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Why is foreign investment in the UK property market so popular?
Foreign investment in the UK is incredibly popular when it comes to property. The UK property market sees a huge amount of investment from those based in foreign countries both inside and outside of the EU, including those from the Middle East. But why is foreign investment in UK residential property such an attractive prospect?
If you’re a foreigner buying property in the UK, or you currently live in an overseas country but you’re interested in what the UK property market has to offer, this guide to the popularity of investment into the UK may be useful for you.
Foreign investment in the UK property market – the figures
To fully understand the extent of the popularity of investment in British real estate, you need to know the appropriate facts and figures. In the last few years, levels of foreign investment in the UK have fluctuated. In 2017, overseas investment made the headlines due to the high recorded numbers of people from foreign countries buying property. In a report by the Guardian, foreign investors purchased 3,600 of London’s new builds between 2014 and 2016 – around half of which were aimed at first time buyers in the city. During the second half of 2017, overseas investors purchased over half of all London properties in the city’s most exclusive areas.
For UK foreign investment, 2018 was another big year. Fast forward to 2018, and the United Kingdom saw a noticeable shift in the cities seeing the biggest number of foreign investors in the UK according to a report on Forbes. Liverpool and Manchester are two cities that attracted a lot of attention when it came to foreign investment in the UK for 2018. In 2018, Liverpool property prices rose by 5.3 per cent, while the number of enquiries from Chinese investors had risen by a huge 160 per cent from January 2017 to January 2018. Manchester real estate experienced a similar increase in Chinese enquiries during the same period, rising by 255.6 per cent compared to the start of 2017. In contrast, London saw declining levels of international interest, with the number of overseas landlords in the city having fallen from 26 per cent in 2010 to 10.5 per cent by the end of 2018.
In 2019, the UK has maintained a steady level of interest from overseas buyers. The number of searches on Placebuzz, a property portal, saw 6.2 per cent of all searches during the first three months of 2019 come from overseas buyers – up from 3.6 per cent in the same period during 2016.
What are the most popular cities for foreign investment in UK property?
According to recent figures, the most popular cities for foreign property investment in the UKare those in the North such as Liverpool and Manchester. These cities have seen a growing interest in the last couple of years and are stealing the limelight from London for the largest investor demand. With some of the fastest-growing house prices in the UK, predictions for further growth, and some impressive rental yields, these north-west cities are outperforming the disappointing reality of the London property market and welcoming some of the biggest foreign investors in UK property.
Brexit and foreign investment in UK property
So what aboutthe impact the Brexit voteon foreign investment in the UK? While many thought that the outcome of the EU Referendum would have disastrous results for overseas investment, the figures told a different story. Levels of UK inward investment since Brexit was voted upon in June 2016 have been higher than imagined. During the second half of 2016, the UK recorded higher levels of overseas investment into the student accommodation market since before the vote. Not only this, but the UK property market improved in many ways, with overall growth in property prices and an increase in rental costs helping to boost the appeal of UK investment.
As we await October 2019 when the UK is set to leave the EU, we’re yet to see how Brexit affects overseas investment in the long term. Predictions suggest that the UK’s investment market will remain strong even after we leave the EU, however, encouraging more investment into the UK from foreign investors. For one thing, the UK will continue to attract a lot of rental demand from students and professionals who are drawn in by the educational prospects on offer along with the opportunity to work with British companies and global businesses based in the UK.
The benefits of overseas investment in UK
So we know that foreign investment in the UK makes a popular venture, but what are the reasons for this? The UK property investment market comes with a number of benefits for overseas investors to enjoy.
Rental returns are a crucial element for any property investor to pay attention to. The higher your rental returns, the quicker you can pay off your investment. Overseas investment in UK cities is considered so worthwhile due to the high rental yields on offer. In particularly thriving cities like Liverpool or Manchester, yields are reaching impressive heights of up to 13 per cent in some of the most lucrative postcodes. Yields are less impressive in many parts of the world such as countries in the Asia Pacific. In areas like China and Hong Kong, where the rental yield averages at around 2.10 per cent, property investors will struggle to make worthwhile returns and so seek out alternative locations to invest in.
A positive outlook
Another big factor that must be considered before making an investment into UK property is capital growth and the potential for your property to increase in value. The UK ranks highly for capital growth as well as rental yields. UK properties have grown in value over recent years, especially in the north-west region, which presented the fastest level of growth. House prices in the north-west increased by 5.6% between July 2017 to 2018, and are predicted to grow by 18.1 per cent by 2022 according to Savills.
Aside from the benefits that come with UK investments in terms of growth and returns, there’s also the fact that buying an investment property in the UK is so accessible. Many other countries have stricter systems in place when it comes to international investment, such as Germany which has more complicated laws for overseas investors to follow before making a purchase. In the UK, overseas investors are welcomed. Once you’ve found a property, you will usually be appointed a solicitor to help you with all aspects of due diligence and make sure the investment process runs smoothly. There are certain taxes you’ll need to know about, such as stamp duty, income tax, and capital gains. Make sure you’re fully clued up on all aspects of the UK property market before making your overseas investment by reading buy to let guides, researching market data, and speaking to a professional for advice.
Make your foreign property investment with RW Invest
If you’re interested in making an investment in British property, make sure you explore our fantastic choice of properties. We have opportunities in some of the best UK cities making big contributions to the global economy, with impressive rental yields and capital appreciation potential. To find out more about the UK buy to let market, get in touch with us or read our special reports on related topics for more information.