Is 2021 a good year to invest in properties abroad?
Contrary to 2020’s dramatic year across all sectors, 2021 is predicted to be a strong year for the UK property market.
The latter half of 2020 saw a property boom and this is expected to continue into 2021. The temporary stamp duty holiday will keep the sector busy until the deadline at the end of March.
Sales activity is expected to slow down in 2021, with house price growth also following suit, with potentially up to a 4% national average house price growth in 2021. With the general consensus that house prices will pick up again in the coming years.
The current global environment and behavioural habits have led many to reassess their home priorities. After spending more time at home in 2020, tenants and buyers are prioritising space and environment within their living environment.
When it comes to mortgage rates and availability, the chances of the base rate interest rate rising is slim, which in turn will keep mortgage rates down. Investors will be looking to take advantage of these competitive rates. Banks are gaining more confidence to lend in parallel, which will increase the availability of mortgage products.
With 2020 in the rear-view mirror and Brexit in place – is 2021 a good year to look for investments abroad?
A Brexit deal was finally struck in December 2020, with investors being left unclear on how that will impact the property market for UK traders looking overseas. With scary news, such as the potential for second homes owned by British expats in European countries being seized by governments, the industry has worked hard to install confidence in the markets.
In situations such as the example above, is that those who own property in EU counties are protected by United Nations Declaration of Human Rights and European Convention on Human Rights.
But, how could Brexit impact home owners and investors?
The uncertainty and risk levels vary from country to country, dictated by how each countries government view Brexit. Property taxes for non-EU property owners could be increased and additional deals that include leaseback guarantees on investment properties could be areas that are eradicated.
There is also the issue of visas. The previous EU Freedom of movement pact allowed British citizens to visit their properties or investments as frequently as they wished, with no limit on the length of time they could stay at the property. For non-EU residents however, travellers can only remain in Schengen areas for a maximum of 90 days within a 180 day period without a visa.
Other non-EU nationals are also required to have a special investment visa, just to be allowed to do so, something that is also on the table for British citizens, although unlikely.
Initial purchases in countries like France and Spain could also be more expensive, Brexit will likely lead to increased stamp duty for British buyers, in addition to impacting foreign currency exchange rates, all having an impact on UK foreign property investors.
In reality, nobody knows for certain what fears for British citizens looking to invest abroad will come to fruition, however with likely restrictions being imposed in 2021. What markets are good options and what should one stay away from? What effect does foreign exchange rates have? Time will tell.