Expat Guide to Investing in UK Property

Expat

FOREWORD

Regardless of the asset in question, at the top of any investor’s agenda is making an informed decision, especially when it comes to acquiring an asset in the first place. Property is no exception, whether you are looking to dip your toe into the market for the first time, or if you’re wanting to build on an existing portfolio. However, as an expat we understand that it can be especially challenging to keep an ear to the ground when you’re not physically on said ground here in the UK.

That’s why here at Thirlmere Deacon, we want to shed light on the current state of play so that you can move ahead with confidence, with one of the leading property investment firms in the country at your side.

We’ve put together the following updated guide for expats looking to invest in the UK property market. As always, if you’re reading through and have any questions about anything we’ve mentioned, please reach out to us and we’d be more than happy to assist you.

iyhWvn e s t in the UK property mar k e t

AS AN EXPAT?

The biggest question any investor has is ‘why?’, and rightly so. Without such scrutiny, it’s impossible to know whether the decision is going to provide a healthy return on investment and we’re completely with you on this. Plus, as an expat, you’re going to be investing in a country you might

know well but aren’t going to be physically located in while your investment blooms.

Here are our top reasons why an investor should consider the UK property market as their next move!

IS IN CONSTANT DEMAND

Starting at the most fundamental of levels, any investor wants to feel safe in the knowledge that their asset will be in demand, especially in the future when they are looking to cash in on their investment.

The current situation in the UK is that the market is hugely undersupplied, with over 250,000 new homes required each year to meet today’s demand. Currently, less than half of this is being built.

The shortage of supply is forcing house prices upwards and having a direct effect on the number of people actually owning property. This in turn means we are rapidly creating a generation of renters, which highlights an opportunity for investors, allowing you to capitalise on the rising house prices, but also on the strong UK rental market.

Property A TANGIBLE ASSET

Many investors openly jest about not investing in Bitcoin back in the day, and you might even be one of them who thinks, ‘if only!’. But the reason for the reluctance was because it was a new format and cryptocurrency isn’t a tangible asset. So, when it comes to managing risk, naturally a lot of investors want to put their capital into a tried and tested asset rather than the unknown, let alone something so unpredictable. Property is a popular form of passive income due to the fact it is

a tangible asset. It’s not a trend or an experiment - it’s solid bricks and mortar where people live and have done for centuries and will continue to do so. In addition, property is always going to be in demand which means as an investor you are putting money into something that has a long history of being financially profitable. Even throughout times of economic uncertainty whether this relates to recent or previous events, people have always needed a place to live!

Flexibility OF CHOICE

Some investment options are incredibly specific and in a fixed format. But what about what’s right for your capital, your commitment level and your general market understanding?

Within the UK specifically, the property market offers something

for every investor, whether they are starting out small or looking to expand on their current portfolio.

The following types of investment opportunities we offer here at Thirlmere Deacon are no exception.

WHEN

GETS REALLY

Williams, CEO & Founder of Thirlmere Deacon

BUY -TO -LET INVEST

For an expat investor, something which you can purchase that will generate income from afar, whilst being totally hands-off, is ideal. Buy-to-let properties offer exactly that, and are one of the only asset classes in which you can put down around 20-25% of the value of the asset and ask the bank to pay for the rest!

From the banks of the River Mersey to the beating heart of Central London, buy-to-let investments allow you to own a slice of the UK property market either solely as a source of

investment, or as an option to potentially return home at a later date.

Our buy-to-let properties offer yields of between 6%-8%. Finished to an exceptional standard, you can be safe in the knowledge that your investment will get off on the right foot versus other avenues of buying property. This also means less hassle where living abroad as an expat is concerned, as the property condition will be in order with no work required to get tenants in once purchased.

View Thirlmere Deacon buy-to-let investment opportunities

SHORT TERM LET

Whether its for a holiday or business trip, short term accommodation has seen it’s popularity soar in recent years. The merits of having your own space for a period of time and often avoiding the high costs of staying in a hotel have boosted the appeal of short term lets.

With airport passenger demand down a staggering 94.3% during 2020, attention turned to what Brits have on their doorstep. With even the cost

of a caravan in Cleethorpes going for £4,000 per week, the UK is now becoming the destination of choice for holidaymakers, and it’s not limited to just those who already reside in the UK. As the number of overseas visitors begin to rise once more, the demand for short term accommodation is increasing.

So what does this mean for investors? In short, UK based accommodation is where it’s at.

UK STATS staycation

• Tourism is the fastest growing industry in Britain, and is expected to account for 10% of all jobs by 2025

• By 2025, the UK tourism industry is predicted to be worth £257 billion

• Tik Tok’s ‘staycation’ hashtag has 800 million views

• The Instagram hashtag #staycation has 7.2 million posts

• North Yorkshire was the most visited staycation spot in 2020

View Thirlmere Deacon hotel room investment opportunities

FOR

retirement

People invest in properties at all ages and for numerous reasons. However, some invest in property specifically in place of a pension. Naturally, you should always consult a financial advisor to help plan the best option for your needs. That said, property wouldn’t be considered an option for retirement funds if there wasn’t any substance to the process, with some even being able to retire early due to gains made within their property investments. Certain property investments are able to be purchased via a SIPP (self invested personal pension), this is something to be explored by those considering this route.

Furthermore, as an expat it might be that you wish to invest now with the intention of moving back to the UK in the distant future. Whether you intend to live in the property you invest in yourself, or simply use it to build capital over time to enable you to buy a home for retirement in the future, the sooner you secure a property the better. Delaying can often mean missing out on years of capital appreciation and when it comes to buying in the UK further down the line, you might find you are priced out.

QUALITY BUILDINGS AT AN

affordable price UK VS REST OF THE WORLD:

POINT

Starting at the most fundamental of levels, any investor wants to feel safe in the knowledge that their asset will be in demand, especially in the future when they are looking to cash in on their investment.

The current situation in the UK is that the market is hugely undersupplied, with over 250,000 new homes required each year to meet today’s demand. Currently, less than half of this is being built.

The shortage of supply is forcing house prices upwards and having a direct effect on the number of people actually owning property. This in turn means we are rapidly creating a generation of renters, which highlights an opportunity for investors, allowing you to capitalise on the rising house prices, but also on the strong UK rental market.

WHAT IS THE CURRENT STATE OF PLAY IN THE UK property market?

It would be impossible to write a property guide for expats without addressing issues that have affected the UK specifically as well as the world in recent times. Getting to the heart of the conversions that matter the most to you as an investor is just as important to us too.

Despite the political rollercoaster and economic headwinds, set against countries emerging and recovering from a pandemic, the UK property market has remained as resilient as ever.

transition, such as the past five years since the EU referendum, investors are likely to gravitate towards bricks and mortar.”

- Financial Times Advisor

Ultimately, there are always going to be periods of economic certainty that initially rattle consumer confidence, regardless of the age we are living in and the crisis we are dealing with. However, returning to the fundamentals - housing is always going to be in demand because people are always going to need a place to live. In addition, even with commercial property, not all businesses can operate remotely, which is why property of all types will continue to be a solid investment, especially compared to other asset classes available for investment.

It’s not just Brits who noticed the health of the market either, as UK property has continued to attract international investors at an unshakeable rate, proving that property remains an extremely resilient asset for investors.

‘Overseas investors find UK regional property a safe bet’ - Financial Times

“UK residential real estate is regarded as a safe asset among both domestic and international buyers; therefore, during periods of uncertainty and

When we also reiterate the point about the UK housing market being vastly undersupplied, this issue does not go away due to any of the events we’ve experienced in the last few years. In fact, it will take a long time to solve because the balance is so far off what is needed. There’s also the simple fact that houses cannot be built overnight either.

Hence, once again property investment remains a fantastic opportunity.

“The average home is now valued at about 13% higher than before the pandemic began in early 2020”

- Forbes

We’ve talked at length about the state of play as an investor, but what about the tenant market itself?

Here are some stats that have emerged in recent times:

• The average age of tenants is now 28.2up from 23.9 in 2017

• 4.4 million households in the UK are classed as private renters

• UK homeownership is one of the lowest rates in Europe at just 65.2% - Statista 3

• Tenants are now staying put 50% longer in rental properties compared with 2017

• The average rent is now a record high of £1,007 PCM, up 7% from 2019

In essence, ‘generation rent’ is getting older, an increasing amount of people are renting versus purchasing a property, and when they do, they are staying longer in their rental contracts than in previous years.

So all in all, the rental market remains strong for any existing investors along with those looking to make their first investment.

WHAT DO TENANTS WANT?

• A place to live and work from home

• High quality finishes throughout

• An abundance of natural light in living spaces

• Access to health and fitness amenities

• In close proximity to outdoor space

• Desirable location close to

hospitality and entertainment venues

• Parking space

• Pet friendly accommodation

In recent years there’s been a seismic shift in what renters are looking for within a rental property. After all, tenants are paying more rent than ever before and staying put for longer, so it stands to reason they want their money’s worth!

All of which means properties that are of a higher spec, are in a central location and offer plenty of nearby amenities including within the building itself are top of the list for renters. In many ways, property is now about the lifestyle as a whole especially with young professional renters.

Vision,

FROM £180,000

A new Vision for Manchester

A magnificent new addition to Manchester’s skyline, Vision is a striking new landmark development in the very centre of the city.

Perfectly located in the M1 postcode area, Vision is just moments from the shops, restaurants, transport connections and business districts.

From the extraordinary building façade

to the hotel-style reception, worldclass amenities, and meticulously designed accommodation, this prestigious development exudes luxury and sophistication that truly delivers a superior quality of life to residents.

Each of the luxurious and contemporary apartments has been designed with the resident in mind, with practical layouts and quality

finishes throughout, beautifully complemented by high ceilings and expansive windows that provide spectacular views over the city and beyond.

Vision boasts an extensive range of facilities spread over 3 floors within the development including a concierge, gymnasium, yoga/spin studio, cinema, residents’ lounge, co-working spaces, coffee shop and juice bar.

Arranged over 37 floors, there is a selection of studio, 1-, 2- and 3-bedroom apartments available with prices starting from £180,000 and an expected rental yield of up to 7.5%.

Manchester is set to experience staggering price growth in the coming years with the latest forecasts from JLL predicting a 15.6% by 2026. Rental prices are also set to rise by a considerable amount over the same period, as the number of properties available to rent has fallen. Certain property types are set to see rental price growth of as much as 18.5% over the next 5 years.

For a current picture of all of the locations in the UK that Thirlmere Deacon has to offer for expat investors to give you a flavour of what to look out for, download our Investment Hotspot guide or get in touch with the team.

MUCH DOES IT

TO INVEST IN THE UK

INVESTORS NEED TO KNOW

UK property laws and legal system

The UK benefits from a robust legal system that offers transparency for investors and developers alike, limiting the level of uncertainty and risk usually present when investing in property overseas.

We would always recommend keeping up to date with the latest laws and regulations in relation to property ownership and any associated income tax in the UK. This information can be accessed for free on the Gov UK website.

Owning an investment property in the UK

While much of the focus of investment properties is on the financial aspects of the process, any expat looking to let out a property in the UK will have a responsibility towards their tenants.

In addition, landlords must complete

various administrative tasks relating to letting out a property.

Some of the top factors to consider include:

• Finding tenants

• Vetting tenants

• Setting up rental agreements

• Arranging Tenancy Deposit Protection (TDP)

• Landlord insurance

• Emergency tenant assistance

• Periodic rental inspections

• Maintaining safety and quality of the property

• Void periods

Understandably, as an expat it’s likely not going to be practical to keep on top of your responsibilities from afar. Instead, purchasing a property that will be fully managed is arguably the best option for investors who are not able to be hands-on.

A management company will find tenants, maintain and manage all

aspects of the property on the landlord’s behalf, eliminating the requirement for constant landlord involvement. It also happens to be the case that many fully managed investment properties offer assured rental income for a set period of time.

Financing your investment

Expats can either finance their purchase using cash or they can seek lending via a mortgage to purchase a rental property.

It is possible to secure an expat buyto-let mortgage. There are certain lenders who work in the market and have tailored products to suit expats that work well when purchasing investment property. It is also often the case that taking lending against a property allows for a greater return on investment in terms of capital appreciation on the cash input. The property might be worth four times the deposit figure yet capital growth

is achieved on the property’s total value.

It is also important to take a long term view when investing in property as this is the recipe for the best success. Whilst property prices, rental income and interest rates will all move during that period and impact overall returns, the best-laid investment strategies are over longer periods of time. Quick sales are not always possible with property investment so it is better to plan for this scenario from the outset. Currency fluctuations are one of the most variable risks involved for expat investors as they have a direct impact on cost and profit. With close management and professional guidance it is possible to enter the market at opportune times and ensure investments are strategically purchased.

We hope that our guide to investing in the UK has given you a flavour of what’s on offer if you invest with us here at Thirlmere Deacon, as well as the wider UK property market in general.

Most notably, the UK property market has demonstrated an unshakable resilience in the face of recent national and global events. Against previous predictions, the market has seen a sharp increase in property value during one of the most turbulent times in modern history. This has attracted investors on both a local and international scale, with no signs of the market slowing down anytime soon.

The property market is a bustling entity across the entire landscape of the UK, with cities such as Sheffield, Manchester, Newcastle and Liverpool offering incredible opportunities without the level of capital needed in London, but with just as much to offer both in terms of the versatility of properties available and the achievable yields.

We’re here to guide you through every aspect of the process as an expat property investor.

DISCLAIMER

The information, statistics and figures included in this guide are correct according to our sources.

Thirlmere Deacon are not financial advisors or tax specialists and recommend that all investors speak to the appropriate professionals to obtain accurate advice.

Thirlmere Deacon lonDon info@thirlmeredeacon.com

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