I personally invested in the UK residential real estate for many reasons including the chronic supply issue as the current homebuilding is covering only two third of the target set by the government, High rental yield particularly in cities like Liverpool, Manchester and Leeds, low-interest rate and the simplicity for global investors to obtain mortgage, find property managers, surveyors, solicitors and accountants needed for purchasing and ongoing management of their properties.
Recently, Night Frank issued their 5 years forecast for UK real Estate Forecast which can be summarized as follows:
- Price growth across the UK is expected to be 1.0% in 2018, reaching 14.2% cumulatively between 2018 and 2022. However, the market is localized and there is stronger growth in the Midlands, East of England and the North West, as shown in the below table.
- Once the Brexit deal is completed, prices are expected to rise across the market, with price growth reflecting this in many locations.
- The UK may now be entering a period of interest rate rises, but even so, rates are expected to be low compared to long-term norms by the end of the forecast period.
- While development levels are rising across the country, the shortage of new homes is unlikely to be fully reversed in the coming years, and that will underpin pricing. On the other hand, factors such as deepening affordability pressures and property taxes, will continue to weigh on pricing.
For non-residents, it is feasible to obtain a mortgage of 75% LTV (Loan to Value) which means you put 25% as a deposit and borrow 75% from the bank. This is a 1 to 4 leverage which amplifies your capital growth on your invested cash. For example, based on the above forecast, the UK house price will appreciate by 14.2% in the next 5 years, if you invested 25k to buy a property worth 100k, the property will be worth 114k after 5 years. This is a 56% growth on your initial capital (14k/25k). Add to this around 5% net yield every year when you rent the property (i.e. 25% for the 5 years) and your total return will be above 80% after 5 years! This is an amazing investment by all means.
In Wealth Heights’ coaching program, we help our clients to purchase properties in the hot areas of UK focusing mainly on Manchester, Liverpool, Leeds and Birmingham where yields and growth tend to be higher than the average of UK. We support them with trusted sourcing agents, property managers, solicitors, surveyors and accountants for tax return to ensure a very smooth process. If you are interested in investing in the very profitable UK Real Estate market, click here and book your coaching course.