Why the British housing market is boosting investment sales in Orlando

Foreign investors have some great opportunities for purchasing homes in the Orlando area.

Foreign investors have some great opportunities for purchasing homes in the Orlando area.


ORLANDO — Prospective home buyers in the United Kingdom are facing two separate headwinds, one that continues to make the move toward purchasing a home look more attractive – and several others that could toss icy cold water in their faces.
Last week, figures released in the UK indicated that the number of first-time home buyers stood at 21,000, a 6 percent increase from 2015. More buyers are getting in because of mortgage rates, which are at historic lows in the UK. The Monetary Policy Committee just voted to keep the UK Bank rate at 0.5pc for an 84th consecutive month, which continues to provide first-time buyers with the opportunity to take advantage of these record low rates.
In fact, those mortgage rates are not only proving to be appealing to first time home buyers, but also to those looking to remortgage their property.
At the same time, the market is facing some new headwinds from SDLT — the new 3 percent stamp duty land tax levy that went into effect on April 1. It was announced last year by Chancellor George Osborne, and will impact domestic and foreign buyers of second residential homes in the UK over £40,000. There are exemptions for caravans, mobile homes and houseboats, and no charge on inherited properties.
The SDLT is not the only challenge confronting buyers. The real estate market across the United Kingdom is facing two critical factors: a limited supply of homes, and, with it, rising prices. In fact, a new report shows that the ratio between the average city home price in the UK and average gross earnings has hit its worst level in eight years. Lloyds Bank’s Affordable Cities Review showed that the city of Exeter, for example, was the tenth least affordable market in the UK, with average house prices 8.36 times higher than average local earnings. But it wasn’t an exception to the rule: the average UK city house price shot up by 8 eight percent in the past year.
The SDLT was actually introduced to address this problem, since the British government was hoping that the increasingly expensive buy-to-let market could be cooled off a bit with the imposition of this new tax. The government’s hope was that it could slow price hikes and make it easier for first-time buyers.
Starting this month, anyone who buys a buy-to-let investment, second home or holiday home in England, Wales or Northern Ireland, will pay the additional 3 percent SDLT on top of the standard rate charge based on the value of the property.
All of this is playing out in the weeks leading up to a referendum in England, asking voters to decide if they want to remain in the European Union. The issue has added a lot of uncertainty to the real estate market, since it’s not clear how a yes vote would impact Britain’s business relations with the rest of Europe.
These factors could also produce another result: to encourage more European investors to look beyond the shores of England and the rest of Europe to a potentially more stable option in the United States. The continued growth in the U.S. economy has helped improve the real estate market, particularly in fast-growing states like Florida, and made the notion of foreign investment here that much more appealing.
Last week, the federal government reported that 215,000 jobs were created in the United States in March, exceeding economists’ expectations of 210,000 jobs. The nation’s unemployment rate was 5 percent, and there were indications that a rising number of previously unemployed Americans were getting back into the job market.
Florida’s unemployment rate is even lower at 4.9 percent, and Central Florida’s housing market is growing quickly, with sales up from a year ago.
Real estate expert An Flamand, the owner and broker of An Flamand-Orlando Vacation Realty, noted that at the beginning of the year she entered into an exclusivity contract with the developers of Posner Estates, a posh new townhouse development being constructed in Polk County. Located right next to the popular Posner Park commercial shopping plaza, Posner Estates will offer luxury living close to shopping and dining, but is being built next to a conservation area that provides peace, quiet and tranquility for those living there.
As An noted, the first phase of this development has already sold out, with $16 million in pre-construction sales being made on the townhouses that will open later this fall. That rapid interest, An noted, was due to foreign investors who have recognized that Posner Estates will be a terrific long-term option for them – an attractive development located in a key section of Central Florida, and in a state that maintains one of the healthiest economies in the nation.
Many of these investors, An noted, see the United States – and economically thriving states like Florida – as a smart and safe place for their investment money, particularly as conditions in the UK market remain uncertain.

Michael Freeman is an Orlando journalist, playwright and author of the book “Bloody Rabbit”. Contact him at Freelineorlando@gmail.com..

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