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Investment rush imminent as overseas buyers try to beat deadline

On top of the rush to beat the stamp duty holiday deadline and changes to Help To Buy - both with cliff edges on March 31 - a bank is predicting a rush of foreign investors trying to make yet another critical date.

Coutts, the wealth manager and private bank, says foreign investors are likely to ramp up pressure to complete on properties before the end of March when a two per cent stamp duty surcharge kicks in for non-resident purchasers.

That deadline - alongside the stamp duty holiday - has led to a position where across prime London there are 16.2 per cent more units under offer now compared to a year ago.

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What will that mean for investors after March 31? 

“The market will need time to adjust to these changes and we could see a softening in demand in the second quarter as a result” says Alan Higgins, Coutts’ chief investment officer. 

But long-term, the bank believes the momentum seen towards the end of 2020 will continue throughout the year ahead, largely down to social changes and a favourable macroeconomic environment. 

Higgins points to three factors: “Firstly, the uncertainty with respect to Brexit is largely in the past. Secondly, we expect a V-shaped economic recovery as the vaccine distribution progresses. And thirdly, we should the release of pent-up demand from buyers and sellers who put plans aside during lockdown.”

 

 

He continues: “In the meantime, low interest rates make financing cheap, and returns attractive compared to other assets for investors.

“We expect close to zero rates in the UK for the next few years at least. The Bank of England’s Monetary Policy Committee is likely to ignore any rise in inflation and focus on reflation, and this is the main positive factor for residential property.”

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