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For first time UK expat and foreign national landlords, it is difficult to know how to go about investing in UK property. There has been a huge surge in the numbers of first time UK expat and foreign national investors recently so Liquid Expat Mortgages looks at some of the common questions and concerns raised by first time investors.
Why Invest in UK Property?
There are so many reasons for UK expat and foreign nationals to get involved in the UK’s investment property market. With property prices growing at their fastest rate since 2004, there are good signals that property prices will continue to increase. For this reason, investing in UK property now almost guarantees a good capital return in the future. This can contribute to a pension plan, serve as a UK residence if UK expats retire from working abroad, or become part of an inheritance package.
Aside from the long-term profitability that comes from capital growth, month-to-month rental income is also highly profitable for UK expats and foreign nationals. Monthly rents are currently averaging £1061 pcm, which is the highest ever recorded. It is these continually growing house prices and strong rental opportunities that contribute to the relative security of UK property as an asset class which continues to be one of the best investment decisions UK expat or foreign nationals can make.
3 Ways to Invest.
‘UK expat and foreign national property investment is a huge, wide world, full of options and possibilities’ says Stuart Marshall. ‘For this reason, it’s often difficult for first-time UK expat and foreign national investors to know where to start. Typically, we would recommend long-term buy-to-lets, student properties, and off-plan properties as these are usually the simplest and most accessible. These are also incredibly popular choices for UK expat and foreign national investors at the moment.’
‘A long-term buy-to-let rental property is usually the most popular choice for first-time UK expat and foreign national investors as it’s simple, there is a wide availability for mortgages, and the returns are great as they come from both long-term capital growth and monthly rental income. At the moment, the most popular choice for long-term buy-to-let investment is city centre flats. This is because the youth market is driving the rental sector and many younger people are preferring city centre rental flats to be close to work hubs and for social opportunities. Younger people are also more likely to rent for longer and have more disposable income. Further, city centre flats are also highly mortgageable and more affordable than many houses, which makes them an excellent choice for first-time UK expat and foreign national investors.’
‘Student properties are also incredibly accessible to first time UK expat and foreign national investors. They are also far more affordable, so are an excellent choice for UK expat and foreign national investors with a lower deposit amount. We often recommend student properties to UK expat and foreign national investors looking for a hands-off investment as they are usually maintained through a dedicated student property management company so give very little for investors to deal with. Student accommodation is a growing sector in major cities because the number of students continues to rise, which means that UK expat and foreign nationals who invest now will have a profitable investment for many years to come.’
‘Another popular investment choice is off-plan property. This method is popular at the moment because new builds are faring well as a result of of their improved environmental efficiency, which makes them attractive to both tenants and UK expat and foreign national landlords. Often, this would be the method of investment that we’d recommend least out of the three we have examined, as off-plan investment comes with added layers of complication that are not there with regular buy-to-let or student property investment. However, for UK expat and foreign national investors looking for a long-term let, off-plan investment can be an excellent choice for an affordable investment method as off-plan properties are usually offered to investors below market rate. For first time UK expat and foreign national investors considering off-plan investment, it is of vital importance to have the help of an expert UK expat or foreign national mortgage broker. Off-plan has many pitfalls and if not properly navigated, these can prove fatal to the success of an investment.’
Be Aware of the Costs.
Having an awareness of the associated costs of buying a rental property is important for any first time UK expat or foreign national investor. The success of the investment will be largely dependent upon navigating these costs and making sure that the investment is returning more than is being spent. These costs can be broadly split into the upfront costs (which involve things like Stamp Duty and the deposit for the property), the ongoing costs (such as mortgage repayments and maintenance costs), and the exit costs (which include the expenses that come from selling the property, such as capital gains tax).
The biggest associated cost of purchasing an investment property is, of course, the deposit. Looking at the average cost of property in a given area is a good way to establish a ballpark figure of how much is needed to make an investment. According to Zoopla, the average cost for a UK property in the last 12 months has been £312,201. However, this varies massively dependent on the type of property. For example, the average cost of a flat is £247,323, while a terraced and semi-detached averaged £269,114 and £291,345 respectively. As a general rule of thumb, UK expat and foreign national investors should look to have around 25% of the total value of the property as a deposit. This will be a great place to start.
Other associated costs of buying a UK investment property will vary depending on many factors. For example, the ongoing costs of the property will differ depending on whether or not the investor employs the use of a rental management company or not. In navigating all of the associated costs of investing in a UK rental property, the best tool available is a UK expat or foreign national mortgage broker. These brokers are particularly important for first time UK expat and foreign national investors and can help them to understand every stage of the investment and speed the process along, saving time and money.
UK Expat and Foreign National Mortgages Going Strong.
‘UK expat and foreign national investors are in a very privileged position at the moment, as there are a wide range of mortgages available. While buy-to-let mortgages usually demand a slightly higher deposit than a normal residential mortgage, they also facilitate excellent investments, and the higher deposits will pale in comparison to the huge returns possible by using a UK expat or foreign national mortgage.’
Liquid Expat Mortgages
Ground Floor, 3 Richmond Terrace,
Ewood, Blackburn
BB1 7AT
Phone: 0161 871 1216
www.liquidexpatmortgages.com
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sergio@ulyssesmarketing.com
+44 161 633 5009
