Christmas is fast approaching and the year is drawing to a close. Although the Enness team is busy gearing up for a big year ahead, there’s also plenty to be learnt from what’s happened in the property market and mortgage world over the last twelve months.
The headlines have been full of housing and mortgages, interest rates have risen, and Chancellor Phillip Hammond released an Autumn Statement dubbed ‘the Housing Budget’. But the housing market has also struggled, across all ends of the market.
Last December, we predicted that 2017 would see the bottom of the market ‘thanks to the EU referendum and stamp duty reform’. We also predicted ‘we won’t start to see it picking up until we establish it won’t go any lower’, in line with what happened in 2008.’
This has certainly proved to be true-there’s no denying the high net worth market has been subdued this year. Sales are down and prices are stagnating, as but as ever, savvy investors are finding ways to diversify to reap maximum benefit from their assets. This has always been the reality—for those with their wits about them, slow markets and stagnant prices represent a challenge to be met and taken advantage of. So how are Enness clients taking advantage of a slow market?
We also felt that there was bound to be an increasing need for development finance in 2017, in order to meet the growing public demand for more housing. We launched Enness Development in line with this, and have supported a great many developers with beginning their projects.
In light of the property market, instead of trying to buy or sell, many of our clients are generating additional funds by refinancing their current assets. We helped one client release equity by refinancing a £30million property in Knightsbridge, arranging a facility of £22.5million at a rate of 1.75% + LIBOR.
Others are buying smaller or cheaper properties to save on the stamp duty costs of a bigger property, and then using finance from Enness Development to expand and refurbish. Many prestigious private banks have a lot of liquidity and a large appetite for lending, so the opportunities are there.
Despite Brexit fears, foreign investment has continued to pour into the UK over 2017 for residential, investment and commercial property. Ultimately, regardless of perceived blows to the market—from Brexit, to changes in Inheritance Tax Liability and even the promise of Capital Gains Tax on commercial properties—wealthy foreign investors still have a hearty appetite for the UK, especially in light of the weak Pound. We recently secured £17million worth of commercial finance for a diverse portfolio with assets across the UK, showing the clear interest in commercial investment. London also had a record month for commercial finance in the summer of 2017, showing that the city has retained its appeal.
We’ve also had a 31% increase in enquiries from Middle Eastern clients. Many of our large residential deals have been for Gulf Cooperation Clients either investing or refinancing in London. From refinancing a £5.5million property portfolio for client in Dubai, to refinancing a £5million bridging loan for a Saudi Arabian businessman, the evidence suggests these clients want to hold on to their UK investments.
As it stands, we expect the market to kick back to life as Brexit trade deals are finalised; the current market slowness is a confidence slump, which will soon correct.
The European market has warmed up considerably, particularly in Spain and France. Enness International received €297,935,625 of lending enquiries in France and Monaco alone since February 2017, which shows the phenomenal appetite for luxury property in the region.
Macron’s change to wealth tax are also set to have a significant impact; and may stimulate the return of wealthy property investors to the country; read our analysis here for more insight.