Buying in the UK and Dubai

People ask me where the best place is to buy when looking into buying in the UK and Dubai, but there are strong arguments for both provided that your outlook is based on the long term.

I should probably clarify at this point that by comparing only Dubai and UK, I’m not saying these are the best two markets to buy in, they are simply relevant to the areas that I operate within. I’m sure many countries and regions of the world offer compelling stories as to why to buy. Feel free to send me your thoughts on other places, always happy to hear alternative views.

I bought my first property in my early twenties, it was a flat in the North East of England and for the most part I’ve held property ever since. I left the UK in 2000 at the age of 29, spent 4 years in Dubai and have lived in Hong Kong since 2004 and have seen a lot of changes and trends that would maybe make me decide to buy or not buy in a certain place.

In 2002 I moved into a brand new villa in The Lakes in Dubai, at the time it was off ‘interchange 5’. My boss at the time asked me why I wanted to live in the middle of nowhere. At that time, the ability for ownership of property in UAE for Foreign Nationals was non-existent.

During my time in UAE from 2000-04, the UK market was also very buoyant to the extent that I sold the former family home for a profit and saw it back on the market later in the year for a staggeringly higher price. It was a harsh but important lesson, which is to ensure that you have some level of correlation to a property market that you may intend to move to in later years. Is your plan always to rent or would you prefer to own somewhere?

I was close to buying in Dubai in early 2004 but it just wasn’t going to work in terms of my employment contract and having left for HK in August of that year, it was over 3 years until I returned to the UAE on a visit. In all honesty I thought I’d turned up in another country the extent of the building work was so extensive, I was literally blown away, not to mention completely lost.

The one constant throughout almost 20 years with Dubai is that when the property market is good, it’s very good, when it’s not, well hold onto your hat… History will tell you that had I made that purchase in 2004 then I’d be reading this article on a beach having long since retired, as opposed to actually writing it.

These days I spend more time finding clients mortgage deals than I do in identifying the properties for them to buy, however during the last 34 years I have worked for a bank and also run a property agency and therefore have seen life on both sides of the fence, pardon the pun.

For me these are the key questions to ask yourself when buying in the UK or Dubai:

What will the property be?

Do you plan to live in the property, will family use it, is it going to be a holiday home or do you just want it to be an investment property that you’re buying for capital growth and or rental income.

What knowledge do you have of the place that you’re buying in?

If you offered me a property on the seafront in Tynemouth in the North East of England then I’d know exactly where it is and what the relative values are of the other properties and all of the potential risks. If however you offered me a property suburb of Bristol for instance I’d be essentially buying blind.

The same applies in Dubai. If you’ve lived in Dubai and know the schemes and suburbs then great, but if you’ve never lived there then the risks are far greater. Most people know the Palm but if you didn’t know Dubai would you know the difference between the Greens and The Green Community?

Don’t buy blind, make sure that if you don’t know the area well that you’ve done extensive research or you are buying through someone that provide with that level of information.

How do you intend to finance the deal?

I will claim a conflict of interest here when I advise you to always use a mortgage broker if you are buying in a different country to where you live but then I am a mortgage broker.

In Dubai if you are on the ground then there are lots of banks that can assist but how easy would it be from overseas? For the UK the same applies, the domestic market is tailored mainly for UK residents. On that basis most of the online offers and rates only apply if you are a UK resident. Frankly speaking it is a mortgage maze and I would always question the logic of trying to do this yourself when spending hundreds of thousands of pounds or more.

I set up my business based on my frustration of the limited amount of mortgage advice for non-UK based buyers. A good mortgage broker knows the lenders that will deal with you and the ones that will not. Also if you are buying a new-build property, you should always check whether a lender is prepared to lend on the scheme itself. Just because you have personally been approved does not mean that the relationship manager from the bank has checked this information – it’s a common
occurrence. Again, a good mortgage broker would check with the bank at the first instance and normally have a back-up plan if something goes wrong.

Who will be assisting you with the property purchase?

Are you using an agent for the purchase and who are they? If it’s a new build property, are they the ‘master agent’ on the scheme or a sub agent? If they are not the master agent then make sure you have a strong relationship and are able to have ongoing contact with them during the time between reservation and completion.

If the property is second hand, how do you intend to source it? As a local UK agent once said to me, “In a rising market, if a property comes in and I need to call you 6000 miles away then there’s probably something wrong with it.”

Buying new-build in another country is normally the easiest route to market but make sure you know who you are dealing with in terms of the agent.

What additional costs are you likely to incur?

The cost of Stamp Duty Land Tax (SDLT) has increased for non-resident purchasers since April 2021 and the nil-rate band is now back at GBP125,000; therefore it’s likely that you will incur this and should factor it into the purchase price. In addition you may have mortgage and legal costs but these should be clearly laid out.

There is no stamp duty in UAE but you are likely to incur other fees in the process and you should fully understand these and ensure you have the money to cover this too.

Those reading this who have or continue to live in the UAE will attest to the fact that whilst there is limited tax to pay, the cost of living can be higher in other ways.

Be clear on your purpose

If you’re buying in the UK or Dubai for investment purposes then don’t be an emotive buyer. Too often people get caught up in whether they would live there and maybe use it for themselves when they retire. For me a good investment is not always where I’d live myself. If you have a family then you’d maybe buy a nice house but is that a good rental investment? Maybe a small apartment near the central business district would be more prudent?

What does the future hold when buying in the UK and Dubai?

It’s fair to say that one thing that we are seeing in the world is that the supply chain has slowed down. Inflation is going up and the cost of goods and services is rising; therefore at some stage this will impact on the price of new properties coming onto the market. I’m not ever going to make predictions I will let you make your own decisions but if product and material costs rise in any
industry then ultimately this will pass onto the end user. We are in for an interesting 2022; therefore I wish you good luck whether you’re buying in the UK or Dubai.

Contact Neil Jenson at St James Place Wealth Management for more information on buying in the UK and Dubai.