Some of the reasons as to why the UK property has been increasingly a good place for non-resident investors.
Investing in UK property from overseas or as a non-resident can be quite a big thing for people. In a world that is increasingly connected by digital technology, the UK property market is of growing inter
est to overseas investors looking for a place to invest their money. After all, there is not really too much difference between someone in London buying a property in Stoke-on-Trent, or someone in Paris or Beijing.
Traditionally, this sort of overseas purchasing power was mainly a characteristic of very buoyant property markets such as London, helped by the ‘brand awareness’ that comes with being the capital city.
In fact, research has shown that overseas investors in the capital are, in part, responsible for the levels of house price growth we have seen over the past decade. Boffins at Kings College in London have even calculated that if foreign investment in housing had remained at the same level that it was in 2000, then the current UK average house price would likely be between 16% and 28% lower.
Undersupply Driving Property Market Growth
The reasons why foreign investors are attracted to UK property investment are easy to spot. The UK has a housing supply problem.
In simple terms, this means that there are not enough houses in the right places to keep pace with growing demand. This has been a problem that has taken decades to develop, and stepping up supply to the level needed to ‘fix’ the housing market is likely to take as long again.
What this means is that UK property is always going to be underpinned by a level of housing need that isn’t being met, particularly in buoyant markets. This is not always good news for first time buyers looking to get on the property ladder. However, it is good news for overseas investors, who have singled out the UK housing market as a good place to grow their money.
Investing in UK – Will This Property Market Trend Continue?
12 months ago, many analysts were predicting that the twin disruptive events of Brexit and COVID would dampen down the UK property market, as economies contracted and demand for properties fell.
However, such predictions proved to be very misguided indeed. Instead, over the past 12 months, we have seen house prices rocketing, with the market in the UK rising 7.3% in the past year, part of a post-pandemic global boom for residential property.
Similarly, recent government moves to dampen down the market for overseas purchasers also appear to be having very limited impact. For instance in April of this year an additional 2% stamp duty surcharge came into effect for overseas based investors. However, the early indications are that recent falls in the value of sterling, low mortgage rates, and a fundamentally strong housing market are likely to more than make up for this extra charge for investors.
All of the signs are that the UK will remain at attractive option for overseas investors looking to invest in residential rental property.
Overseas Investors and The Ripple Effect
Many people believe that overseas property buyers are only really interested in London. This may have been the case a decade ago, but that assumption is increasingly different to what is happening on the ground. An interesting trend in recent years has been the way that. what was once a feature of London markets, has now filtered through to other parts of the UK. Starting initially with larger and more known cities.
This is partly because the more saturated the London market became, the higher the price of entry has climbed for new investors, and the less headroom there was for assets to grow. Therefore, as London property prices grew and grew, investors from Asia, Europe, and the US seem to have started to expand their area of search, snapping up new apartment blocks in other major UK cities such as Manchester, Liverpool, Leeds and Birmingham.
I can tell you from personal experience that this trend is now also starting to feed into other UK property markets, including Stoke-on-Trent.
Savvy overseas investors who are more in tune with UK housing market trends and looking to invests in UK property from overseas, are following their online research and starting to diversify into less well-known areas where yields are potentially higher. Investors are increasingly seeing the opportunities that can come particularly from investing in areas such as Stoke-on-Trent, Crewe and surrounding where the combination of historically low property values and rising demand have created great opportunities for overseas purchasers.
In fact, Stoke-on-Trent’s blend of lower prices and strong demand is why one of the country’s leading financial websites, This is Money, identified Stoke-on-Trent as the UK’s best place to invest in rental properties. As overseas buyers increasingly do their own internet research, Stoke-on-Trent will be a name that pops up on their laptop screens time and time again. Crewe alone, is a current hotspot due to the future of the HS2 regeneration plans and how this is to affect the property market there.
Supporting Overseas Buyers
Bienvenue à Stoke-on-Trent | مرحبا بك في Stoke on Trent | Добро пожаловать в Сток-он-Трент | Welcome to Stoke-on-Trent
Of course, when purchasing a property from overseas, buyers will need additional support from reputable property sourcers like ourself, and other property professionals. As the data shows, the UK property market is fundamentally strong, but the simple fact is that some investment properties are likely to perform better than others. To help identify the right property for you, it is essential to reach out to people who have a detailed understanding of the housing markets where you are considering investing.
Having a team on the ground to help support the identification, purchase, repair, letting and management of your property provides security and peace of mind. That way, you can be sure that your investment is being looked after, no matter where you are in the world.
As a leading property sourcer located in one of the best cities for property investment in the UK, I can help clients in pulling strong and trusted teams together, and provide a single point of contact which makes remote investment clear, convenient, and easy.
To learn more about how Treasure Tower can support overseas purchasers looking to invest in the UK’s number one buy-to-let market, get in touch for an informal discussion.
Treasure Tower Property Consultants