Late into 2021, rents are still rising fast, meaning that buy-to-let investment continues to present excellent opportunities for UK expat and foreign national investors.
‘With rents outside London rising at their fastest rate since 2008, it’s a great time to become a UK expat buy-to-let investor. The average renter outside of London is now paying nearly £500 more a year (£456) compared to 2020. And, with house prices having tapered off somewhat, the time is right for prospective UK expat and foreign national buy-to-let investors to get involved in the UK’s lucrative buy-to-let market.’
What’s Causing the Rise in Rental Prices?
High Demand and Low Supply.
‘Much of the reason behind the rise in rental prices is because of the city centre rental revival. The demand for city centre rental properties is something we’ve been noting a lot recently. This trend is putting pressure on rental stock and, consequently, driving up the cost of rents. Rental demand is also growing in areas outside of city centres – but the supply of rental property is not similarly rising to meet this demand. All of this has contributed to the fast 5% rise in rental prices that have happened in the last year.’
‘It all comes down to tenant demand really’ continues Stuart Marshall. ‘Demand for rental properties outside of London was nearly 80% higher in 2021 than the average levels of tenant demand between 2017 and 2019. The pull of the city centre isn’t set to decline either, with the resuming social scenes of bars, restaurants, and clubs as well as the reopening of office spaces continuing to drive people back to the city centre. Further, many people are now in the rental market because they have sold their homes during the pandemic to capitalise on the high prices but have been unable to secure a property to move on to. For these people, the rental market has become a necessity until they can find another home that can meet their needs. This is leading to a whole host of new renters in the marketplace.’
At the same time, rising demand for rental properties has not been met by rising supply. On the contrary, 19% growth in demand has been met by a -13% fall in the number of rental homes available to let, as well as a -2% fall in the flow of new rental homes.
The Student Factor.
Students are another factor that can’t be ignored. With university resuming in a more normal fashion, many students are also moving back to city centres – including from abroad, which is causing an influx of rental opportunities for UK expat and foreign national investors. ‘The student market is an incredibly lucrative rental market for UK expat and foreign national investors. With a constantly replenishing market group, fuelled by new students arriving every year, void periods are kept to a minimum and student rental prices are typically higher than regular long-term lets.
Fast Letting Homes.
‘The situation that has been created by the rising demand for rental properties and the low numbers of rental homes available to let has meant that we have a seriously fast-moving rental market on our hands’ says Stuart Marshall. ‘This is just another reason for UK expat and foreign national investors to get involved. With properties letting after such a short time on the market, investors are reaping maximum rewards because of the shorter void periods. And they’re also starting to see return on their investment much more quickly than they were previously. The average time between listing a property and renting the property has now fallen from 20 days in 2020 to 15 days in 2021. This is the fastest moving rental market since 2016. The fast-moving rental market and surging demand is the perfect situation for UK expat and foreign national investors.’
Investing as a UK Expat or Foreign National.
‘Buying a UK investment property as a UK expat or foreign national comes with its difficulties’ warns Stuart Marshall. ‘However, it’s nowhere near as difficult as it was a number of years ago. There is a great breadth of mortgage options available for these investors, especially if you use an expert mortgage broker like Liquid Expat Mortgages, who often have access to specialised lenders and preferential deals. You need to be aware of the changing legislation and the associated costs – such as the Stamp Duty surcharge for overseas buyers – but an expert mortgage broker can also help with this.’
‘Where to buy is also an issue that is faced by many UK expat and foreign national investors. But the picture is quite clear at the moment in the UK – there is an obvious swing back towards the city centre in tenant demand. City centre properties are also typically more accessible both in affordability and stock availability. They also have a great range of flexible options available, such as off-plan solutions which offer investors cheaper properties and, occasionally, the ability to choose some of the specifications of the build too. City centres like Birmingham, Leeds, Manchester and Edinburgh have all seen hugely positive bounce backs in rental growth compared to during the pandemic and this is hugely encouraging for UK expat and foreign national investors throughout the rest of 2021 and beyond.’
Liquid Expat Mortgages
Unit F2, Waterfold Business Park,
Bury BL9 7BR
Phone: +44 (0) 161 871 1216
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