Half-Term Report - Expert H1 Market Commentary and H2 Predictions Part 2

The mid-point of any year presents a unique opportunity to reflect on the months that have passed and anticipate what still lies ahead this year. This is Part Two of our Half-Term Report, featuring additional expert commentary from our other Heads of Departments and insights from their areas of specialism. 

The two critical questions they responded to were;

 

Q1 Reflecting on H1, what have been the most significant trends or changes you've observed in the market?

And

Q2 In H2, how do you expect these needs / demands to change and what other challenges and opportunities do you envisage? 

 

As revealed in our H1 Highlights release, at a group level we have seen year-on-year growth in enquiries during H1, accompanied by an increase in borrower quality, net-worth and property value. These trends are very promising for the second half of the year, which we anticipate will also be influenced by the upcoming US election in November, market stabilisations and a robust global super prime property market. Business investments also look likely to recover slightly, although consumer spending may remain cautious in may markets.

Below is a summary of our team’s insights.

 

Harry Derrick

Associate Director, Dubai Office

Q1 We’ve seen a notable increase in international/overseas buyers purchasing UK properties for personal use, either as holiday homes or for family members to reside in full-time. For these purchases, a significant trend has been a growing preference for base rate tracker mortgages. Although these typically are an initially higher rate than the fixed rate alternatives, many HNW & UHNW clients have been happy to accept higher initial rates in return for the longer-term flexibility, including overpayments (these usually do not come with early repayment charges) they provide. As well as the prospect of benefitting of potential future reductions in the base rate.

Conversely, we’ve seen a decline in the appeal of the Buy to Let market, linked to higher interest rates & fees, plus stricter stress tests and therefore lower loan amounts available for borrowing. However, there has also been good traction with lenders who can consider overall affordability when assessing HNW & UHNW clients, negating stricter stress test restrictions versus mainstream routes. 

Q2 As rates start to come down, as is widely predicted, I expect we will see an influx of first-time buyers who may have been holding off whilst rates have been at recent highs. As more buyers come into the market it will likely be more competitive when clients are searching for their properties & having offers accepted, but the best thing to do is make sure the right lender is lined up and ready to move ahead asap.  

I expect similar challenges will continue to impact the Buy to Let market for the rest of this year, although rate reductions may also provide some signs of optimism. Of course, regardless of market dynamics our network means we are in a strong position to help clients, including those in the most difficult of circumstances.

High Value Insurance and Protection – ‘the risk of being underinsured remains.

Vicky Barton,

Head of Insurance

Q1 The risk of being underinsured continues to be the key aspect of the market. Our experience suggests insurance remains incredibly underrated in importance and often overlooked where clients focus purely on the financial transaction itself. As such, there is still a risk in the market of insurance not being advised or structured correctly. Reinforcing the need for quality conversations with an advisor whose role is to solely iron out your future financial resilience in the event of a major life event. This is especially critical for HNW and UHNW.

Q2 As we enter H2 we also embark on a new political era for the UK. Whispers of higher taxation may result in higher premiums, although the government are keeping their cards close to their chest. Higher taxation could lead to additional cost pressures on insurers that may force them to review premiums. However, it is possibly too soon into our new government to give any real insight into how this will impact the insurance market, or indeed if at all.

High Net Worth Services – ‘eventful with wide ranging enquiries’

Conor Groome

Head of HNW Services

Q1 H1 has been eventful with wide ranging enquiries and opportunities. A significant trend which we have noticed is some UK based clients seeking exit strategies from the UK. Our team has been busy advising them on alternative residency options which include (but not limited to), the UAE, Italy, and Monaco. Fortunately, Enness holds a global presence which means we are excellently positioned to advise on these matters. 

Facilitating a global move will always require expert advice to ensure that all parts of the move have been catered for. Lifestyle, residency, property, wealth, and business needs must be accounted for, each one is as important as the other. From a residency standpoint, each location carries its own benefit; we simply advise them to ultimately allow the client to make the best decision for them and their family. 

Q2 In H2, I envision this trend to continue, and possibly gain further traction although the way forward is less than clear. Potentially creating a domino-like effect where we see HNW and UHNW clients seek moves abroad in favour of more favourable tax regimes and sunnier weather. Each case is different and brings on its own unique challenges, so it’s hard to comment on that! In this market, there is always opportunity. I envision fantastic opportunities to collaborate with other departments, such as our insurance division, as we facilitate the movement of our clients.