There have been a number of articles in the media recently about property issues, particularly around mortgage rates, wealthy and foreign investors and those looking to downsize later in life.

So here’s what’s been reported, along with Harj’s take on them:



Foreign landlords leave Britain
There has been sharp fall in the proportion of Buy-to-Let property in the UK owned by foreign landlords, says the Mail. In 2010 they accounted for 12% of all residential property let in the UK, but in 2017 that had fallen to just 5%. In London, the ratio has fallen from one in four homes to one in ten over the same period. The biggest decline has been in European ownership. Experts say the tax changes, including liability to capital gains tax for foreign investors when they sell, have deterred people, but lower expectations for price rises in the South East have also played a part.

“While Brexit continues to be negotiated and uncertainty remains for EU citizens in the UK , people are putting off new home purchases. I cannot see this changing until we have a clearer picture from the EU negotiations.”



Half of pensioners ready to move
Almost half of Britain’s retired population would be prepared to move and downsize, potentially releasing almost 3 million extra bedrooms, says the Telegraph. With pensioner numbers set to rise from 5.7 million today to over 11 million by 2036, downsizing could help to deal with the country’s chronic housing shortage. A survey showed 10% of retired people would be motivated to downsize by a stamp duty concession, but experts said the real problem was that there weren’t suitable properties for them to move into, since far too little new building was designed to be suitable for older people.

“My own experience is that most of our older clients don’t actually want leave their home and downsize. This is borne out by this survey where only 10% say they would consider it. People get used to the size of the house, location and the people around them, and it is often very difficult to give this up when forced to (e.g. to provide for care), let alone voluntarily. I am not convinced that a stamp duty concession would encourage more people to do this.”


Borrowers take advantage of cheap loans
Wealthy borrowers are taking advantage of cheap mortgage loans to invest in a growing range of assets, says the Financial Times. Previously, such loans might have funded Buy-to-Let investments, but with the recent tax changes, commercial property has become a more favoured investment. More sophisticated borrowers are also investing in private equity and alternative assets.

“There are always risks involved with any investment and this is increased by the ‘gearing’ effect of borrowing money to invest. We discourage clients from even considering such routes if they are not professional investors”



Interest-only crunch ahead
Crunch time for interest-only mortgages is 2022, says the Financial Times. This is when the majority of interest-only mortgages taken out between 2003 and 2009 reach redemption – but will borrowers be able to repay? A great many probably won’t: some will have banked on paying off their mortgage when they downsized, but that is highly dependent on the state of the property market. Today, it is harder to get an interest-only mortgage – higher deposits are usually required, and there are tougher ‘affordability’ tests.

“From our experience the biggest issue is not that people have these mortgages  but no way to repay them, instead it is that they tend to bury their head in the sand until such a time as the bank wants its money back. People with an interest-only mortgage really need to get advice as early as possible, since there are other options that may be appropriate for them (for example, converting to a ‘half and half’ approach or pushing the final capital repayment to a later date – in some circumstances as far back as a person’s 85th birthday). As with all these scenarios, getting advice should be a top priority.”