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June 23, 2020

Why Expat Investors Should Still Buy UK Property

Even although the global health pandemic has negatively affected millions of businesses, the UK property market continues to thrive. Rory van den Berg explains why.

With Q2 of 2020 over, it’s fair to say that this year has been a shock to the system. While the threat of COVID-19 has been grinding to a halt, the global economy has continued to suffer.

There is a silver lining, though.

As with all economic events, the media and public tend to focus on the negatives rather than on the opportunities these events create. While the cause is undoubtedly unprecedented, the fact is that COVID-19 presents opportunities like any other market disruption.

For foreign investors looking to capitalize, the UK property market is ripe with potential.

Over the last century, UK real estate has continued to deliver stable, predictable returns for investors despite volatility. The ease of entry, low capital requirement, regular income, and deductions on offer make investment properties a go-to choice.

Beyond the basic benefits, property in the UK provides unmatched performance for property investors. Currently, the UK is the best property investment location globally, with London ranking #2 among cities.

Why Should You Buy Real Estate In The UK?

The UK is uniquely structured to offer a range of benefits to property investors, both foreign and local.

COVID-19 Market Crash

The UK property market was one of the best in the world before COVID-19, and this is still the case. Property prices are 18-20% above their previous peak, most cities in the UK are well priced, and mortgage rates are at record lows.

Looking forward, the disruptions caused by the pandemic will inevitably lead to a drop in the housing market in 2020/2021.

The only question is, “How much will the market drop?”

As always, there is no right or wrong answer to this question, as expert opinion varies. One thing everyone agrees on though is that there will be an opportunity to buy real estate in the UK at a discount.

From what we could find, estimates ranged from a modest 4% to an extreme 20% reduction in housing prices.

In either case, the savings on an average investment property valued at £234,742 is worth paying attention to. For foreign investors, savings could range from £9,388 to £49,900 depending on the severity of the crash.

As for what happens next, most experts expect UK property prices to return to post-crash levels within 6 – 24 months.

Low Housing Supply

The UK is the second most crowded nation in the EU/G7 with 395 people per square kilometre. The rapid growth in population and popularity alone is enough to create an insatiable demand for new rental properties.

To keep up with demand, the UK would have to create 300,000 new houses annually. As many critics have shown, the UK is consistently failing to meet this goal, and the housing supply is currently at a 100-year low.

As you know, when demands skyrocket and supplies are scarce – growth is rapid. If the UK continues to expand and fall short of its property quota, it will remain an incredible investment opportunity for buy-to-let investors.

Leading Legal System

For foreign investors, considering the legal system of the country you plan to invest in is critical. Factors such as stability, fairness, and corruption can all have a major effect on your investment.

There are many countries where land & property rights are loosely regulated which could put your investment at risk.

In the UK, this is not a concern as the local legal system is transparent, trustworthy, and takes good care of investors. The odds of you being robbed of your investment in the UK are slim to none.

They are also welcoming of foreign investors, and have made the foreign investment process straightforward and achievable. With the right guidance, practically any foreign investor can buy property in the UK.

Rising Rental Potential

With homeownership and social renting on the decline, the demand for quality private rentals is on the rise. Estimates suggest that 24% of households in the UK will be private rentals by 202, which equates to 5.8 million homes.

This rise in demand for private rentals makes the UK an excellent choice for foreign investors. That’s not the only reason, though.

Rental yields are also predicted to climb by 15% in the next 5 years. As we explained earlier, while demand is going up – the availability of new rentals is struggling to keep up with the change in pace.

Enhanced Infrastructure

The UK has been making significant investments in its infrastructure that are set to improve connectivity drastically. As you know, increased connectivity brings with it increased housing prices and higher profits for investors.

One of the massive infrastructure projects is the Crossrail in the South East which will transform access to and from London. Since its launch in 2009, housing prices within a mile of the Crossrail have surged by a whopping 66% on average.

Low Unemployment

Pre-pandemic, the UK’s employment rate hit a record high in 2019 of 76.5%, which is the highest it has ever been. This incredible abundance of employment means that those who live in the UK should almost always be able to pay the rent they owe to buy-to-let foreign investors.

The UK is Hard To Beat

The information above should paint a clear picture of the opportunity that the UK the property market presents to foreign investors. For buy-to-let investors, the UK meets all the requirements of a top investment location.

What’s Holding You Back?

It’s a common misconception among foreign investors and expatriates that investing in UK property is incredibly difficult, but this is not the case.

As an expert property investment company, we have created processes and systems that enable overseas investors to safely and efficiently invest in UK property and enjoy the benefits that this exciting asset class has to offer.

Through our fully comprehensive end-to-end service, we source unique projects, appoint quality solicitors, find the best mortgages, and ensure properties are let out to the right tenants giving our clients complete peace of mind. 

For more information on the above,
Contact us here
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Article by: Rory van den Berg