Despite economic uncertainty in 2023, the UK property market showed considerable resilience by ending the year with average house prices virtually unchanged when compared to the previous year. UK Property has historically been seen as a safe haven, and new research from Investec shows that high-net-worth individuals plan to ramp up their investment in the sector, as economic headwinds could create opportunities.
Investec conducted a study [1] with entrepreneurs, finance professionals, and corporate executives with average earnings of more than £510,000. It found that more than three in four (77%) are looking to increase their individual exposure to UK property investment.
On average, they will invest an additional £380,000. Around one in ten (11%) are planning to increase their individual exposure to the sector by £500,000 or more – providing further evidence of their confidence in UK property.
On the flip side, just one in seven (14%) plan to reduce their exposure to the sector, with 3% planning to divest entirely. Around one in 15 (6%) are not planning any changes.
The confidence in UK property suggests a positive outlook for house prices and interest rates among high-net-worth individuals (HNWIs), espousing confidence in the buy-to-let investment sector and remortgaging, mirrored by confidence in borrowing against other assets.
Around 58% said they have borrowed against an investment portfolio, with 21% of those people borrowing £250,000 or more. Typically, these loans are taken out to reinvest into the portfolio or to assist family members with buying property.
Cheryl Quinn, Private Banking Team Lead at Investec, said, “Despite uncertainty around house prices, as a business, we are seeing that a large number of high-net-worth individuals remain optimistic about the sector. Many view the current instability as an opportunity to increase their exposure to UK property at an attractive price point and very much value the ability to leverage income to fund investment properties.
“However, these individuals can struggle to access lending because of their complex income profiles. This is particularly true of City professionals, who often receive a large part of their remuneration as discretionary income, and entrepreneurs, who usually have a large part of their wealth tied up in their businesses. This, combined with the current market uncertainty, means that clients need to think carefully and seek independent expert advice before any major decisions.”
About Investec
Investec offers a range of private bank accounts for clients earning at least £300,000 a year and with a minimum net worth of £3 million. Teams are structured by profession – enabling them to understand the complex earning profiles that HNWIs often have. Clients are looked after by a dedicated private banker who can provide tailored banking, borrowing, savings solutions or foreign exchange.
Investec’s ability to understand complex client profiles means it can often tailor a mortgage quickly. The bank recently arranged a £7.65m mortgage at 75% LTV in 12 business days for an entrepreneur with a complicated financial situation—much of their wealth was tied up in their business, and their remuneration predominantly came from dividends.
About the Research
[1] Investec commissioned independent research agency PureProfile to interview 100 high-net-worth individuals, including senior executives working in the City and living in London and the South East, earning at least £300,000 a year, and business and property entrepreneurs owning a profitable business with a turnover of at least £2 million. The research was conducted during October 2023.
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