African investors who want to build wealth on a global scale and diversify their investment portfolios can benefit greatly from participating in the real estate investment market in the United Kingdom (UK).
Foreign investors have the opportunity to purchase in the United Kingdom, which is an economic powerhouse, and specifically in locations that have consistent property growth and strong rental demand. In addition to a thriving property market and established property management, the United Kingdom provides this opportunity to foreign investors.
Here are some of the most compelling arguments in favor of investing in the real estate market in the United Kingdom.
1. Confidence in the UK market
Buyer and seller confidence in the United Kingdom continues to be high, which is fueling the country’s housing market despite the numerous external forces that are influencing the market. The United Kingdom has a strong reputation for stability, opportunity, and safety, which attracts a lot of foreign investors who want to either keep or grow their assets and capital there. Not to mention the ongoing revitalization of cities in the United Kingdom, which helps to boost employment, as well as the improvements in rail transportation, which help to make the United Kingdom’s connectivity one of the finest in the world.
2. Supply vs demand
The supply and demand for real estate, which includes both the building and the plot of land on which it is situated, determines its value. Real estate is a tangible asset.
Inequality is one of the most significant factors that influence property investment decisions in the UK. The demand for housing in the UK is only going to increase as the population does. Because there is a shortage of housing in metropolitan areas, there is a growing demand for property that is either affordable or available for rent in many areas of the UK’s countryside.
Because the average age to buy a home in the UK is 44, as opposed to the average age in some other countries, the demographic tends to rent for a longer period of time. Both younger generations of students and young adults who have not yet purchased their own homes, as well as older generations of people who are looking to downsize, make up a large portion of the population in the United Kingdom and are driving up demand for rental properties.
Buy-to-let properties, for example, provide investors with the opportunity to maximize their long-term return on investment through both the capital growth of the asset and the long-term rental increase of the property. This is especially true in times of inflation.
With rental yields in prime UK cities reaching up to 5%, the income from a rental property has the potential to cover mortgage payments in addition to other expenses such as general property maintenance. Because of this, the purchase of the property you made would bring you a monthly amount of cash that was in the positive for you.
3. Interest rates
Since the value of real estate in the UK is relatively consistent, you can confidently purchase a home overseas using a mortgage. Because the interest rates on mortgages are noticeably lower in the well-established property market in the United Kingdom compared to those in other jurisdictions, it is significantly simpler to qualify the property as a functioning buy-to-let investment.
mortgages secured by investment properties
Buy-to-let mortgage loans and commercial mortgage loans are two examples of the types of investment property loans available. These are the kinds of loans that are used to finance the purchase of real estate with the express purpose of turning a profit, either through rental income or upon eventual resale of the asset.
Mortgages at competitive interest rates are easy to come by and can be obtained in large numbers. Foreign investors who want to take out a mortgage can choose from one of 87 different types of loans available to them, and South African investors are free to purchase property in the United Kingdom without being subject to any legal restrictions.
You have the ability to “lock in” an interest rate for a term of up to five years, which means that as an investor, you will be able to precisely estimate how much your mortgage will cost over the course of the next five years. As a consequence of this, when you create your investment profile, you are aware of all of the costs that are associated with it. The costs of borrowing money at this rate can range anywhere from 75% credit to 25% value depending on the circumstances, but they are guaranteed to remain at 4% for the next five years.
The growth of capital
To put it another way, capital growth is defined as an increase in the value of your property over the course of time. This holds true for all different kinds of real estate, and comparing the prices at which the property was bought and sold is one way to figure out how much its value has increased over the years.
An investment that has been carefully planned out and researched beforehand may result in even greater capital growth. Consulting an expert who is conversant with interest rates, understands the risks associated with them, and can assist you in mitigating those risks is essential for this reason.
4. Improvements to the infrastructure as well as revitalization
Towns and cities all over the United Kingdom are undergoing transformations as a result of a national regeneration program and investments in local infrastructure. Efforts have been made to encourage growth and redevelop blighted areas by promoting regeneration. This includes upgrades to homes, street facades, and roads, in addition to the addition of new transportation links that will make it easier to travel around the entire UK.
Cities such as Birmingham and London are experiencing an increase in investment as a result of rail projects such as High Speed 2 (HS2). The first phase of the high-speed rail line known as HS2 in the United Kingdom (which will connect London with major cities in the Midlands and the north of England) is currently under construction. HS2 is planned to connect London with these major cities.
The High Speed 2 (HS2) rail line will establish connections between major airports and cities like London, Birmingham, and Manchester. It will be the longest railway bridge in the UK, measuring more than 3.4 kilometers in length, and it will stretch across a number of lakes and canals. Additionally, it will be the second purpose-built high-speed line in the country.
Access to the city will be good, and transport costs will be relatively low in comparison to the costs of long-distance trains coming from outside the country, which means that investors can now invest outside of central London and still get a good return on their money.
As part of our strategy for investing in offshore real estate, Sable International will collaborate with you to determine the most suitable offshore investment strategy that is suited to your individual requirements and goals.