Foreign exchange firm recommends forward contracts for off-plan purchases
Prospective investors looking to purchase off-plan property should consider making forward contracts to take advantage of the current trading strength of sterling, according to a foreign exchange firm.
With the pound currently set against $2 - the highest level since 1975 - HiFX is encouraging property investors to pay for assets using forward contracts, which set the exchange rate at its current level and allow the balance to be paid off at this rate at a later date.
Usually, clients would pay a 10% deposit and pay the 90% balance off at the maturity date of the contract.
HiFX claims this could be particularly important for off-plan investments, as the average purchase time for this type of property often ranges between 6 and 24 months.
Mark Bodega, HiFX's marketing director, explains: "Forward contracts are a great way for people looking to buy overseas to take advantage of the current favourable exchange rate."
He added that without a forward contract, property acquisitions are subject to exchange rate fluctuations - something that would be akin to agreeing to buy a property in the UK without knowing how much it will cost.
A recent surge in UK consumer price index inflation pushed sterling over the $2 for the first time since 1992 earlier this week.
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