Expat property investor – the need for professional help

Case study relating to an expat property investor interested in keeping a foot on the London property ladder.

Two years ago a potential buyer, Andrew, a virgin expat property investor contacted us.  Andrew was in his early thirties, single, handsome, a first-time buyer and successfully worked in finance for a large corporation in Singapore. His concerns were that when he eventually returned to the UK, he wouldn’t be able to afford even a one bedroom flat in Central London as he had been watching property prices rise, even during the recession.

For 3 years, the ‘Andrews’ of this world have been a constant recurring client type on our books, the expat first-time investor living in Asia. These are not the buyers from Asia you hear about who unwisely buy off-plan at property fairs (oh yes Sir, Whitechapel is Prime Central London) but expats forging their careers in Singapore, Manilla and Hong Kong.

So why do they want two bed period conversions in Islington?  Living a 12 hour flight away, they always have an end date in mind and return home at some point.  While anxiously watching the London property market without even a little toe in the London market, they worry that they could be completely priced out when they return with their new family.

Our first questions to potential clients of this nature are usually:

• Can you be totally commercial about the purchase and not be influenced by personal emotions?
• Are you willing to consider a location out of your comfort zone?
• Will you accept our professional advice over friends/family who ‘always know better’?
• Yields are low in London, with more than a 50% mortgage, the income will probably only just cover the yearly overall costs so capital growth therefore has to be your ,main barometer
• Have you considered all your tax implications when you come to sell?

Property investment is a very sensible option for expats with no home in the UK. They normally aren’t familiar with the calculations involved or care required when choosing a property investment. They need guidance.

Andrew put his trust in our expertise as property advisors and invested without viewing. From our perspective when acting for a virgin expat property investor, it is always a little tricky, as they inevitably cannot remain completely unemotional about their purchase.

A two-bedroom, 850 square foot Georgian conversion in Clerkenwell was sourced and secured at sealed bids for £605,000. Sealed Bids – another challenge! Trying to win the bid while not overpaying – they are not owner occupiers that have to have it whatever the cost.

We organised a quick re-spruce of the flat and lined up furniture for purchase if requested by a tenant. A local agent let it quickly at £500 per week, unfurnished, which kept costs down. Although by national standards not a brilliant yield, this was a fair market rent at that time in Clerkenwell. The investment covered its yearly costs.

Two years later, following our advice, the tenants have accepted the rent increase to £650 per week. The flat is now worth over £800,000 – 33% capital growth. Not bad for a first-time buyer who didn’t even view the flat before purchase!

Now Andrew plans to return home with a pretty young wife and they have an eye on something quaint in the Home-Counties. But there are tax implications on selling this flat. So for non-UK residents professional tax advice is always recommended.  In some cases the property must be your main home before you sell it, or you could be liable to high capital gains tax.

For a virgin expat property investor, using a property finder with expertise in this field ought to be one of their first considerations. It is a huge investment with many consequences and if chosen unwisely could become a rather expensive experience.

But choose your property finder wisely.  Unfortunately our industry attracts many who have no or very little experience in order to ethically advise their clients properly.

The ARP, our governing body, is a great starting point when searching for a professional property finder.  All members must abide by their Rules of Conduct, have full professional indemnity insurance, never act as an estate agent and never take on clashing clients which would be a conflict of interest. The Property Ombudsman also ensures that all members are properly accountable.

However, we can save you that phone call!  We have a long list of very happy repeat clients, are FULL members of the ARP and have 15 years experience in buying great property investments in London.

If you are an expat property investor please contact us below:

Lucy Richardson Limited Property Search Consultancy
2 Eaton GateLondonSW1W 9BJ Mobile: + 44 7795 242 300 email: lucy@lucyrichardson.co.uk Follow us on Twitter: @BuyingAdvisor

Expat Buy to Let Mortgage Financing

Property118.com also works with a panel of brokers who specialise in arranging buy to let mortgages for expat property investors. Criteria is generally that the loan must not exceed 60% of purchase price and that applicants must work for a multi-national business. To discuss your buy to let funding requirements please call Neil Patterson on 01603 489118.

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