Buyers from the United Arab Emirates and Qatar, including many British expats, are “piling into the British property market” in order to beat the UK’s stamp duty surcharge, according to the international advisory group deVere, which is based in Dubai and has a large presence in the Gulf region.
A 3% stamp duty surcharge is due to come into force in April on UK properties for buy-to-let investors and second homeowners compared with residential buyers. This has led to “a 60% month-on-month uplift in inquiries from Qatar and the UAE”, deVere reports, citing its own data.
In addition to Dubai, deVere has offices in Abu Dhabi and Doha.
Kevin White, head of distribution at deVere’s UK division, says more than 70% of all enquiries at deVere Mortgages normally come from foreign nationals or Britons living and working abroad, but that right now, the overwhelming majority of these individuals – approximately 45 per cent – are British expats currently residing in Qatar or the UAE, or nationals from those two countries. And this, he says, is where much of the interest in UK property is coming from.
“We attribute this rush-to-buy phenomenon to those who, quite sensibly, want to avoid being subjected to the extra levy,” White says, referring to the pending stamp duty surcharge. “No-one wants to pay an extra 3 per cent in stamp duty.”
According to deVere, its observations on the UK property market’s buoyancy have been confirmed by a series of recently published reports.
‘Hurdles’ for expats, foreign buyers
DeVere says it always warns its expat and foreign clients who express an interest in buying into the UK property market that, in White’s words, “there are extra hurdles that they will have to face” as a result of their non-UK-resident status.
“British expats and foreign buyers should know that they are typically deemed as ‘high risk’ by the vast majority of UK lenders,” White says.
“They are usually ‘red-flagged’, due to a lower UK credit rating, as they have lived outside the UK, earned a different currency, and worked for a non UK-based firm. This is often the case even for those who have substantial assets and/or a high, stable salary.
“They also need to consider other important factors, including the pitfall of wasting money on excessive rates, and the ability to reclaim tax within 18 months.”
For this reason, he says, such individuals should get advice before buying, ideally from advisers with relevant experience of cross-border financial matters.