THE TRANSATLANTIC MAGAZINE
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There's been a growing body of evidence in recent months that American interest in UK property is on the rise, partly due to the strength of the dollar against the pound. UK based property expert, Jemimah Barnett, has added her voice to the consensus that American and international buyers have shown extra interest in UK property in recent times, explaining that "Sterling weakness on the backdrop of a flatter market has presented a great opportunity, and for those who are well-positioned and a bit adventurous ... there are some really outstanding deals to be done at the moment, whilst uncertainty still hangs over the UK markets". Noting a rise in American buyers, Barnett said "it shouldn’t be surprising given the realignment in our two currencies recently — Americans are now getting much better value for their dollar! I work with US buyers a lot, but have seen a significant uptick in new client enquiries since mid last year. In addition, I’ve also seen a jump in Canadian and Australian buyers."
How is uncertainty surrounding the UK's exit from the European Union affecting property? Barnett says that "We’ve been treading water for around 3 years now and the uncertainty is challenging for businesses as well as individuals & families. It seems the Boris Johnson government is feeling the frustration of the public to get on with things, and is very much committing to this exit date of October 31st, 2019. So the wildcard now isn’t when we leave, but how we leave... For buyers who feel confident in the UK’s long term prospects the next few months are an opportunity to capitalise on this cloud of uncertainty and negotiate quite aggressively. There are a lot of buyers waiting to see what happens on October 31st, and ‘deal or no deal’ we can expect that Sterling might continue it’s weakness into 2020. It would be sensible to expect activity to pick up once we cross that October deadline and leave the EU — all these buyers and sellers waiting for the ball to drop will want to finally make their move, and if Sterling takes a hammering (more likely in a 'no deal' scenario) then dollar-equipped purchasers would be wise to be ready and positioned to take advantage."
A new Prime Minister will also have an impact on the property sector. Looking back at recent changes in British politics, and the potential priorities of Boris Johnson's Administration, Barnett notes that "To say that it’s been a tumultuous time for British politics over the past few years would be a huge understatement, and we’re lucky that the economy has outperformed expectations off the back of the Brexit vote. We have changed our Prime Minister (though not our government, which remains Conservative). Boris Johnson was a popular 2 term Mayor of London, so unlike other candidates he is a ‘known quantity’ with respect to his positions and approach. Broadly speaking he’s a fiscal conservative and a social liberal, and we know from his leadership election campaign that he plans tax cuts for middle income earners, and may revisit stamp duty. A reduction in the eye watering rates of stamp duty would be a significant stimulus for the property market, and we should expect to see a solid bump in transaction volume if he follows through on that."
Given all the changes, what does Jemimah recommend for those looking at buying UK property? "I have been steering purchasers away from new construction for a little while. There are certainly exceptions to this advice, but broadly I’d say that new construction isn’t demonstrating great value for money, especially in inner London. If you do buy ‘new build’ be very, very sure that the scheme is well designed and built, and that you feel good about the long term site management plan. In terms of areas to buy, if you’re looking in London I would recommend using this opportunity to buy in the best postcode you can afford, even if that means some compromise on size. I say this for a few reasons: (1) a property in Kensington will always hold its value better than one in Vauxhall, (2) negotiation leverage like we have at present will not be permanent — it’s a time limited opportunity to buy into a better neighbourhood, and (3) Zone 2 outwards has seen some incredible price growth; in fact, some of these areas are starting to look like poorer value, relatively speaking."
The overall signs are that whilst this is an uncertain time, it's also a time of great opportunity. Possibly a good mantra for the coming months is that uttered by Winston Churchill - "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty". Optimistic American buyers could be about to make a big contribution to life in the UK.
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