3 top considerations from Altura mortgage finance for expats with UK property
This week we interviewed Rob Gill, the managing director of Altura Mortgage Finance in London, to discuss the key issues affecting expats and internationals living in Europe that either have a UK property or are considering buying one.
1) The first big impactor we discussed was the British government’s summer statement, which has also been called the emergency budget plan in July 2020. The most notable announcement to come out of this was the changes to stamp duty, the tax you pay when purchasing a property. The nil tax threshold for stamp duty has been increased to £500,000 in what has been called a temporary holiday. It is planned to expire in April 2021. For someone considering purchasing a property in the UK up to this amount, it represents a 3% saving. Importantly, it applies to first home buyers as well as investors.
In addition, Rob pointed out the planned stamp duty surcharge on international buyers is not due to commence until April 2021. This means that someone living in Europe that is planning to purchase a property in London, for example, can save 5% between now and April 2021. On £500,000, that equates to £25,000 in savings.
2) Interest rates. We have mentioned across several forums recently that we believe the substantial inflows of monetary spending by the governments and central banks to support economies earlier this year may put pressure on inflation and interest rates in the next couple of years. We asked Rob what impact he thinks that might have on expats living in Europe that have a mortgage in the UK. Drawing on his experience over the last 15 years and the patterns after 2009 and the inflationary pressures through to 2016, when inflation in the UK went as high as 5.8%, he noted that at that time the spike in inflation was not passed on to borrowers via higher interest rates. He expects that a similar pattern may follow this time and that inflationary pressure in the UK may also be balanced against the market responses to Brexit once the UK completes its transition to complete its departure from the European Union, currently scheduled for 31 December 2020.
What all this means for expats in Europe holding UK mortgages is that there may be competing factors influencing how interest rates may change. They remain at very low levels historically and it may be worthwhile discussing your situation with the team at Altura to ensure you are benefiting from these low rates.
3) Brexit is the third main issue. As Rob stated in the discussion, whilst it feels like Brexit has been around forever, and there is still a lot of uncertainty around it, it should not be the key factor in deciding your investment strategies, including buying or selling property in the UK. Rob’s advice is that if you believe the market is right for you to achieve your long-term objectives then you should be invested in that market; if you do not then you should consider alternatives.
Rob’s advice, which aligns to the Black Swan Capital philosophy, is that investors should always be goal driven and should be focused on the long term, and not try to time the markets. As Rob warned, even with stamp duty holidays, jumping in and out of the property market is still expensive and risky. Invest for the long term.
If you would like to find more information, you can see the video on our video page here, you can contact Altura at www.alturafin.com, or you can speak with us at Black Swan Capital and we can connect you directly.
