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Cheap politics, cheap property, cheap money
Cheap politics
Gordon Brown’s supine lack of supervision over the UK’s greedy bankers and incompetent regulators has had dire consequences, with the need to virtually nationalise Royal Bank of Scotland and take a massive government/taxpayer holding in Lloyds. Further taxpayers’ money will be thrown at the banks which will probably be swallowed up with as little effect as the initial bailout funding.
Prudence, our ex-Chancellor’s keyword has given way to the economic policies of Mugabe and the Weimar Republic. In the knowledge of his impending consignment to history’s losers’ dustbin, Brown, in between solving the world’s wider problems, is now relying on printing money and daily promised policy activity which will never reach fruition. He thinks that if he throws the dice often enough maybe two sixes will come up.
As a son of the manse, the leading clerics who denounce his Government as ‘morally bankrupt’ have probably given him the unkindest cut of all. Unfortunately he is so far in sin that sin will pluck on sin. Pity his poor successors who will inherit unprecedented debt, massive unemployment and a demoralised nation. New buzz words like toxic debt and quantitative easing are used to avoid the simplicity of more easily understood words, such as greed, stupidity and excess. Billions have become trillions. Where are they? Where have the billions gone and where will all the trillions come from?
Gordon’s new solution to the aforesaid is to have our criminally incompetent banks nationalised and run by equally overpaid incompetent civil servants. Halving the number of banks, the number of civil servants and the number of regulators would be a better idea. What is the point of having regulators incapable of spotting the most obvious malfeasance – Equitable Life, Madoff, banks profligacy, split capital trusts etc. etc.? Absolutely brilliant that they removed the block on financial short selling the other week – Barclays must be exceptionally grateful with their share price taking a 30% knock in just the last hour of trading on one Friday. How stupid can these people be? Now of course we have the latest run on the pound, courtesy of Mr Soros.
Perhaps the world’s best hope, Barack Obama, will turn out to be the new FDR – it’s hard to find any other reason for optimism in 2009.
Cheap property
Experts would have us believe that house values have returned to those prevailing in 2005. Various price indices give results varying from a probably optimistic 8.6% reduction in 2008, and a hopefully ultra pessimistic figure of 14.6%. With such disparity what is the point of relying on any of these figures? Looking at the industry experts who last year predicted house price movement in a band of plus 5% to minus 5%, investment experts who predicted a year end FTSE 100 level of 6000, and you may as well trust your own judgement. One thing is for sure and that is that there are and will be real opportunities for those looking for bargains, particularly if they are paid in US dollars, currencies pegged to the dollar or euros.
Add to reduced prices, a dramatic increase in purchasing power and cheaper money and you have thrown three sixes. What might have been a dollar/euro funded purchase at £500k last January could translate now to an effective 30% reduction in real costs. We are already seeing signs of renewed interest from expatriates and foreign nationals. What’s needed is the replacement of fear by greed and hopefully the Hong Kong Chinese riding to the rescue as they did at the time of the ‘nineties price shakeout.’
Cheap money
IMP is able to offer investment purchasers interest rates as low as 4.24%. This still represents a healthy margin of 2.74% for our distressed bankers needing to replenish their balances dissipated in foolhardy investments beyond their limited capabilities.
Simply, a £250k expatriate buy to let loan need only cost £1,000 per month – $1,450 or 1,150 euros at the time of writing.
The starting point for anyone buying property in the UK should be a 15% reduction in price with a view to settling at a discount of 10%. Here we are talking about prime residential areas. You could probably offer 50% off a new city centre apartment in the Midlands and North and have every reasonable ‘expectation of success’. IMP is able to access new build properties discounted by a minimum of 20/25% and in extreme cases 50%. Contact us for full details.
Rent yields remain strong and taking a £500k purchase with a mortgage of £250,000 and a monthly sterling interest payment of £1,000, it would be reasonable to expect a rental of £2,000 a month. This is a massive margin for property investors with serious opportunities for capital gains when the market turns, whenever that is.
IMP has been advising on expatriate mortgages for twenty years, a longevity unmatched by any other independent advisers. Our extensive panel of lenders includes exclusive and semi exclusive deals framed specifically for our overseas clients. Currently we offer more attractive buy to let investment facilities to expatriates than those available to UK residents in the general market place.
Call or email us for details of current lending facilities, both for purchasing and for refinancing UK property security. Our website www.international-mortgage-plans.com is updated regularly and will give an independent overview of the market place and lenders’ comparable terms. |
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