Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.
Overseas buyers turn to mortgages for luxury UK property purchases
Wealthy overseas buyers are increasingly using mortgages rather than cash to purchase luxury homes in Britain, according to new analysis by real estate adviser Karis Capital.
The number of residential mortgages worth £5 million or more rose to 333 last year, up from 313 the previous year. The rise was attributed to a dip in cash buyers in the luxury market.
The scale of super prime lending
The total value of the 333 regulated mortgages worth £5 million or more completed last year reached £3 billion, with the average prime residential property loan standing at approximately £10 million.
Karis Capital says London continues to dominate Britain's luxury property market. Of the 333 mortgages completed last year, 88% (292) were secured against London properties, up from 84% (263) the previous year. Only eight of the 333 mortgages above £5 million were for properties outside London, the South East and the South West — a stark divide in the super prime market between the North and South of England.
Why wealthy buyers are borrowing
Francesco Amato, Senior Debt Advisor at Karis Capital, said the increase reflects a change in how wealthy buyers are approaching the luxury property market. Even when wealthy people have the cash to buy luxury properties, many are choosing to borrow because it allows them to preserve capital for other investments.
He noted that while the change in the non-dom rules has had an impact, many buyers see the current drop in luxury property prices as offering compelling long-term investment opportunities. He added that London remains one of the world's premier destinations for international wealth and continues to attract buyers from across the Middle East and Asia.
A specialised lending market
Amato also explained that arranging finance at this level requires far more than simply securing the lowest interest rate. Luxury property finance is a highly specialised area of the market, with borrowers often having complex income structures, international assets or bespoke lending requirements. A tailored borrowing plan, he said, can make a big difference to both the speed of a luxury property purchase and the overall outcomes and returns.
What this means for agents and clerks
For UK letting agents and inventory clerks, the figures underline continued international demand at the top end of the London market and a shift towards financed purchases rather than cash deals in the super prime segment. High-value tenancies and handovers in this market may increasingly involve mortgaged, internationally owned properties, making thorough documentation and professional inventory practice all the more important.
Source: The Negotiator