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Exchange rates and golden visa encouraging overseas buyers in Spain
Currency exchange rates are encouraging even more foreign buyers back to the Spanish property market and this is reflected in increased sales, especially in popular areas. New legislation to relax the requirements for Spain’s golden visa which allows non-European Union buyers to gain citizenship if they invest in the real estate market is also set to encourage more buyers from overseas. In the Balearics the currency rates are currently by far the biggest influencing factor in the property market, according to Alejandra Vanoli, managing director of Mallorca Sotheby's International Realty. ‘Thanks to negative interest rates, affluent Germans are currently paying to keep their money in the banks and some would rather see it being put to good use in real estate investment. Mallorca is an obvious choice, German tourists have been coming to the Island for more than 50 years and represented 38.6% of all foreign arrivals to Mallorca in 2014, they have their own weekly newspapers, radio station and Air Berlin dominates the Airport. There is a strong bond,’ he said. He explained that with the British pound is at a seven year high against the euro, a two million euro property would have cost £1.67 million a year ago, but just £1.44 million today, some 14% more affordable. Swiss buyers are in a similar situation. The Swiss Franc soared when the National Bank abandoned its euro peg in the middle of January and a property costing 2.54 million Swiss francs a year ago would now cost 2.11 Swiss Francs, a saving of around 17%. The golden visa, which was introduced in September 2013, has seen 530 foreigners granted a visa so far with the majority, some 490 people, doing this through putting at least the minimum of €500,000 into property. Most of the property investors have been Chinese, Russian or Arab with business entrepreneurs coming largely from the United States and it has earned the Spanish economy an estimated €700 million so far. Previously the visa was granted to the applicant, their spouse, children under the age of 18 and disabled children of any age. This has now been extended to unmarried couples, economically dependent relatives and children of any age. Also, while the economic criteria remain the same, the path has been made smoother with applicants able to start the process upon arrival in Spain rather than applying from overseas. The visa will also be given within six months even to those who haven't formalised a property purchase, provided they've signed a contract and paid a deposit. ‘We are expecting more non-European purchasers but at the moment Mallorca is still very much dominated by British buyers who have been coming en masse since the 1960s, the Germans, and the Swedish who also have a long standing love affair with the Island,’ said Vanoli. ‘Mallorca is reported to be the most popular holiday destination for Swedes in 2015. Like the Germans, they have… Continue reading
UK property market cooling in run up to general election in May
Almost a third of house sales in the UK are going to first time buyers but overall the market is cooling in the run up to the general election, according to estate agents. Some 30% of total house sales in February were to people getting on the housing ladder for the first time, the highest number since September 2014, says the latest monthly survey from the National Association of Estate Agents (NAEA). The data also shows that 46% of NAEA members have seen a cooling in the property market as the May general election approaches and 27% think the election will have the biggest impact on the housing market this year. Findings in February also show that demand for property is up, with 366 house hunter’s registered per NAEA member branch, up from 353 in January. With supply marginally down from 44 houses per branch last month, to 43 this month, there’s still a significantly higher demand than supply of housing, a problem that is unlikely to be solved anytime soon. The total number of sales agreed in February remained the same as previous months, with eight house sales going through per NAEA member branch. ‘It’s clear from the findings in the report that things are starting to ease for first time buyers, which could be down to reduced property prices or more accessible funding, especially following December’s stamp duty reforms,’ said Mark Hayward, NAEA managing director. ‘We will all be waiting with bated breath to see if the first time buyer figures increase following the new Help to Buy ISA, and whether we see real momentum in the market. It still remains notoriously hard to get cut through in the property market, especially for first time buyers, so any green shoots are encouraging,’ he added. When it comes to policy proposals in the run up to the election some 45% of agents think that the Conservatives’ pledge to build 200,000 more homes will have the best impact on the housing market. On the downside, 57% of agents think Labour’s proposed Mansion Tax will have a negative impact on the housing market. ‘Demand is still vastly outweighing supply in this country, so it is clear something needs to be done to aid this growing problem. It will be interesting to see the outcome of this year’s General Election, but whoever wins it is vital that building more affordable homes is top of their agenda,’ Hayward concluded. Continue reading
Landlords of sought after lets in London getting 12 months rent in advance, research shows
Price may be falling in some parts of the prime London property market but new research shows that rich tenants are paying the entire cost of six or 12 month tenancies and deposits in advance in a battle to secure homes in London’s best addresses. A typical wealthy up front tenant letting a two bed flat in London's West End on a £3,500 per week let are willing to pay the landlord over £200,000 up front before moving in, according to the research from lettings firm E J Harris. Indeed in the first 10 weeks of 2015 it is estimated that over £100 million has been paid up front by affluent tenants, many of whom are part of a new breed from countries such as Russia, the Ukraine, China and Nigeria. The research suggests they are business people, socialites and students from very wealthy families and are able to pay anything from £9,000 to £10,000 per week on a luxurious residential property in London’s best addresses. In a normal year one in 10 tenants in the prime central London will typically pay their entire rent and deposit up front in order to secure the property they want, however this year this has jumped to one in five tenants. According to the firm this surge in up front rental payments since the start of 2015 reflects the current frenzy in the London lettings market as stamp duty and pre-election mansion tax concerns have turned vendors into landlords and buyers into tenants. The Central London £2 million to £20 million sales market has stalled and been replaced by a buoyant lettings market for properties within the same value range. The top 10 locations for up front rental payments are Mayfair, Belgravia, Knightsbridge, St James’s, Soho, Fitzrovia, Marylebone, Westminster, Chelsea and Kensington. The top London address for up front rental payments is Mount Street in Mayfair where over 80% of the tenancies are secured by up-front payments and the firm says that this is because the number of tenants seeking properties on Mount Street vastly exceeds supply. Mount Street is closely followed by Mayfair’s Dover Street, where 70% of tenancies are secured by upfront payments. This is followed closely behind by Eton Place in Belgravia, Trevor Square in Knightsbridge and St James’s square where over 60% of tenancies are secured by up-front payments. In Ward our Street in Soho, Charlotte Street in Fitzrovia, Cadogan Square in Knightsbridge and New Cavendish Street in Fitzrovia over 50% of the tenancies are done by up-front payments. ‘The dramatic rise in up front tenancy payments is driven by several factors. Stamp duty and mansion tax concerns has turned purchasers into tenants and so competition has risen for the best homes which has led to a rise in up front bids,’ said Elizabeth Harris, managing director of E J Harris . ‘Alongside this the London lettings market has become increasingly international with a new wave of wealthy tenants from Russia,… Continue reading
