Weak Pound Strengthens the International Appeal of UK Property

By HopwoodHouse, 14 December, 2017

As the old saying goes, “it’s an ill wind that blows nobody any good”. While importers have bemoaned the fact that the weak pound has made international purchases more expensive, exporters have made the most of the fact that their products and services have become more affordable to international buyers. Even though UK property can’t be bundled up and shipped overseas, it is of great interest to overseas investors, including many UK expats and the recent, weak pound has made it easier for them to afford to buy.

Better effective prices and better availability of mortgages fuel expat interest

Expats are often acutely aware of the risk of being left behind as the UK housing market continues its almost endless march forward with only brief pauses for breath. At the same time, they not only have to manage the cost of living in their host country but have long had to struggle to get mortgage lenders even to consider them. Over recent years, however, mortgage lenders have begun to realise that providing mortgages to expats (and even foreign nationals) could increase their profits in a safe manner and have started to become more open to providing them. This, coupled, with the drop in value of the pound, has led to a 20% year-on-year jump in sales of UK property investments to UAE-based expats and foreign nationals (according to figures by Liquid Expat Mortgages).

A robust legal system provides reassurance

While the UK actually has four legal systems running in tandem with each other, the fact still remains that all four systems are robust and transparent and provide a high degree of buyer protection. It is also reasonable to say that the UK has long had a very welcoming climate for international investors and even though some may be disappointed that the government is moving towards charging capital gains tax on investment properties owned by overseas investors, this (proposed) move simply puts overseas investors on a like-for-like footing with locals rather than placing them at a disadvantage to domestic buyers as is the case in many other countries. It should also be noted that this change may actually be of no impact whatsoever to expats who intend to let out a property while they are away and then live in it when they return to the UK. 

The north is the “home-from-home” of choice of UAE expats

Even though London still has many charms, its combination of high house prices and low rental yields has seen it fall out of favour with expats and international investors in the UAE. In fact, London has seen a spectacular 60% drop in purchases, while the north has seen growth. The de facto centre of the Northern Powerhouse initiative, Manchester, has taken the lion’s share of the investment funds, accounting for 60% of the purchases made by UAE-based expats and international investors, followed by Birmingham on 25%. Both cities offer a compelling blend of affordable property prices and high rental yields with strong potential for capital appreciation. They also have robust economies meaning that returning expats are likely to find good opportunities for work or high demand if they choose to sell their investment property to finance a fresh start elsewhere in the UK.