Similar to in Britain, property is a favoured pastime in Singapore, from the one-off investor who bought on a recommendation from an enthusiastic friend or colleague, to the savvy investor who boasts a 30-strong portfolio. Furthermore, the focal point of this enthusiasm outside of Singapore itself is London, in particular zone 1 – Prime Central London.
It is estimated that nearly three-quarters of new-build homes in prime central London were bought by non-UK buyers since 2012 and a large proportion of these foreign buyers came from Asia. Quite timely, this period from 2012 to 2017 coincided with a fantastic boom in London property with the average house price increase in the capital in that period reaching a monumental 56%. With this dramatic increase in equity and in overall wealth a lot of investors are now sat on a goldmine in equity, and with new opportunities constantly emerging in the ever-changing global financial landscape, the question is how do you access that equity in order to utilise all of that capital and re-invest it elsewhere?
Taking a slight step back, ask any Singapore resident about the ease or availability of mortgage finance and it is likely you will hear a collective groan. The reason for this is that in June 2013 the Monetary Authority of Singapore (MAS) took measures to cool off its own ballooning housing market by introducing a very strict set of guidelines referred to as the Total Debt Servicing Ratio (TDSR) framework. The short version of this is that mortgage interest and the ability to service this is stress-tested at a very high level whilst at the same time any variable income (namely property rental income) is only considered at a percentage of its face value when looking at these calculations. What this means for a lot of residents is that looking to the likes of United Overseas Bank (UOB), Oversea-Chinese Banking Corporation (OCBC) and other local banks is no longer a viable option.
This is where the Capricorn Financial comes in to save the day. Capricorn has a well curated panel of high street, specialist, offshore** and private banks who all can extend propositions to cater to the needs to Singapore residents and other buyers based overseas without imposing the same harsh TDSR restrictions.
In a number of situations, we have helped clients raise their mortgages back up to 70-75% of the current market value which in the current low interest rate environment means the property is still comfortably self-financing, whilst in the process frees up huge amounts of equity. Most of our buyers will then use this capital to put forward deposits on more property on which we can also arrange finance thus maintaining liquidity and allowing this area of the property market to continue to thrive.
Rates in the UK are still at historic low levels and with the pound trading approximately 20% down on where it was less than 2 years ago this creates a major opportunity for overseas buyers, especially those who are already sat on lots of sterling denominated assets that they just need to free up, unlock the wealth within them and go again.
*Please be aware that changes in the exchange rate may increase the sterling equivalent of your debt.
**The overseas services promoted here are not part of the Openwork proposition and are offered in our own right. Openwork Limited accepts no responsibility for this aspect of our business which is not regulated by the Financial Conduct Authority.