If you’re a UK Non-Resident or Expat looking to purchase a Buy to Let property in the UK, location is one of the most important factors to consider.
Your Buy-to-let location will determine its value, growth, rental yield, security of income, and whether you’ll be able to use it as a personal second home.
We look at the best investment property locations in the UK for Expats in 2022, based on predicted housing price growth for 2022 onwards and rental yields across the country.
Contents:
What Does The 2022 Expat Buy-to-Let Market Look Like?
What To Look For With An Expat Buy-to-Let Property?
Applying for a UK Expat or Non-Resident Buy-to-Let Mortgage?
What does the 2022 Expat Buy to Let Market look like?
In the year of post-pandemic economic recovery, 2021 was a fantastic year for buy-to-let property investors.
Throughout the year, UK house prices grew at the fastest pace in 15 years at a rate of 9.8% with the average property valued at £280,000.
This gives a great potential return on investment for Expats looking for a buy-to-let income stream from UK property in 2022.
Life during the lockdown has motivated property buyers to value home space, outdoor areas and rural environments compared to before the pandemic which has pushed prices up.
Although 2021’s market boom was fuelled by a variety of factors including the stamp duty holiday, predictors of the market are anticipating the speed of growth will be very similar to that of last year.
The Royal Institution of Chartered Surveyors (RICS) states that house prices could end the year about 3 per cent to 5 per cent higher than the start of the year.
According to a Zoopla survey, about 22 per cent of UK households remain ‘eager’ or ‘very eager to move home in the next 18 months as a result of the pandemic, as workplaces move towards more flexible, hybrid working options.
What To Look For In An Expat Buy-to-Let Property?
We have just got back from a roadshow to Dubai last week and clients posed a very valid question – What to look for when investing in a UK property? Here are some answers:
Buy To Let Rental Yield
First and foremost, ex-pats and non-resident investors that are looking at UK Buy to Let Property look at rental yield. Rental yields are calculated as an annual percentage of a property’s value.
For example, a property that is worth £400,000 and produces £20,000 per year in rent has an annual yield of 5%. The higher the rental yield, the better. Lenders will also factor in your projected rental income when assessing the loan.
Rental Stream
The reliability of repeat tenants to ensure longer-term income is essential when applying for a buy-to-let mortgage. Lenders will factor in the location of your buy to let alongside the reliability of the rental stream when calculating affordability. Below are examples of what to look for.
Properties near city centres where there are work opportunities
Properties with great local amenities including shops, gyms, and leisure facilities
Properties near a university will attract a steady stream of rental applications
Properties with a communal living facility including remote working spaces
Capital Growth Potential
Lenders look closely at capital appreciation over the term of the loan so that the investor can build up sizeable equity. It is best to read reports provided by reputable estate agents who have some of the best teams to undertake this research on all areas in the UK.
Sometimes, there are areas in the UK which offer low rents but due to regeneration, the future would offer very good capital growth. Lenders take this board.
Holiday Lets And Personal Usage
Holiday lets can generate a higher rental yield than buy-to-let over the year however they are harder to maintain with a higher turnover of guests and rental income is not always guaranteed. It’s also important to bear in mind that it is harder to secure mortgage finance for holiday let properties.
What Are The Best Locations For A UK Buy to Let Property in 2022?
According to Zoopla’s market research the number one buy-to-let (BTL) Hotspot next year will be within the North West. The region offers the UK’s best yields closely followed by Yorkshire & the Humber.
Location | 2022 | 2022-2026 (5 year cumulative) |
North West | 4.5% | 18.8% |
Yorkshire & the Humber | 4.5% | 18.8% |
North East | 4% | 17.6% |
East Midlands | 4% | 15.9% |
West Midlands | 4% | 15.9% |
South West | 3.5% | 13.1% |
South East | 3% | 10.4% |
East of England | 3% | 10.4% |
London | 2% | 5.6% |
UK | 3.5% | 13.1% |
Life in the post-pandemic world has led people to work from home, with less commuting to the office. London remains a significant outlier with projections in comparison to other regions with a projected growth of 5.6% over the next 5 years.
The slight cooling of London’s property market will be of no surprise, with affordability in the capital a sticking point for most residents and investors.
However, with attractive employment prospects in London, the traditional ‘commuter belt’ located just outside is once again set to provide a strong attraction to investors.
Those considering looking at property within the London commuter belt, areas such as High Wycombe offer a 35-minute commute into Central London and is currently ranked as one of the most family-friendly towns. The capital appreciation in this area has increased to 8% over the past 12 months.
Overseas Buyers Will Take Tax Hikes In Their Stride
As of April 1st, 2021, overseas buyers purchasing property in England and Northern Ireland are now subject to a 2 percent stamp duty surcharge if the purchase is for a second home. The first home can be anywhere in the world.
For example, a non-resident buying a property worth £300,000 will pay £6000 more stamp duty then the UK buy-to-let investor and £15,000 more than a home buyer without a second property.
Applying for a UK Expat or Non-Resident Buy to Let Mortgage?
There are a number of options available for ex-pats and non-residents wanting to purchase a buy-to-let in the UK.
Many traditional mortgage lenders do not accept mortgages for ex-pats, however speaking to a specialist mortgage broker will give you access to a wider range of products
Get In Touch
Contact us to arrange a convenient time for a discussion and see how we can help.
Disclaimer:
This article is intended to provide a general understanding of the topic. The contents should not be treated as advice. Your home may be repossessed if you do not maintain repayments on your mortgage.
