Overseas property demand surges as UK lockdown eases
As coronavirus restrictions began to ease in the UK last year, real estate property portal Rightmove revealed a surprising spike in demand for overseas homes.
The company said that the surge in overseas property searches coincided with the relaxation of lockdown measures in the UK, with movers seeking property abroad.
With Britons following stay-at-home orders amid the UK’s coronavirus lockdown, many had the opportunity to reflect on and re-evaluate their living situation.
While UK property searches are bound to increase as the easing of lockdown measures revives the UK property market, Rightmove noted a record-breaking interest in the hunt for property abroad.
After the UK government announced quarantine free travel to various countries last June, the real estate portal registered more than one million searches for overseas property, and Europe was a popular destination.
This trend shows no signs of slowing down as increased demand for overseas property continues in 2021. Spanish property portal, Kyero, also saw a surge in website activity this year, as 40% of potential buyers plan to conduct overseas viewings.
European property in high demand in 2020
As the UK government opened quarantine free travel from 17th May 2021, Rightmove stated that enquiries for property in Portugal rose by 93%, with the Algarve proving to be the most popular. A significant perk of Portuguese homes is their affordability, with average two-bedroom apartment prices in Albufeira standing at GBP 150,000.
Spain is also a consistently sought-after location for UK migration; mainly owing to its beautiful beaches and first-class healthcare. Research conducted by Kyero found that out of 2,500 overseas buyers surveyed, 90% said that they were looking to buy in Spain.
Of any European country, France has one of the largest British-born populations, with Brits finding the lifestyle, education system and proven property markets appealing. France also has a shorter working week at 35 hours, so the work-life balance is often an attractive proposition for Brits wanting to relocate.
However, property agents across Europe have reported being inundated with phone calls and enquiries for overseas properties.
Gavin Vercoe, chief operating officer at Chestertons International, said his firm recorded a sudden increase in enquiries over the last few days of June last year, in line with the UK government’s announcement.
Mr Vercoe said: “There was a 340% increase in enquiries for European properties across the Chestertons network in the last few days of June, compared to European enquiries received over the weekend two weeks prior.”
If you’re considering purchasing a property abroad, we advise using established estate agents who have a strong knowledge of the local market and can negotiate a contract with desirable terms.
Foreign exchange specialists such as Halo Financial can also navigate past the risks associated with fluctuating exchange rates to help save you money; both when buying a property overseas and when sending money abroad for taxes, or bills.
We are regulated by the Financial Conduct Authority (FCA) and offer competitive exchange rates to ensure you maximise your currency exchange.
What to expect from the UK property market now and post-2021
While there is still a lot of uncertainty surrounding the future of the UK property market in 2021 and beyond, the coronavirus pandemic seems to have created significant amounts of pent-up demand, with buyers seeking more space away from the hustle and bustle of cities.
So far in 2021, UK house prices have seen a substantial increase, as it’s predicted that prices could rise by as much as 46% by the end of the year compared to 2020. Property website, Zoopla have also stated that 2021 looks to be the busiest year for the UK property market in 14 years.
Home.co.uk says that pent-up demand, low stock and the new stamp duty holiday has encouraged vendors to raise UK housing prices, which signals a return to confidence in the market.
Holiday let mortgages reintroduced in the UK amid easing of lockdown restrictions
In anticipation of a staycation boom, Leeds Building Society reintroduced holiday let mortgages alongside the reawakening of the hospitality and travel sectors.
The building society is offering two options for a holiday let mortgage, the first being a 2.84% fixed mortgage up to 60% loan-to-value (LTV), and the second, a 3.34% fixed-rate mortgage up to 70% LTV.
These holiday let mortgages are fixed up until 30 September 2022 and complete with fees assisted legal services, free standard valuation and no product fee.
Matt Bartle, Leeds Building Society’s Director of Products, commented: “The government’s stamp duty holiday will likely encourage more interest in the buy-to-let market, including holiday lets.”
He added that while “buying a holiday let carries risk, it enables an investor to diversify their portfolio risk by letting weekly to a range of occupiers, rather than relying on one individual to pay rent every month.”
Rishi Sunak increases the stamp duty threshold
To alleviate some of the damage inflicted on the housing market by the coronavirus pandemic, Chancellor Rishi Sunak raised the tax threshold on properties in the UK.
The original threshold was on properties up to GBP 125,000, but under the new measures, house buyers will no longer have to pay stamp duty on properties worth up to GBP 500,000.
Mr Sunak said the stamp duty holiday will be in effect up until June 2021 and could save home buyers as much as GBP 15,000 in tax, with an average saving of GBP 1,800.
The stamp duty holiday also applies when purchasing a second property, although you will be required to pay the additional 3% Stamp Duty surcharge that applies to second homes.
Nevertheless, second homeowners will still be saving as the previous requirement was to pay 3% on the first GBP 125,000 and 5% on homes costing between GBP 125,001 and GBP 250,000.
The stamp duty holiday is also prompting lenders to reintroduce low deposit mortgages to tempt buyers.
Low UK mortgage deals for first-time buyers and current homeowners
Amid signs that the UK housing market is recovering Lloyds, Santander, Barclays, HSBC and NatWest are offering UK mortgages on small deposits, in efforts to entice first-time buyers.
Many lenders are now offering a 95% mortgage, backed by the UK Government. The scheme, which was introduced in April, is significant support to young buyers looking to get on the property ladder.
Both first-time buyers and current homeowners can now secure a property with just a 5% deposit on homes worth up to GBP 600,000.
However, 95% LTV mortgages will become a concern for the Bank of England (BoE), which is responsible for financial stability, and the Financial Conduct Authority, which regulates businesses, as it increases the risk of negative equity.
