UK Buy to Let Popular for Overseas Buyers
UK property is proving an attractive choice to overseas buyers – thanks to low interest rates and the current Stamp Duty Holiday.
But the clever foreign investors and UK ex-pats know they need to buy now. That’s because after April 1, 2021 they will have to pay an additional two per cent in Stamp Duty charges.
At present UK and foreign buyers in England are enjoying a Stamp Duty Holiday where there is no charge on properties worth up to £500,000. It’s similar for properties in Scotland and Wales – although the maximum amount is not as generous (it’s £250,000 in Scotland, for instance). Despite this, many online property agents are reporting record numbers of enquiries.
By the same token, mortgage lender – Skipton International – has seen increased overseas buyer activity for UK properties over the past few months. To the extent, the firm’s managing director Jim Couple described the company as being “inundated” by interest from foreign buyers, and potential landlords in particular.
Mortgage Lenders Pulling Low Loan-to-Value Deals
Thanks to Covid-19 resulting in national lockdowns and potential job losses, the Bank of England won’t increase interest rates for some time. However, this economic uncertainty has led to a number of nervous mortgage lenders pulling generous loan to value deals for potential buyers, as a result. Online property agents say first time buyers in particular have been particularly badly hit in this respect. This is another reason why potential buyers should act now ie before mortgage deals get even tighter.
Foreign Exchange Rates Are Good as No Deal Brexit Looms
Meanwhile, another reason overseas investors are keen to buy UK bricks and mortar is because exchange rates are extremely competitive for them right now. And, with a No Deal Brexit looming, many are aware it’s time to strike while the iron is hot, so-to-speak. Certainly, there is no question that bricks and mortar will always prove to be a more secure investment than the stock market – any online estate agent and financial expert will tell you that.
Meanwhile, on a more negative note, there shouldn’t be any surprise to learn that the recent buying spree in the UK has led to backlogs in sales being processed and transactions going through. The overseas market is no exception.
Some authority voices from the UK property industry including the investors themselves said them and other colleagues were noting delays, especially with surveys coming through. As a result, sales transactions weren’t being processed as quickly as usual.
Best Buy to Let Locations for Foreign Investors
When it comes to investing in buy to let, location is probably the most important aspect to get right. Investors must buy in areas where they know their ideal tenant wants to live. However, there is also the matter of yield ie how much rent can be charged compared to the cost of buying the property in the first place? A leading offshore bank, leading the way with a wide range of offshore accounts and mortgages is still finding plenty of interest from foreign buyers for properties in London and the south-east of England.
However, northern cities are proving more impressive when it comes to yields – especially the likes of Manchester, Birmingham and Liverpool. Thanks to regeneration and property development in these cities, as well as many firms moving their HQs to less expensive areas, populations in these spots are increasing markedly.
Another study, this time by Landlord insurance company found the most popular buy to let locations in the UK were Manchester, Salford and Leeds.
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As a landlord you will gain passive monthly rental income from your buy to let and capital appreciation as the years flit past. And it’s exactly this capital appreciation ...
February 12, 2021
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