Top Reasons Why Foreign Investors Should Invest in the UK

The UK has long been a honey pot for overseas investors looking for great returns on property and more - here’s why foreign investors should look to the UK.

The UK economy is one of the strongest in the world, and although the looming prospect of Brexit is predicted to shake things up, the country is still achieving new heights with 2019 marking a record-breaking wage growth and retains its status as the most popular European country for foreign investment, holding more than both France and Germany combined.

The UK has a steadily growing population; currently at just under 67 million, there has been a year on year increase since the last census in 2011, when the official number was estimated to be 63,182,000, and this means more and more residences are needed to accommodate a rise in new households.

The Housing Shortage

Despite the continuous population increase, there are quite simply not enough houses in the UK, and it is projected that over the next two decades, more than a quarter of a million new households will be formed every year. This means that around 250,000 new homes will need to become available to meet the growing demand, yet new housing is not keeping up…

There is also an overwhelming demand for rental houses, with a prediction that ⅕ of the population will be renting their home in the next five years, as buying properties has become more expensive and competitive. All in all, this is a tricky situation for the British government, but a fantastic opportunity for foreign investors.

Expect a High Yield

The UK is known for its high yielding property investment models. This means that having the money to invest in the UK property market, especially in major cities such as London, Manchester and Leeds, means you can be fairly certain you’ll get good returns on a buy-to-let property.

With the potential turbulence of Brexit lurking on the horizon, it’s understandable that some investors may want to wait out the storm. However, getting in now opens up the opportunity for price negotiation, enabling you to get a good deal on a buy-to-let property.

Due to the pre-financial crisis actions of British banks, who lent out huge amounts of money in the form of mortgages, an increase in population and demand, the value of the average UK property today is more than three times that of what it was in 1997. Ignore Brexit for one moment and recognise this phenomenal statistic.

The Bottom Line

Investing in a UK property can be daunting and downright confusing, but at the core of the property market sits one undeniable fact: people love the UK. It’s a safe and stable in terms of government, society and culture, and in the long term this consistency can weather any economic storm that Brexit throws up.

To ensure you get the best deal (and save yourself a lot of time), use a reputable property investment company when investing abroad. Choosing professional assistance gives you instant access to local knowledge and expertise, and gives you an overview of all your options according to your future plans and budget.

Top 5 Highest Yielding Cities for Residential Property Investment

Whether you’re buying to let, renovating for a resale, or looking for a second home, here are 5 of the current most profitable cities for investing in property.

Investing in property is one of the best ways to generate long term income, and secure your money for future years to come. Where you choose to invest plays a vital role in determining the success of your venture, so it’s important that you do plenty of research before commencing your property hunt.

To make things easier, we’ve compiled a guide to five of the most profitable UK cities for investing in residential property, so whatever your goals, budget size or timeline, you’ll start things off on the right foot by looking in these areas.

We’ll cover the factors that have made these locations increasingly desirable, as well as the average Return On Investment (ROI) you can expect from each city as an investor.

1. Greater Manchester

After London, Greater Manchester is the highest yielding area for property investment, and this doesn’t just apply to the city centre any more. Offering an average ROI of 6% annually through renting, a rich cultural scene, good job prospects and a population on the rise (it is expected to reach 2,730,076 by 2020, showing 0.74% annual increase), there are several non-central areas that offer lots of opportunity.

2. Sheffield

Sheffield has a population of around 1.5 million strong, and it’s growing. It also has some of the most affordable property prices in the country, and with recent developments making it an increasingly popular and more affluent area, there are plenty of opportunities for investors after a bargain buy. While these properties are unlikely to bring great yield just yet, the low prices mean you can hang on to them for the future, and the current ROI investment score of a whopping 22.7%.

3. Leeds

Another Northern city that’s surrounded by a real buzz at the moment, Leeds has the second fastest growing population (Manchester has the first), and subsequently residential properties are in high demand. Huge developments are currently underway to modernise the city, and returns on investment are expected to soar over the coming decade.

4. Bath

With its gorgeous architecture and rich social and historical scene, it’s easy to see why Bath is an eternally popular place to live, and therefore a great place to invest if you’ve got the cash for a Southern property. With an annual 12.7% average ROI score, you’ll be able to make decent cash out of renting and selling on.

5. Derby

One of the biggest property booms is taking place in Derby, with the average ROI for investors currently at 18%. In the past decade, £4 billion of development cash have been pumped into Derby, and it remains the industrial hub of the North with its historical association with Rolls Royce and Toyota. Derby has showcased some of the most impressive economic growth of any UK city in recent years - so why not get involved in the action?

There are great opportunities for property development all over the UK. However, it’s important to remember that, wherever you choose to invest, there is no guarantee of yielding a profit, even if you do purchase in one of these cities. Do plenty of research before committing to a project, especially if you’re not familiar with the area in which you’re buying. Speak to an independent advisor to ensure your money is being well spent, and good luck!

Property vs Other Investments

For those eager to invest their money into a solid enterprise, property is a fantastic option - here we compare it to the benefits of other investment avenues.

Property is one of the most secure and profitable areas in which to invest your money, but don’t take our word for it: in this article, we’ll look at how property compares to other investment avenues so you can make the right decision for your finances.

Whether you’ve got the funds to invest in a classic townhouse as a second home, you’re interested in a contemporary city apartment so you can buy-to-let, or you’re eager to get involved in a fixer upper project with the hopes of selling it on for a profit, it’s important to consider all your options before handing over the cash.

We’ll compare property with other popular investment options to give you a clear overview of where best to put your money.

Other Worthwhile Investments: Your Options

So, you’ve decided to start investing your money? That’s great news - if you choose the right option to suit your life, you will gain valuable assets that could generate a supplementary or even main income one day.

There are lots of options to choose from, and it can be a daunting prospect, especially if you’re a first time investor. The avenues include: stocks and shares, peer to peer lending, angel investing, ISAs and pensions - here’s how these options measure up against property.

● Stocks and shares: if we’re talking about time, returns on stocks and shares will give greater returns with an ROI of 10% annually, however they are a more volatile and risky avenue, prone to big changes that are out of your control, compared with the fairly stable world of property investment
● Peer to peer lending: although considered relatively low risk, the returns on P2P are limited in comparison with property.
● Angel investing: a good option for startups who need a boost, but quite often you need connections to get it going, and the terms are often ambiguous.
● ISAs and pensions: these are both easy to manage and offer reliable payback, but they are also tied to each and every economic change that comes their way.

Why Property Is the Most Stable Investment

Property investment is in a category of its own, and is your best option for acquiring long term wealth. This is due to several reasons:
● As well as offering a lot of potential for capital growth, property can be rented out and used to generate an income from tenants, offering around 10% payback
● You don’t need to be an experienced investor to get involved and easily access records for information on the market
● Despite Brexit, the UK property market is still on the rise, and has been for decades - over the past 30 years, the average house price has quadrupled from £50,000 to £250,000
● Unlike other types of investment, a property is something you can see and visit, which makes it more dynamic and engaging.

The forecast for the UK property market is set to stand steadfast throughout the years to come, and technological innovations transforming the way properties are built and run, this is as exciting a time as any to grab your slice of the pie.

London vs Rest of the UK

We take a closer look at how London compares to the rest of the UK in terms of property investment returns on investment, house prices and other economic factors.

London is in a category of its own in pretty much every regard. When compared to the rest of the UK, it trumps every other city in terms of population, racial and linguistic diversity, economic size and public transport. However, it is also the place with the most prolific drug use, biggest wage disparity and highest living cost in the UK.

Whatever your opinion of the capital, it is a bustling city with big opportunities for property investors. For those who want to get into the London property scene, or are perhaps curious about investing in other cities, we’ve created a quick guide to London vs other major cities in the UK in terms of economic performance and other stats. Read on to find out how the Big Smoke measures up.

Population Demographics

One of the most visited cities in the world, London is by a mile the most populous city in the UK, with the current number of residents estimated to be just under 9 million in 2019, representing an escalated growth rate of 1.76% compared to 7 years ago, and 6 million more than the UK’s Second cities of Manchester and Birmingham, each of which is home to fewer than 3 million people.

To put it another way, around 13% of all the UK’s residents live in London, although the area it covers accounts for less than 1% of all the country’s land.

House Prices

What with the rising population and the fact that the banks essentially made new money before the 2008 financial crisis, houses are in high demand in London - and they’re on average more expensive than in any other city in the UK. As a result of this, London is the only city in the UK where more people rent their homes than own them.

As of June 2019, the average price of a house in London was £457,000; to put that into perspective, in Northern Ireland it was £135,000. The average house price in the UK is £230,292.

Return on Investments

With a population increase that shows no sign of slowing down and house prices through the roof, it’s no surprise that more and more people are turning to rental properties to find somewhere affordable to live. This is great news for property investors: once you own the property, you can expect to gain a reasonable, long term income from renting it out.

The exact ROI of renting out a property you own depends on the desirability of the area in which you buy, but tends to yield at a steady rate of between 3.5 and 4.5% annually.

If you’re interested in property investment in London, get in touch with one of our friendly team today for a consultation on where to begin, and which project might suit your requirements.

3 Top Tax Benefits from Property Investment

Directly buying a property can transform your financial situation, and give you returns for potentially years to come. Whether you’re purchasing so that you can live in it yourself as a second home, buying a holiday house that you let some of the year, or getting involved in a buy-to-let scheme, property is a stable and secure way to invest your money.

As an independent owner, you have to pay 45% tax on all income you get from the property. Compared with other investment types, property offers particularly great tax benefits, and there are several loopholes that first time investors should know about too.

Besides generating income from renting out or selling a house, there are various tax benefits to consider when getting involved in the property market - here are the main three:

1. Deduct Expenses

If you’re in charge of a residential property, there are certain expenses that can be deducted from all your profits generated by the house (from selling or renting it out). The included expenses include any fees paid to the letting agent or accountants, legal expenses, insurance, utilities and Council Tax. The full list of what counts as an expense can be found on the direct gov page on renting out a property.

2. Dual Ownership

If you’re the owner of a rental property, you’re entitled to up to £1000 tax-free allowance on income from rentals. If you own a property with someone else, you are both entitled to this £1000 allowance, which can save you an average of £300 in tax payments. If you’re considering property investment, finding someone reliable to invest jointly is a good move.

3. Hold Property Under a Ltd Company

You’re entitled to up to £11,850 tax-free personal allowance from rental profits. If you’re an individual, you’ll have to pay the full 45% tax (not to mention additional taxes in the form of Stamp Duty, Land and Buildings Transaction and Land Transaction taxes); if you purchase a property through a Limited company, you could end up paying less tax. If you’re a landlord who has four or more properties to let out, you will likely save money by purchasing through a ltd. company, but there are other factors to consider such as time spent doing business admin.

Doing plenty of research into property-related taxes could save your hundreds of pounds. Make sure you correctly deduct all your expenses before calculating your profit from rental, so as not to accidentally file for too high a rental income tax return.

Consider buying a property with another person to maximise your tax-free allowance (and share the financial responsibilities in general), through the benefits of joint ownership laws.

And finally, if you’re serious about cutting your taxes and are in charge of four or more properties, setting up your own limited company could be the best way to do that.

Whatever your decision regarding property and taxes, you can get all the assistance you need with the help of a professional property investment company. Get in touch today to arrange a consultation.