There is mounting evidence that expats are taking advantage of the weakness of the pound to invest in the UK market and that increasingly they are investing outside London and the South East.
New research from Liquid Expat Mortgages indicates that there has been a 20% year on year increase in expats and foreign nationals within UAE investing in UK property. The investment are in buy-to-lets and first, or second homes.
Manchester is popular with 60% opting to buy there, while 25% choose Birmingham. London meanwhile with high prices and poor rental yields has seen a 60% drop in buyers compared with other regions of the UK.
Liquid Expat Mortgage point to the fall in property prices in real terms in the UK compared with a decade ago and the North/South divide*. In London, the average property value has risen by nearly 70% in 10 years, whereas in Northern Ireland it has fallen by more than 40%. (*Source: Office of National Statistics 2017).
In a recent article in The Sunday Times, Hugh Graham wrote:
‘The downward spiral of the pound may be a thorn in the side of British holidaymakers, but it’s blooming good news for UK nationals who live abroad, earn in foreign currency and are snapping up their forever England home now.’
The Sunday Times quotes Charlie Taylor, head of Knight Frank estate agency’s Bath office who says that overseas buyers accounted for 23% of sales of country houses above £2m in the southwest in the year from June 2016. The weak pound has offset the increases in stamp duty.
This article says that ‘anecdotes are backed up by the data’ and points out that ‘the number of people buying in the UK from abroad has risen from 2.9% in the second quarter of 2016 to 4.1% in the same period this year, according to Strutt & Parker’.
Skipton International bank reports that the number of inquiries for buy-to-let mortgages from British expats investing in the UK has soared since last year. In the first five months of 2017, there was a 162% rise in interest from expats in Hong Kong, 115% from Singapore and 124% from the United Arab Emirates.
Stuart Marshall, Managing Director believes that the protections offered by legislation in the UK to property buyers and the straight forward process is a factor. Investment by overseas buyers is no longer the preserve of the wealthy:
“Over recent years, there are many teachers, nurses, IT workers who have been turned away from UK mortgage companies and have found it unaffordable to use brokers in UAE, as the deposits and interest rates are much higher.
“Now, expats and foreign nationals can easily buy in the UK, as there is a wide choice of mortgages on offer. Many are choosing to buy property in the cities and towns in what is known as the Northern Powerhouse, as they offer the best investment opportunities in buy-to-let, with rental yields of 7.08% in Salford, 5.96% in Leeds and 5.79% in Manchester. (Source: Kufflink 2017). In fact, Manchester, the unofficial home of the Northern Powerhouse, sits in the Top 10 buy-to-let postcodes in the UK, with rental price growth of 7.53% and yields of 6.11%. (Source: LendInvest 2017).
“There has never been a better time to buy a property in the UK. The average house price has fallen compared with a decade ago and interest rates are at an all-time low, despite the recent rate rises.”