As someone with assets currently tied up in the UK, the imminent Brexit decision looks like it will hurt, with the GBP tipped to get a hammering in the short-medium term. We had planned to bring our UK funds over here in the next few years to contribute to a PPOR in Sydney (fiancée is English and we have family ties there). It may now not be wise to do this. However, UK property prices are also predicted to drop (an estimated 10%) if they were to leave the EU, and possibly even more so in the London market. Given that a world city like London will always have demand, we are perhaps considering purchasing a number of properties there with the money.... Wondering if there is anyone out there in a similar boat? Or if anyone is currently holding UK property and has an opinion??
We're in a similar position but have sold our house, just have cash over there. We'll take some time to work out what this means but we have kiwi and aus dollars in investments so may just shuffle those around until things settle.
It'd be important to understand whether the same sort of volume of people from European countries will still be able to work in London as easily. If not, this may have an impact on the sort of property that lends itself to share housing. Be clear on what sort of demographic would be interested in renting or buying the property from you and how big of a slice that market is. If the slice is likely to dwindle in size it'd be a dangerous step for you.
It would certainly be a consideration, although net migration to the UK (and especially London which requires a steady supply of skilled and unskilled migrants to fill service gaps) in the medium-long term would be unlikely to decrease- the main change will be the type of migrant and their place of origin. I am thinking the risk may come more from potential rental vacancies or quality of tenants in the short-medium term? I certainly won't be doing anything knee-jerk, but I guess I'm trying to see a silver lining if there is a continued drop in the GBP and UK house prices.
Hey Birdseed, I'm pretty much in the exact same situation. My partner and I have a property portfolio in London and released a bunch of funds with the anticipation of bringing money back to Australia in the near future. Luckily we did exchange some of our pounds at $2.20AUD prior to the Brexit decision but still have a significant amount sitting around doing nothing in the UK. It was a measured risk we took and at the time felt confident Brexit wouldn't happen (and it still hasn't), however, the damage to the pound will take some time to recover regardless of whether they go through with A50. Regardless of the decision the UK has a massive housing shortage and migration, especially in London (according to the govt) will not be dramatically decreased. The weak pound will probably see an even greater influx of Chinese and Russian investment in my opinion and in the 2 year lead up to A50 the speed of the economy may pick up significantly giving the markets confidence and softening the after effects if Brexit goes through. There is some pretty good expat loans floating around at the moment for buy to let properties and since I have the intention of holding for 10-15 years it looks like a good time to pick up some bargains while the press scares everyone off. Good luck!
I've also been thinking about whether London presents a good opportunity at the moment (London). Spoke to a mortgage broker a couple of days ago and non-resident mortgage rates start at about 2.99%. If you're Australian you'll be paying Australian tax on the income (and any capital gain when you sell) so the UK tax law changes should be largely irrelevant while one is Australian tax-resident (aren't our tax laws great?). There is the added cost of additional UK stamp duty for buy-to-let investors however. But given the pound has fallen so much, it's starting to look quite attractive when compared to Sydney when you think about potential future growth (in value and more speculatively, the FX). And at least the media over there isn't dedicating their front pages to daily sensationalist articles on property like smh.com.au is (which is surprising).
Yeah the exchange rate makes it more attractive and I think it's got a little further to go. I'd certainly like to see it back in the 1:1.50 (GBP AUD) range. Depending on your structure and arrangements the stamp duty can be minimised. I don't hold any property in my name in the UK so if I decided to do so, it would be classed as my first property and attract a lower rate. zlatan; how would you plan to purchase? Unseen? Do you have any feet on the street?
I lived in the UK for many years and currently have a buy to let apartment there so it's not wholly foreign to me. I think at the very least if one is buying there, it's worth a trip to visit a few locations and speak to agents on the ground. If you can justify the trip solely as a scoping trip you might even be able to claim it as a deduction (tax advisor to confirm of course). I have read that for the additional stamp duty, they consider any property anywhere in the world as your first property, so it doesn't matter if you didn't have a UK property. Not sure how accurate this is so you should investigate further. In any case, it's one thing what the requirements are, but query how they would know if it's not a property in the UK and how they would find out.
