Investing in UK property market has been a lucrative, stable and profitable investment option for non-UK resident for more than a decade from the proven record. Since significant socio-economical changes that have happened from the year of 2008 in which global financial crisis have made property assets, especially the UK property investments, even more attractive to global investors. There are a lot of favorable factors that reveal the potentials of relative high return in the UK property investment.
If you are interested in investing in UK property or simply want to know more about this investment option, Prop Home Ltd. is here to offer you every possible assistance. With our decades of experience in the property market and housing management, our specialists are ready to offer you detailed information and free consultation. Contact us today or give us a call any time when you feel convenient. We can even conduct a video conferencing that suits your time zone.
A Non-UK Resident Investing in UK Property Market: Opportunities and Difficulties
Investing in UK property market has been a lucrative, stable and profitable investment option for non-UK resident for more than a decade from the proven record. Since significant socio-economical changes that have happened from the year of 2008 in which global financial crisis have made property assets, especially the UK property investments, even more attractive to global investors.
There are a lot of favorable factors that reveal the potentials of relative high return in the UK property investment. Let’s anaylze further into them so that you, as a non-UK resident, can see for yourselves if you should consider investing in UK properties.
Low Exchange Rate
The result of the 2016 EU referendum and its direct result of the Briexit has had a significant impact on the value of £GBP. There can be seen an abrupt fall of around 15% overnight and so far, £GBP is still lingering within a recent low that its rate has yet to be recovered from since then. The weak currency and low exchange rate has provided a great opportunity for foreign investors whom is to invest in UK property. The UK property, even though has undergone a consecutive upward trending for a decade or so, is still being considered a very affordable investment option for those investing using non-GBP money sources. The current devaluation of £GBP along with the increasing rental market offer non-UK based investors a golden opportunity and window to invest in UK property.
Expected Rising Trend
Property experts and researches shown that a long-term bull market trend is expected in the UK property prices. This has significantly strengthen the non-UK investors’ confidence in building mid to long-term investment profolio in UK property market.
Increasing Rental Demand
As the younger generations struggle to afford deposits to buy property, the UK is seeing an ever-increasing demand for renting. The trend for renting property in the UK is constantly increasing in which with 25% of UK citizens under 40 are renting property, while around 40% of the total population is living in rental property.
High Yield of Buy-to-Let (BTL) Property in UK
The proven track record of overall potential return on investment (ROI) of UK property is between 5% and 12% per annum. Under the current unstable and fluctuating economic situation and investment market, UK property’s ROI and its stable and high cash flow become very lucrative to global investors.
Low Interest Rates
While there are various costs associated with BTL property investments in UK, low interest rates in mortgage arrangement has created a great environment for property investors. Alongside with UK property’s guaranteed income schemes and the rising strong rental demand infer that investors can expect to see a stable and long term excellent cash flow return of between 5% and 12% per annum on BTL property.
Foreseeable Shortage of Property Supply
One of the biggest factors for anyone looking to invest in UK property is the disparity between supply and demand. Statistics tells us that every year, there are around a shortage of 50,000 housing. Some researches further confirm that UK renters will outnumber homeowners by 2039. This means a nearly 125 million households in a private rented sector set to grow by 24% by the next few years. This simply strengthens the view of the advantage of property investment in the UK in which the residents are heavily trending towards renting but yet the market cannot deliver enough supply to meet the rising demand.
Having listed all the pros of investing in UK property, we would point to the facts that there are also some difficulties and pitfalls that a non-UK resident may face. However, luckily, those risks and concerns associated with UK property investments can usually be avoided and solved.
As a non-UK resident, one may not be very familiar with the UK tax rules. Ensuring that you can stay compliant with tax rules is important. This is likely that you have to hire a specialist to complete any tax returns as well as ask for professional advice.
Fluctuations of Exchange Rate
As a foreign investor, when making a decision in investing into UK property, one should be fully be aware of the potential changes to the value of the currencies. The changes in the exchange rate can impact your affordability as well as ROI in term of your money source. Do prepare for the scenarios of such fluctuations and hence, find ways to some financial specialists to see if you need any hedging scheme to lower the risk.
Sourcing the Property
Although UK BTL property can render investors an annual return of 5% – 12% on average, one of course wants to maximize the ROI. As a non-UK resident without too much understandings and knowledges in UK property markets, sourcing the right property that can provide highest yield and higher potential of appreciation become the utmost issue. Doing your own homework is a must, yet further than that, investors must also get to find a trusted local property agency that can offer accurate information and advice.
Applying for Mortgage
Property investment usually incurs rather larger total investment amount. Most of the case, investors will seek for mortgage so that they can save their capital for investing in multiple properties. Finding the right agency or mortgage advisor can make the property’s mortgage application smooth and easy. And they can even help investors saving cost and gaining a higher amount of loan too.
Cost of Maintaining and Managing BTL Property
BTL property will surely render cash flow for the landlord. However, one must be aware of the costs and try your best to keep them to a minimum. However, for non-UK resident whom are new to UK property investment, understanding them thoroughly may not be too easy. Various cost like hiring agency to find tenants, maintenance, repair and refurbishment of the rental property as well as monthly rental collection can be something quite costly if you can’t find a reliable property management agency.
If you are interested in investing in UK property or simply want to know more about this investment option, Prop Home Ltd. is here to offer you every possible assistance. With our decades of experience in the property market and housing management, our specialists are ready to offer you detailed information and free consultation. We can conduct a one-to-one direct video conferencing that suits your time zone. Contact us today or give us a call any time when you feel convenient.