UK real estate is loved by many overseas investors as it offers high growth and attractive yields, in a politically stable environment.
According to the Centre for Public Data, foreign ownership of properties in England and Wales has trebled since 2010 to around 250,000, with 8,500 properties purchased in 2021. This shows the continuing attraction of UK property ownership. Buyers were spread across 20 different countries with buyers from the Middle East and South East Asia leading the way. With strong house price growth, the UK property market continues to provide excellent investment opportunities. It has been widely reported that Average UK house price exceeds £260,000 for first time earlier this year.
London has traditionally been targeted by non-residents looking to invest. Despite London’s price growth being at a 13-year low, the average property price has there has increased by 67 per cent since 2013. The 2022 property forecast shows there are better places to invest in the UK.
Foreign investors have followed suit. They have recently been looking for alternative British cities to invest in. Large scale developments in cities such as Manchester, Liverpool and Leeds have significantly increased non-resident ownership. There is a Housing Stampede in the Northwest with a number Emerging hotspots in the Greater Manchester Area as overseas investors have been lured by the high growth and attractive yields which these cities offer.
When overseas individuals are looking to purchase UK property, there are some key points to consider:
Firstly, location remains a critically important consideration. Key drivers are transport, regeneration, and the potential for this to drive capital appreciation.
Secondly, property type is an important consideration, focusing on the remaining years left on a lease as well as the building structure. Buyers are asking how the purchase will be funded; will finance from an international bank be required? And if so what are the likely fees and costs to consider?
Thirdly, non-residents are taking time to select appropriate professional advice. They want to keep it simple, staying clear on investment objectives and remaining focused on these goals throughout the purchasing decision.
Brokers also have a lot to think about when selecting which lenders to work with when selling to overseas buyers. They need know the lending requirements for each lender. Additionally, clients have to provide higher deposits, typically 25 to 50 per cent, depending on the client’s circumstances. Most lenders also require an account to be opened alongside the mortgage to facilitate the monthly payments and receive rental income for buy-to-let properties. Although there are a number of specialist brokers outside of the high street who have more flexible terms.
There have been a number of political and economic changes that will impact overseas buyers in future years: The introduction of the two per cent stamp duty surcharge from 1 April 2021 is one rule. A register to identify overseas property owners in another. In January 2021, there were also changes to the visa application process for British National Overseas (BNO) passport owners in Hong Kong. Many overseas investors are also considering buying via a limited company. Advantages Of Buying Property Through A Limited Company can potentially be a way of getting around the two percent stamp duty for some overseas investors.
In 2022 we have seen continued interest from foreign buyers. As interest rates and political pressure to regulate or restrict purchases from foreign investors remain low, this trend to buy UK property is likely to continue for a long time to come. check out our latest developments for great value property.