Is Buy-to-Let Still Worth It for UK Expat and Foreign National Investors in 2023?

buy to let 2023

Buy-to-let investments have been performing even better than usual in recent history. This is largely a result of rapid house price growth and high rental demand, which has meant that people have remained in the rental market after high property prices have barred them from property ownership. As a result, UK expat and foreign national investors have been seeing huge returns on their investment.

However, while buy-to-let properties have been performing very well in the rental market, potential UK expat and foreign national investors have been reticent to invest with increasing interest rates massively raising the cost of borrowing.

Positives of Buy-to-Let in 2023.

UK buy-to-let property is one of the most consistently performing methods of investment. This is partly because there are two distinct ways that buy-to-let properties earn money. The first way is through rental income which provides monthly revenue. Often, this money is used to pay the mortgage repayments as well as any maintenance costs that need to be made. However, with high rental demand and low supply pushing up rental incomes by massive amounts, monthly rental incomes go far beyond covering these costs. According to data from the Land Registry, average UK rents rose by 5.1% between June 2022 and June 2023.

The second way that buy-to-let properties earn money is through the long-term capital growth of the property. This is the amount the property appreciates over time. UK property has a strong recorded history of great growth as an asset. Over the full term of a mortgage, this is likely to mean that a UK expat or foreign national investor will earn huge returns. In the last five years alone, UK properties have risen by an average of 26%. This means that UK property offers much larger returns than most other forms of investment and earns in both short-term and long-term ways.

As an asset class, UK property is also very stable, which makes UK property a very unique asset: near-guaranteed stability and profitability is a rare combination for any asset class. And neither the profitability nor stability of UK property is likely to change either, as high demand is set to continue for the foreseeable future. This is due to the massive deficit in the number of properties being constructed compared to demand, which means that the supply-demand imbalance is unlikely to be corrected. Rental growth has already been massively stimulated by this imbalance, and the continued imbalance will only further push up the profitability of rental property as well as the overall stability of UK property as an asset, as prices are unlikely to fall while demand is so high. So, the age of short void periods, high tenant demand and high rental profits is likely to continue for the foreseeable for UK expat and foreign national investors.

Falling Property Prices Bolster UK Investment Proposition.

For conservative UK expat and foreign national investors, it would be easy to look at property prices in the UK and be fearful about buy-to-let in 2023 – UK property is relatively expensive, even compared to the last few years of the market. As we mentioned, high demand and low supply are contributing to high prices, as well as huge property price rises during the pandemic. And high mortgage rates driven by the Bank of England’s rising base rate are not helping would-be investors either. However, as we mentioned, UK property is an asset that is going to continue appreciating over time, so an investment property that is bought now will still be worth far more in the future. Further, prices are falling at the moment, so it is a good time for UK expat and foreign national investors to utilise one of the excellent UK expat and foreign national mortgage products to purchase a property before mortgage rates stabilise and property prices start to climb again.

According to Zoopla, in the 12 months to 2023, the average UK house price had fallen by 1.1% (£2,830). Further, prices are falling in all regions of England. This is significant as it’s only the second time that Zoopla has registered annual price falls for more than a decade (the other time being last month when house prices fell 0.5% compared to the previous 12 months). This trajectory is unlikely to change with mortgage rates holding firm and incomes not rising enough to offset high house prices and higher mortgage rates. Because of this, it’s likely a great time for UK expat and foreign national investors to get into the investment market while prices are trending downwards, but the rental market is booming.

How Can an Expert UK Expat or Foreign National Mortgage Broker Help?

Because of the inherent risks and rewards involved in investing in UK property, one of the best things potential UK expat and foreign national investors can do is to utilise an expert UK expat or foreign national mortgage broker. An expert broker can help to determine a sensible budget, establish the investor’s risk tolerance, the length of investment and what type of property best suits the investor’s needs and goals.

However, the most important role of an expert UK expat or foreign national mortgage broker is to help make the investment process as cost-effective and simple as possible. To this end, a broker can navigate many of the pitfalls often faced by UK expat and foreign national investors. Further, they have access to exclusive deals and are able to find the most competitive rate for UK expat and foreign national investors, to make sure that the rental yield is as high as possible and monthly costs remain as low as they can be.

Liquid Expat Mortgages
Suite 4b, Link 665 Business Centre,
Todd Hall Rd,
Haslingden, Rossendale
Phone: 0161 871 1216

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