Is the trend for High-Net-Worth individuals buying a country retreat set to continue post Covid-19? What opportunities does this create for brokers?
A quick glance at history reveals that High-Net-Worth (HNW) individuals have, over the centuries, resided in rural property during periods of public health crisis, helping them avoid highly populated areas and the risk of infection. In many ways today’s pandemic situation is no different with a surge in more affluent homeowners moving from our big cities to the countryside during Covid-19. This trend has not only provided increased opportunities for lenders and mortgage brokers servicing the HNW sector over the last year, but looks likely to remain.
History repeating itself
1665-6 was the last major epidemic of the plague to occur in England. As was normal, the plague concentrated in London with the HNW individuals of the time (Including King Charles II) moving from the capital to their country estates to better avoid the disease. Even parliament was held in leafy Hertfordshire, where our Society is based, to avoid the disease during an earlier outbreak.
There are numerous more examples. Later in history instances are linked to respiratory conditions associated with the industrial revolution, right through to the clean air act being implemented in the 1950’s leading those that could afford it, to live more permanently in rural areas that were better suited to a healthier way of living.
Today’s escape to the country
A housing survey undertaken during the 2020 Covid-19 pandemic by the London Assembly Housing Committee* illustrates a modern day equivalent of moving to lower risk areas in relation to health. The survey findings outlined that one in seven Londoners (14 per cent) wanted to leave the city as a result of the COVID-19 pandemic. Financial uncertainty and the cost of moving were cited as the two biggest reasons for those surveyed not being able to move home, a factor seemingly less relevant to HNW individuals who, with greater flexibility provided by wealth, have been able to lead the charge when it comes to moving out to a more rural location over this last year.
New types of property in demand for HNW individuals
Paul Welch, Founder and CEO of largemortgageloans.com, specialising in mortgage solutions for HNW individuals sheds further light on the situation.
“It’s been an extraordinary year in the HNW space with significant change seen with regard to demand versus location when it comes to financing a high end property. One of the most notable features for us during Covid-19 has been the significant number of our HNW clients looking to move from the city, out to the countryside. In our experience, demand to own bigger properties in a rural location surrounded by wide open space has never been greater.”
“Over the past year one of the primary motivations for a rural relocation has been to move away from the risk of Covid and with accelerated use of improved technology, this has enabled our C-Suite customers, business owners, and wider HNW individuals to operate from locations away from the cities. There’s no longer the need to live close to the ‘traditional’ office, it’s never been easier to manage affairs from a rural, home base.”
Welch continues: “Far more emphasis is now being placed by HNW individuals on time with family: healthier living; better access to the great outdoors; home entertaining space and of course, home offices. Despite normality beginning to return and some entities opening their offices again we believe HNW individuals having sampled rural living, will be reluctant to give it up, retaining the demand for quality, high spec properties in a more rural location.”
So what should be considered by the broker when choosing a lender to partner with in these HNW circumstances? Welch adds:
“Choosing the right lender to work with, in an often multifaceted mortgage situation, is key to securing the right mortgage solution for our clients. Many high street institutions will not look beyond their standard lending criteria so of course the complex incomes of many HNW individuals may not fit their lending model. Other considerations are also important. It may sound simple, but being able to get answers from a lender in a timely way, when you need them; working with underwriters who have specialist experience in the HNW sector and having products that are fairly priced and relevant, are all important considerations for us when selecting a lender on behalf of our clients.”
At Harpenden we have a long tradition of servicing the HNW market. Specialists like ourselves, experienced and knowledgeable in this sector, spend time assessing complex income structures, looking at cases on an individual basis. In our experience, it’s time well spent. Working through the analysis on a case and exploring all possible solutions, often creates a successful conclusion. A personalised, highly analytical and creative approach to lending remains important to us when supporting brokers operating in the HNW space going forward.
Jean Errington
Business Development Manager, Harpenden Building Society
*Source: www.london.gov.uk/press-releases