Key Highlights

Investment makes the world go round. Investing in the UK has always been a lucrative and attractive venture for either those living abroad or an expat rising in the UK. Since the UK’s major social and economical changes post-2008, UK property investment is bigger and wealthier than ever before. The UK has always had a long-time appeal, owing to its stability, potential for major growth, global economic standing, and strong legal framework. In particular, UK off-plan property, including developments in cities like London, has become a favoured choice for overseas buyers looking to maximise their returns and minimise risk.

Why Are Expats So Important?

Expats play a pivotal party in the UK property investment industry. Wealthy, highly-educated expats have a lot of financial strength and can invest in high quality residents, in some cases in volume. With access to stronger currencies and liquid assets, expats contribute significantly to property demand, particularly in high-value markets like London. Many focus on buy-to-let properties, meeting the high rental demand in cities and benefiting from consistent returns. Furthermore, expats are often drawn to UK off-plan properties, which often have lower entry costs and higher potential gains. This investment strategy in turn increases the overall wealth of the UK, in turn causing more property development and overall supporting the market.  

They’re not just important from an investment perspective but a renter’s one as well. A lot of wealthy expats come to the UK to work and study, often bringing substantial capital into the country with them. They tend to prefer high-quality buy-to-let spaces that are designed for modern and city living for the duration of their time in the UK, whether short-term or long-term. These expats tend to be studying and working in the city, so they opt for homes that are designed especially for renters’ and come with renter-friendly amenities. These homes also tend to be high value, directly benefitting the local investors they rent from.

Why Expats Invest in UK Property

Why does the UK hold so much appeal? It comes down to two primary reasons: rental income and capital appreciation.

Capital Appreciation

The UK is renowned for its incredible growth rates. House prices in the country have grown by more than three times their price at the beginning of this century. It was revealed that the average home has increased by 207% in the last 20 years, as evidenced by Halifax. In Greater London, the increase has been even sharper, with prices rising by 239% since 2000.

Rental Income

Properties in the UK usually average a yield return between 5% and 10%, with some regions offering even higher rates depending on local market conditions​. London tends to average around 5-6%, which is considered good and stable. In northern and more remote areas, yields can reach up to 10%. The UK has always had a strong rental market – currently 25% of people under the age of 40 are renting, with the total figure growing every day. This ensures that there is always a steady stream of renters for your investment.

Other Factors

A key driving reason, beyond the obvious, is that the UK is considered a stable and secure country to invest your money into. It is politically stable and has a strong economic environment. It also has a pretty good legal system that can help protect you and your investment should something go wrong. The UK’s transparent legal system provides security for property rights, a significant draw for expats from countries with less stable markets. Furthermore, the lack of restrictions on foreign buyers allows non-UK residents to enter the market easily, provided they can navigate the complexities of securing financing.

Factors To Consider For Expats

Currency Fluctuations

Recently, the British pound has experienced some fluctuations, owing to major events such as Brexit and Queen Elizabeth II dying where the UK pound fell against the Euro and American Dollar. In these instances, it has made UK property very affordable for expats in countries with stronger currencies to invest in. This weakness has meant that overseas buyers get much more purchasing power, helping them to invest in property cheaper in key locations.

Stamp Duty Land Tax

A particular UK policy expat investors need to know about is the Stamp Duty Land Tax (SDLT). It is essentially a tax levied on property that is purchased in England and Northern Ireland. It applies to both residential and commercial properties and is calculated based on the property’s purchase price – the higher the value of the property, the higher the tax.

For non-resident investors, the SDLT surcharge introduced in April 2021 increased the cost of purchasing property by 2%. This measure was designed to cool demand from overseas buyers, but many expats continue to invest, recognising that long-term gains in the UK property market often outweigh short-term costs​.

Tax Benefits and Challenges

While SDLT can be a deterrent sometimes, there are still plenty of reasons for foreign investors to choose to put their money into the UK. The country has a policy for tax relief for landlords, which applies to both UK and non-UK residents. For instance, buy-to-let investors can offset mortgage interest payments and other costs against rental income.

Capital gains tax exemptions for primary residences also make it easier for those living in the UK or planning to relocate to sell property at a profit without significant tax penalties​. This means expats can consider long-term property holding strategies.

Summary

North Property Group is a property investment agency and lettings agency that focuses on premium UK real estate and buy to let London properties. We secure deals with reputable developers to hand deliver the best off-plan developments to our network of investors. If you choose to invest in property in London from overseas, we can help you navigate the UK’s legal and investment system.

We’ve been closely tied to London’s constant regeneration, working closely with developers to grow the city. Book a free consultation with us today to start your journey of investing in off-plan UK property.