HNWIs to ramp up investment in UK property despite uncertainty
New research from Investec shows high net worth individuals (HNWIs) are planning to ramp up their investment in UK property, as uncertainty around the economy and house prices creates potential opportunities.
Investec’s unique study with corporate executives, finance professionals and entrepreneurs with average earnings of more than £510,000 found that more than three out of 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.
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.
Their confidence in UK property suggests a positive outlook on house prices and interest rates among HNWIs and continuing support for buy-to-let investment and remortgaging.
It is mirrored by a 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 for increasing their exposure to UK property at an attractive price point and very much value the ability to leverage income in order 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 renumeration 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.”
Investec offers a range of private bank accounts for clients earning at least £300,000 a year and with a minimum net worth of £3m. 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 who had a complicated financial situation – with much of their wealth tied up in their business and their remuneration predominantly coming from dividends.
