Read the full article in Citywealth here.
Will overseas buyers return? Ben Gurluk, a partner at Hunters law firm specialising in high value residential property deals, notes that there are two factors which would suggest they’ll return sooner rather than later.
Firstly, overseas buyers can benefit from favourable exchange rates (especially if they are buying in US dollars) and a softening of prices. Secondly, overseas buyers may act now in order to avoid the 2% surcharge on the acquisition of residential properties by non-resident buyers which takes effect from 1 April 2021. Take for example, the purchase of a second home by a non-resident for more than £1.5million. The SDLT would be 12 per cent plus 3 per cent for an additional home and 2 per cent for the non-resident surcharge – meaning that the top end SDLT rate could be as high as 17 per cent.
“With its status as a global financial capital, education system, sound legal system, land registry offering safe and secure title, and being able to live so close to a city centre with such varied cultural and leisure activities, there are many reasons for international buyers to still choose London and its surrounding areas”, said Gurluk.
Despite the activity in the market, deals are taking longer. “From due diligence to the money laundering side of things, it’s very strict. During lockdown signing documents proved difficult, while there were changes to the witnessing of Transfer deeds and what was acceptable during lockdown, many of the banks didn’t accept an e-mail attaching the form required to drawdown funds. The funds are usually requested by fax which with everyone working from home proved to be an unexpected difficulty”, said Gurluk.
“On top of this, documents often need couriering from one country to another, the postal system has been under pressure which has caused delays. Furthermore, the banks have tightened up their lending criteria and pulled various products. What would have been a simple arrangement in the past, now has numerous layers of due diligence to satisfy including very strict AML requirements. Cheap borrowing is attractive, but if there are delays, buyers may have to use funds from elsewhere. Therefore, it is important for overseas investors to ensure that they take the relevant tax advice when purchasing a property”, Gurluk concluded.