Expats living in Bahrain are going to be banned from owning homes in areas that are not seen as tourism or investment zones. MPs have banned expat home ownership in certain areas, because it was felt that Bahraini citizens were finding it increasingly difficult to purchase property, due to the high demand pushing up prices. Expat home ownership is causing problems by pushing up prices because of foreigners' higher spending power, according to MP Shaikh Majid Al Majid. At the moment, foreigners can invest in property and land anywhere in Bahrain, although restrictions were imposed to limit this right to certain locations like Hoora, Abu Ghazal, Reef Island, Al Fateh District, the Diplomatic Area and Seef. Expats can also invest in designated investment projects, such as those on the Amwaj Islands.
Expat homes are causing problems for Bahrainis, who are finding it difficult to get a home of their own. Property is expensive because of the limited amount of available space, argued the Parliament’s financial and economic affairs committee vice-chairman, Jalal Kadhem. The argument has found favour with fellow MPs, who voted in favour of amending the 2001 law that allows expat home ownership, to insert a clause which restricts expat homes to tourism areas and investment projects only. Now the clause must be drafted as an official legal amendment within six months and then put before the National Assembly for a vote. Foreign interest could also rise because the Gulf island nation of Bahrain has been ranked the best global destination in the world for expats, in a survey by network InterNations.
Although MPs say they do not want to restrict the open market, they feel there needs to be a balance between the needs of the local market and foreign investment. MP Isa Al Kooheji said a study was urgently needed to look at the real estate sector and investment trends, to resolve the problem of a shortage of property. It is hoped that any restriction on where expat homes can be bought will ease pressure on the property market and make homes more affordable for Bahrainis. At present, there is the situation of two groups seeking to invest in the same sector - the foreigners who can pay anything and the Bahrainis who have limited resources.
Such issues have also arisen here in the UK, particularly seaside resorts. Local authorities are now assessing whether second home ownership in their area should be permitted, given the effect this is having on the community, particularly for the younger generations trying to get onto the property ladder. The secondary effect is on house prices in the area which escalate due to the demand, meaning people living and resident in the area are struggling to move due to the demand for coastal properties. Another knock-on effect is the shortage of properties for sale, made all the more galling by the fact that in May these areas remain so quiet before the holiday seasons starts.
For instance, there are three popular tourist destinations on the Cornish coast that were looking to ban ownership of second homes. In 2014, this area was granted the same Celtic minority status as the Scots, Irish and Welsh and therefore signs such as ‘English Out’ aren’t uncommon, almost as similar in resonance as the Bahrain situation, but much closer to home.
In May 2016, residents of St Ives voted and 83% wanted to ban second-home owners buying new-build developments. This was followed by two similar destinations on the south coast being the historic town of Fowey and fishing port of Mevagissey. Both these towns followed St Ives’s and voted to include similar proposals in their own draft neighbourhood plans. Second homes account for a third of properties in Fowey and a quarter in Mevagissey.
However, are the locals standing in the way of progression and the fact that sometimes children maybe buying a second home as an investment for their pension and can rent out during the meantime? Additionally, are these investments made so that the elderly, rather than buying for themselves may want to live down on the coast to see out their retirement years?
Many ponderables as you can imagine, but for those looking to purchase a second home, equity release schemes now cater for this kind of customer. With the recent innovation from Retirement Advantage with their 55+ Buy-To-Let/Landlord and Second Home Equity Release schemes, secondary owned properties can now be remortgaged, or purchased using these plans.
Not trying to upset the residents of the aforementioned Cornish towns, Retirement Advantage are bucking the trend for Landlords being vilified by the recent changes in legislation, both with the increase in stamp duty on purchasing 2nd homes and the reduction in mortgage payment relief up until 2020.
Landlords may wish to refinance for numerous reasons, one particularly common objective presently is to repay an existing interest-only BTL mortgage where the lender is demanding repayment. Retirement Advantage can come to their salvation where no standard BTL lender will assist, as they can offer either roll-up or even voluntary payment Buy-to-Let equity release plans where no proof of income or affordability is required. The same set of rules apply to the 2nd Home schemes also.
So for those aged 55+ and in need of a advice on second home ownership, do not hesitate to ask an Equity Release Supermarket specialist.