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Welcome back to the show! Today, we’re diving into some major shifts in the UK property market, from potential mortgage rule changes to foreign investment trends and the rise of a new generation of wealthy buyers. Let’s get started.
Easing Mortgage Rules—Will It Really Help?
The UK government is considering loosening mortgage regulations, particularly the loan-to-income flow limit, to boost home ownership and drive economic growth. But will it work?
After the global financial crisis, the Financial Conduct Authority (FCA) tightened mortgage rules to prevent reckless lending. That’s why mortgage arrears and repossessions have stayed much lower than they were during the crisis. Even though the FCA removed mandatory stress testing in 2022, lenders still apply their own risk assessments, meaning any regulatory changes might not have a huge impact.
The Bank of England’s data suggests that mortgage rules haven’t been the main problem for first-time buyers—it’s the massive deposits they need to put down. So, while relaxing regulations might increase borrowing capacity, it could also push house prices even higher if supply doesn’t keep up with demand. That could make home ownership even tougher, rather than easier.
The big question: Can the government encourage more home ownership without overheating the market?
Foreign Investment—Why Prime London is Losing Its Shine
For years, London’s prime property market was a magnet for global wealth. But in late 2024, things shifted. Buyer registrations were down 8%, and offers fell by 11%. Since its peak in 2015, prime central London property prices have dropped 18%.
Why? A mix of political uncertainty, higher borrowing costs, and tax changes for foreign investors. The government’s tweaks to the temporary repatriation facility offer a small tax break, but the real issue is inheritance tax on overseas trusts. Until that’s resolved, wealthy investors will keep moving their money to places like Italy, Switzerland, and the Middle East.
Surprisingly, prime outer London has held up better, with transactions rising 10% compared to just 3% in prime central areas. It seems London is no longer the automatic first choice for global investors.
The Rise of Younger, Fast-Moving Millionaires
Another big shift? A new generation of wealthy buyers is transforming London’s super-prime property scene.
Traditionally, luxury homebuyers were in their 50s and 60s. But today, many are in their 30s and 40s, having made their fortunes in tech, finance, and digital industries. And with millennials set to inherit £5.5 trillion over the next 30 years, this trend is only just beginning.
But sudden wealth isn’t always easy to navigate. Some struggle with the costs of prime London property, while others feel pressure from family expectations or worry about standing out too much in their social circles. Plus, many underestimate how competitive the market can be—assuming money alone will guarantee the property they want. With rising stamp duty and other costs, making the wrong property decision can be expensive.
So, some advisers suggest younger buyers should take their time, settle into their financial stat
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