Case Study
Working with foreign property investors in 2019 Paresh Raja CEO Market Financial Solutions
J
anuary’s arrival is invariably accompanied by a wave of predictions about what the New Year will have in store. This is certainly as true in the property and finance sectors as it is in others.
With the UK’s departure from the European Union taking place on 29th March 2019, long-term forecasts are particularly difficult to make this year. In particular, brokers and lenders will be eager to see how Brexit affects the appetite of international investors to purchase bricks and mortar in Britain. However, if recent data tells us anything, it’s that Brexit certainly has done little to dampen the country’s attractiveness to foreign buyers. In the year to May 2018, non-UK residents acquired 2,162 properties in London alone, which had a combined value of £2 billion – this was up from £1.65 billion in the preceding 12 months. Meanwhile, separate figures show that more than half the prime central London real estate acquired in 2017 was purchased by foreign buyers. Consequently, lenders and brokers must remain attuned to the financial needs of international property buyers. As a bridging loan provider that regularly works with international high-net-worths – and brokers who have such individuals as clients – Market Financial Solutions (MFS) understands the unique challenges facing foreign investors within the UK property market.
Fast and bespoke One recent case from late 2018 highlights this point. A new broker approached us for a client who required funds urgently to clear an existing debt on a prime central London investment property. Said property – which had a market value of £8.7 million – was listed for sale and, at the time of enquiry, was garnering strong interest from potential buyers. 20 | NACFB
As the client resided offshore, they had experienced difficulties to raise finance through traditional methods in order to clear their debt with an existing lender; their current facility was close to being called in and only a very quick completion on the London property would enable them to avoid being penalised and charged for late repayment. MFS helped the broker and their client overcome the challenges they faced. MFS instructed a valuer to complete a report on the investment within 24 hours. Simultaneously, our solicitors were engaged to start the legal process and to ensure the transaction was conducted without delay. The result was that we were able to issue a loan to the client of £5.2 million at an LTV of 60%. It was agreed that the exit was the sale of the security property that was already attracting lots of attention from prospective buyers. The broker’s client was particularly pleased with the fact that we do not charge any penalty for early repayment, which allowed the client to redeem the loan as soon as the property sold without any additional costs. Whatever the outcome of Brexit and however the coming 12 months unfold, it is safe to say that the need for fast and flexible financial solutions will remain of critical importance for property investors. For foreign buyers – who are evidently still keen to pursue bricks and mortar opportunities in the UK – it is vital that brokers and lenders take a bespoke approach to delivering short-term finance. Due to the unique challenges they face and investment portfolios they boast, international high-net-worths require a tailored approach when it comes to bridging, and that will hold true in 2019 and beyond.
Key details Borrower: Property owner Loan Amount: £5.2 million Loan Type: Bridge Location: Central London Project Type: Investment property Special Features: Foreign buyer
