The UK has always been favoured by foreign property investors. Along with an enterprise-friendly environment, it provides a market with high-spending customers. The UK is one of the easiest places to launch, operate, and expand a business due to its time zone, language, legal system, financial infrastructure, and minimal red tape.
Estate agents in Winchester outline some important considerations for international buyers considering the UK.
Why is the UK so favoured by international investors?
By giving foreign businesses access to highly integrated markets, the British government tries to encourage investment. To foster innovation and achieve sustainable growth, progressive policies encourage foreign investment via administrative effectiveness. Regardless of a company’s origin or that of its owners, the UK government vigorously defends the interests of all UK businesses. One of the UK economy’s primary assets in attracting FDI is real estate because of the following:
Taxes and benefits
The UK has really low corporate tax rates among the G20 countries. It provides both domestic and foreign corporations with a variety of tax breaks.
Work and talent
The UK have a vast labour force with lower labour costs than many other European countries. It lures some of the most skilled professionals from across the world. Exports are competitive and varied structurally.
One of the greatest and most progressive economies in the world for growing innovative enterprises is available to international businesses in the UK. London offers several advantages, including being a leading player in the fintech industry and having a strong and thriving banking industry.
The UK possesses Europe’s most extensive air transportation network and 100 seaports. It benefits from the most modern road and rail infrastructure and has the biggest offshore wind farm to run a reliable electricity grid. The UK is placed 8th in the Doing Business 2020 report by World Bank. In the UK, it takes 13 days to establish a business, compared to 32 days across Europe. It is rated 1st in Europe and 6th overall by using this criterion.
With advanced tech and ground-breaking research, the UK is outpacing other countries in the quest for a decarbonised economy.
Freeports are increasing growth, opening up new investment possibilities, and promoting trade, innovation, and business throughout the UK.
Though there were concerns about how Brexit might affect the UK real estate market, it continues to be a popular choice for overseas investors. The UK is preferred by international investors due to its excellent infrastructure, reputation for safety, good governance, and history of embracing foreign investment.
The falling of the pound after Brexit encouraged international investors to profit from the favourable move. Foreign investors could essentially invest in more for less money.
Stamp Duty Holiday
It should come as no surprise that the stamp duty holiday boosted interest in London real estate both domestically and abroad. The potential savings on real estate acquisitions in the UK, and especially London, attracted foreign investors looking to make money.
In January of 2021, the BNO visa programme was introduced. This allowed Hong Kong nationals with the British National Overseas status to be able to live in the UK for up to 5 years. The programme also allowed dependent family members to reside in the UK. There is no limit on the amount of BNO visas issued to Hong Kong residents, and the qualifying requirements are quite lax.
The nationals are eligible to seek permanent residence after 5 years and can also look for British citizenship. Due to the program’s enormous popularity, several citizens have been granted visas, which has allowed Hong Kong purchasers to obtain property in the UK.
Not all overseas investors have piles of cash stashed away. They may be in a stable financial situation with many sources of income, but their cash might be invested or not readily available to buy property.
Thus, mortgages are a possibility for overseas investors to purchase an investment property without selling big assets. For many international investors, getting a mortgage is preferable to paying cash as it also offers some tax advantages.
Property investment in the UK is now more accessible than ever, thanks to historically low borrowing rates. Because of the FDI interest, obtaining mortgages from lenders who are not in the UK is also simple.
Has COVID-19 had an impact on foreign buyers of UK real estate?
Foreign investors intending to purchase real estate in the UK were undoubtedly impacted by COVID-19. There was a brief period at the beginning of 2020 when international investors reconsidered their responses to the unpredictability of the global economy. With skyrocketing housing demand, a high number of transactions, and soaring house prices, it became apparent that the UK, particularly London, was emerging as a global leader in real estate investing. Foreign investors sought to enter the market again, but travel restrictions made it difficult for them to reach the UK, which led to a delay in transactions.
Overseas Buyer Surcharge
Since the Overseas Buyer Stamp Duty went into effect in April of 2021, overseas buyers of UK properties have had to pay 2% of the purchase price of the property.
The UK real estate has demonstrated that it is still a viable and desirable place for FDI. Despite the Overseas Buyer Surcharge and second property stamp duty, the returns on real estate investments and the prospects for the UK provide a compelling case for carrying on with investments.
The taxes will undoubtedly deter some international investment. Even so, it should not deter the majority of foreign buyers of real estate since the UK is simply too appealing as a place to invest. This is particularly true for those who want to invest in the most sought-after parts of the market.
Where businesses choose to invest and locate depends on a variety of variables. Greater and wealthier marketplaces typically draw more businesses since these businesses want to be near their clients. Due to its legal framework, open markets, and highly educated workforce, the UK remains a popular location for FDI.