The UK property market has seen significant changes since the start of the calendar year with new regulations and macroeconomic factors bringing a variety of implications for overseas investors with present or potential property investments in the UK. Tim Walford-Fitzgerald outlines key areas for inward investors to be aware of in the second half of the year.
Dealing with the new Register of Overseas Entities
New rules were introduced on 1 August requiring all overseas entities that own or buy land or property in the UK to register with Companies House and record the entity’s beneficial owner(s). The requirement aims to prevent individuals hiding their property ownership behind companies incorporated in obscure locations, with the hope that this will dissuade those with illicit funds from hiding assets in the UK and promote a global standard for transparency. [This also comes at a time when the Law Society is clamping down on lax anti-money laundering procedures in the legal sector.]
Find out more information about the register, who it applies to, and how to register here.
Stamp duty surcharge continues
Non-UK residents who acquire residential property within the UK have been liable to an additional SDLT surcharge at a rate of 2% from 1st April 2021. This has been put in place to counteract property price inflation, often claimed to be a result of foreign investment in the UK market, and improve property affordability for UK residents. A year on from the implementation of the surcharge, there has not been a noticeable decrease in the volume of foreign investment in the UK market, despite this tax detriment. Nevertheless, there are areas of complexity in the regulation that foreign investors should consider. Specialist SDLT advice is recommended before making a purchase.
Continuing rise in inflation and impact on pricing trends
Soaring inflation, rising interest rates and the related cost of living crisis are leading investors to speculate about the impacts on the property market. Halifax, the UK’s largest lender, reported the first price fall since June 2021 in July, and a slowdown in the market is widely expected. While this may be good news for first-time buyers, investors looking to sell and those with an established property portfolio have greater cause for concern. Average time to exchange on a property has risen almost 50% in the past two years, leading to additional uncertainty for those looking to sell or acquire properties. With more volatility expected into 2023, investors looking to buy or sell property in the UK should watch the market closely.
The UK remains a top choice for inward investors looking to expand their property portfolios, despite a range of economic factors impacting the market. Whether this trend will continue over the coming months of uncertainty remains to be seen, but one thing is certain – specialist, focused advice is always a good investment. For more information or to discuss your specific circumstances, please contact Tim Walford-Fitzgerald.