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Property buy: UK pines for clean funds
Published on: Monday, August 03, 2015

Kota Kinabalu: Despite the current weakness of the ringgit against major currencies, United Kingdom (UK) property market thirsts for clean investment funds, including from Malaysia, and more people from Sabah have invested in the London property market.

UK's Nationwide Building Society – the first to record the annual change over the whole of 2014 – suggests that UK house prices rose 7.2 per cent in 2014.

"London is not a place to stash your dodgy cash. I want Britain to be the most open country in the world for investment. But I want to ensure that all this money is clean money. There is no place for dirty money in Britain. Indeed, there should be no place for dirty money anywhere."

British Prime Minister David Cameron made it clear that as he delivered an anti-corruption message with his visit to Singapore, Malaysia and Indonesia to meet with political and business leaders, that his country desires clean investment funds.

UK's foreign policy seeks not only to serve the British national interest but also to establish minimum moral and ethical standards in a world increasingly dominated by greed and self-interest.

The UK housing market saw a spring and summer boom in 2014, particularly in London and the South of England, before activity dropped away a little towards the end of the year.

Recent changes to stamp duty have little effect and the bank rate – a key factor in determining the level of mortgage interest rates – could have a bearing.

The problem is partly due to many Local Councils stopped building new homes. Last year in England they built just over 1,000.

Meanwhile, on waiting lists for council houses, 1.4 million people were sitting with their fingers crossed.

Overall, the number of affordable homes being built is running at about a third of the 75,000 a year the UK needs, compared to the 5,000 a year that Sabah needs for the low-income groups to alleviate the squatter problems realistically.

Sabah PAM head Ar Hj Shahriman Abdullah said the viable option is by IBS. A housing project in Tuaran is putting up more than a hundred permanent homes within months, not years.

Like many Malaysians, many Britons have been brought up with 'getting on the property ladder' as a major life goal. But is the ladder disappearing. The first time "property ladder" appeared in the Times newspaper was the year 1981.

A rung on a ladder isn't an end in itself, it's a means to somewhere else - to a stake in society, to greater wealth, to a bigger, better place in a few years' time. Financial security, a sense of belonging, and good life aspiration, have all been wrapped up in bricks and mortar.

For millions of people under the age of 40 the property ladder has become a snake instead – unsettling and threatening, the very antithesis of the stability and security that a home ought to bring.

For people who are renting, the failure to do the big thing – to build enough homes – has led to small policy steps which could add to the growing issue of insecurity.

"We need to make the global business environment more hostile to corruption and to support the investigators and prosecutors who can help bring the perpetrators to justice."

"Fifa is a lesson about tackling corruption that goes far deeper. Corruption at Fifa was not a surprise. For years it lined the pockets of those on the inside and was met with little more than a reluctant sigh. The same is true of corruption the world over. Just as with Fifa, we know the problem is there, but there is something of an international taboo over pointing the finger and stirring up concerns. But we just don't talk enough about corruption. This has got to change. We need to find ways of giving more support and encouragement to those in business, civil society and the media who are working to fight corruption as the more corruption in your society, the poorer your people are," he said in the recent past.

In 2014, Britain attracted foreign direct investments of £1 trillion and its exports more than doubled.

Cameron who was pitching for investments to the north of London brings home the point that cities like Bradford is worthwhile for Malaysian property investors to consider.

Bradford is akin to the Bangsar of Kuala Lumpur that is popular with youngsters and yippies and the hip crowd being the fifth fastest growing area outside of London. The increasing population, housing demand and prosperous business sector in Bradford is keeping prices affordable, offering great stability, and acting as a safer bet for capital growth than most other region in the UK.

Property prices have grown by 112 per cent over the last six years, against a national average of 67 per cent.

City centre prices in this period outperformed national growth with a 90 per cent increase offering the most appealing capital growth potential.

For example on the investment overview for a residential strata unit from RM308,000 onwards at Midlandmills with the completion date scheduled for October 2016, if an investor pays the purchase price of RM346,920 for a better unit, your guaranteed ROI for 52 weeks or one year is estimated at RM35,235. After deducting ground rent of RM1,400, refurbishment cost of RM1,120 and service charge of RM5,119, your net ROI is about RM27,597. After five years your ROI is estimated at RM137,983 or about 40 per cent.

The top five reasons to invest in north of London like Bradford is a growing population of 2.2 million about twice of Kota Kinabalu with 8.6 million tourists and visitors each year with most importantly excellent transport links with London and airports. Hence, there are a lot of international companies developing within Bradford City centre providing high rental property demand for well-paid city workers and students as the city has one of the largest university campuses in Europe.

Cameron said in 2014, the top 25 British companies in Malaysia, with total investment of £17.2 billion and still growing, created 70,000 jobs. Bilateral trade between Malaysia and Britain is expected to exceed RM40 billion by 2016.

In 2013, Cameron led a mission to ensure Britain's network of overseas territories and Crown dependencies, like Cayman and British Virgin Islands, signed up to a new clampdown on tax evasion, aimed at promoting transparency and exchange of information between tax jurisdictions.

"We need to know more about who owns which company – beneficial ownership – because that is how a lot of people and a lot of companies avoid tax, using secretive companies in secretive locations. By lifting the shroud of secrecy, we can stop corrupt officials or organised criminals using anonymous shell companies to invest their ill-gotten gains in London property, without being tracked down," he said.

UK Estate agent Savills has predicted that over the next few years house prices will rise no faster than 5 per cent per annum from 7.2 per cent in 2014 flushed with the effect of government stimulus measures on the housing market and prices in 2014. Prices in London rose by 17.8 per cent over the course of the year, according to the lender, compared with 1.4 per cent in Wales.

It is predicting UK property price growth of 2 per cent in 2015, 5 per cent in 2016, 5 per cent in 2017, 3 per cent in 2018 and 3 per cent in 2019, a skill that is found wanting with Malaysian estate agents keen to please property owners by pushing up prices and property valuers fixated with the comparative methods, sitting in the office, looking at Napic captured figures, adjusting with their knowledge to differentiate their opinion with various variable input factors.

However, predictions can always be thrown out by unexpected events, and longer-term estimates must be treated with even more care.

Some are members of the Royal Institution of Chartered Surveyors (Rics), now with some in the Institution of Surveyors Malaysia doing a report on why home prices went up so much in parts of Sabah. If the report does not mention graft besides other factors in the government and private sector contributing and compounding the issue, it is not credible. Rics global residential director Peter Bolton King opines that house prices in London will be unchanged in 2015 compared with 2014. This will restrict UK house price growth to 3 per cent in the year to come.

Cameron called for Malaysian investors to look at investment opportunities elsewhere in Britain, particularly the northern side to go beyond Battersea to explore opportunities elsewhere in Britain.

Northern England, with a population of 70 million, has over 600,000 businesses, and was a driving force of the UK economy.

"I want you to take advantage of the Northern Powerhouse building and benefit from the Western hub of Islamic finance that is in London," he said.

Cameron since winning an election in May said Malaysian investors should adopt a 'can-do' attitude in their investments in UK. A 'can-do' attitude is also desired for the success of the '0' squatters policy, coupled with a non-corrupt zeal as a building professional puts it, an abandoned housing PPR project needed RM30 million to salvage and complete, was awarded for RM60 million.

Australia lately has also embarked on measures to discourage the laundering of corrupt funds, particularly from Mainland Chinese seeking emigration and permanent residency status through property investments and purchases.

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