Rents Reach Their Highest Level in a Decade.
Rents are at their highest level in a decade, having increased by an average of £120 or 11.5% in 2022 alone. This is mainly driven by new lets, although even those staying in their current rental property are seeing an average rent increase of 4.2%. There are a number of factors behind the rent increase, but the main cause is a mismatch between supply and demand in the rental sector. There are more households in the rental sector as a result of high mortgage rates, high house prices, and the cost-of-living barring would-be buyers from home ownership. However, there are also more households in the rental market in general, many of whom are living there as a choice. Property portal, Zoopla, is expecting rents to increase further in 2023, though more slowly than they did in 2022. This is as a result of continued tight supply with a low level of investment from private sector landlords. Meanwhile, strong employment, high wages, and borrowing difficulties for would-be buyers will continue to stimulate demand in the rental market.
‘With this, and many other factors in mind, it’s an excellent time for UK expat and foreign national investors to purchase a buy-to-let property’ says Stuart Marshall. ‘Many of our discussions with prospective UK expat and foreign national buyers at the moment are centring around where to buy. Of course, with rents so high, it’s important to find the right area to maximise the profitability of the investment.’
Where to Invest.
Renters are currently on the hunt for flats, city centre properties, and environmentally friendlier properties. This is good news for UK expat and foreign national investors as these properties are highly mortgageable, allowing UK expat and foreign national investors to utilise some of the excellent UK expat and foreign national mortgage products that are available. When it comes to deciding where to buy, narrowing the search down to specific regions is a good idea. The standouts are London, Scotland, the North West, Wales and the Midlands, with respective annual rental growth of 16.1%, 12.5%, 11.3%, 11.2% and 10.1%. The rental increase in London is unsurprisingly high as the capital continues its post-pandemic recovery. ‘However, London is typically only good for experienced investors, investors with a big budget or those with a specific purpose. Many of the other regions will present better investment propositions for first-time UK expat or foreign national investors. These regions are also much more affordable and are home to desirable rental locations.
As a result of their massive popularity for renters at the moment, city centres have seen the biggest rental price increases. When looking at city centres in the regions mentioned above, Glasgow, Edinburgh, Cardiff, Birmingham and Nottingham all jump out, with rents having increased by 13.1%, 12.7%, 11.7% and 11.4% respectively.
UK Expat Investment Location Spotlight: Manchester.
The North West has quickly become a real prime location for investment outside of London, with thriving cultural and economic scenes drawing both renters and homebuyers. Large numbers of young professionals are also drawn to key cities like Manchester, where excellent employment opportunities and regeneration schemes are giving good reasons to move for those wanting to get out of London with young families. The North West also presents an excellent proposition for investors as house prices are far lower than in other locations in the country, meaning UK expat and foreign national investors are more able to find prime real-estate in the city centre.
As a result of the North West’s popularity, Manchester is a standout when it comes to city centre property locations. The average rent is now £977 per month, an annual increase of £126 or 14.8%. In particular, rents in inner Manchester, Trafford and Salford are growing faster than anywhere in the North of England, with rental increases in excess of £140 in the last year. ‘The demand for city centre property is really being exemplified in places like Manchester, where the price for new tenancies is increasing by 15%. And it’s no surprise when property retail giants like Savills are spotlighting areas like Manchester. The relative affordability of investing in Manchester is also incredibly enticing for UK expat and foreign national investors.’
‘While the spotlight is often on the inner Manchester areas, there is also a lot of excitement to be found in the surrounding areas, with areas like Stockport enjoying their fair share of the limelight. Commuter areas like Stockport often enjoy extremely close proximity to the city centre and great commuter links, alongside lower prices for investors and enticing lower rents for renters. There are many new property opportunities in these areas alongside existing stock, and many properties are highly mortgageable for UK expat and foreign national investors utilising UK expat and foreign national mortgage products.’
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