Is now the right time for overseas investors to purchase in the UK? - 10/02/23

For a long time, the UK property market has been a popular destination for investors looking for healthy returns and a stable market protected by a solid legal system. Over the last six months, we have seen this appetite grow further, as the cost-of-living crisis, combined with the impact of Liz Truss mini budget has hit the strength of the pound significantly.

In January of last year, £1 would have bought you $1.40; at the end of December, that amount is closer to $1.24, a decrease of 12% in less than a year. As you might imagine, this percentage can have a significant impact on both the borrowing potential of first-time buys, and the interest rates on homeowners sitting outside their fixed-term mortgages.

The weakness of sterling has its upside for anyone abroad looking to capitalise on property available for investment. If we use a buy-to-let house as an example, which has a base price of £150,000. In May, the price would have been €169,767, but at the current exchange rate, that amount would sit at €163,064, representing a €4,697 saving. These savings can be applied to each additional cost incurred, such as legal fees and furnishing, which all achieve a higher yield for investors.

There are other advantages to take into account, in addition to the obvious large overseas investment savings. It is anticipated that the value of the pound will return to January levels within the next three to five years, which means that the savings you have earned by investing now will double as prices return to former levels.

Additionally, since an investment property generates income, you can increase your return on investment by taking advantage of lower currency exchange rates while the pound is weak. There is still a chronic undersupply of property in the UK, and as a result of which, rents have continued to grow at an exponential rate.

So, in conclusion, it’s clear that the UK property market is still a suitable asset class for anyone looking to invest in property. Investors that are hoping to achieve a regular income over a three to five year period should certainly explore the market. The north west in particular is showing the most promise, and with new off-plan developments launching in Liverpool and Manchester on an almost monthly basis, now it the time to invest.

For more information on this subject, contact a member of our team today.