Property investment could soon be regulated for the first time, according to one leading player, Assetz. Its view is based on the Financial Services Authority's publication of the Mortgage Market Review, which proposes to bring in strict affordability tests for buy-to-let mortgages among other measures.
Liam Bailey, Knight Frank's head of residential research, said: "It now appears that house prices are starting to stabilise across the world. The latest results from our Global House Price Index show values increased in almost half of the locations reporting price changes for the second quarter of the year. Significantly, quarterly price falls accelerated in only 22 per cent of the locations and did not exceed 10 per cent in any country. This compares with double-digit falls in a number of locations during the first quarter."
The publication of these proposals is aimed mainly at the UK residential market, but it also raises the question of whether investment in – and the financing of – overseas property could soon come under regulation. Currently, there is no statutory regulation of selling overseas property in the UK, which means that there is relatively little in the way of protection for buyers.
There are two organisations, the Association of International Property Professionals (AIPP) and the National Association of Estate Agents' (NAEA) international section, that each operate a code of practice for their members in selling property overseas. Paul Owen, chief executive of the AIPP, says he thinks the FSA's proposals are unlikely to have any impact on those buying – or selling – overseas, pointing out: "If you are raising the money overseas, then what the FSA is doing is irrelevant."
There is a European Union initiative to introduce self-regulation of international property sales across the EU, says Owen, but it is already way behind schedule. In the meantime, he argues, the best protection that buyers can obtain is to ensure that they only buy through agents who are members of AIPP or NAEA International.
"What consumers want to know is that they will be able to get redress in the UK if the company they are buying from breaks the rules," he says. Since AIPP was set up, seven members have been expelled for breaking the rules, and in some cases agents and developers will only deal with other companies that are AIPP members. The prospect of any significant statutory regulation of overseas property sales is remote, says Owen. "At the end of the day, if you buy a property in Turkey, that is where you sign the contract, and there's not much the government here can do to control that."
The AIPP's new Consumer Guide can be downloaded from the organisation's website www.aipp.org.uk
Alexander Garrett is a freelance property writer who contributes regularly to The Observer and British Airways' Business Life.