be let as soon as completions take place.

J.L.L. have predicted a 17.1% cumulative growth in rental demand over the next 5 years due to wage growth and undersupply from the sales market.

Rentals look to be very robust over the next few years.

Tax/dealing costs

London remains one of the most favourable Cities in the world when it comes to the total package of dealing costs.

The following graph illustrating this was prepared by Savills and published in the F.T.

Currency/market

Both currency and market are in a very favourable position for buyers looking at London this year.
The “discount” on currency due to Brexit fear is North of 30% if one buys from a US$ base.

The market has had four years of doldrums – again Brexit motivated. Now with a strong new government and a clear path forward prices are beginning to move upwards. This is likely to get stronger as the year progresses.

Buying from any currency base that is US dollar pegged – Saudi/U.A.E./Hong Kong, is offering the best discounts.

Liquidity

London is in a league of its own when it comes to any European property markets liquidity. It is the largest urban investment market in Europe, Paris is a distant second.

“The supply and demand imbalance in the UK is due to the chronic housing shortage and in London in particular that means that the average time a unit is on the market is only 77 days”.
Rightmove

London remains the Number one buying option in 2020.

View our current projects here

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Rising UK Property Prices Seen in the Last 8 Months

Tuesday, November 7, 2017

Properties in the UK has steadily risen over the past 8 months according to Britain’s mortgage lenders. See full story here.

Read more
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