Decline in pound attracts Middle East investors to UK real estate

Decline in pound attracts Middle East investors to UK real estate

16 Nov 2018

Brexit impact on UK

The Brexit impact could be seen on the pound that suffered one of the biggest declines in the last few months. Investors believe there will be no Brexit trade deal finalized this year and it is assumed if a trade deal is made, pound rate would increase significantly. At the same time, Middle East investors are picking deals from UK property, mostly in buy-to-let, before March 2019 due to attractive mortgage rate and the decline in a pound, which offers exceptional opportunities to grab deals at the desired prices.

Many foreign investors believe this is the right time to invest in UK property as the mortgage rates are one of the lowest, and many new opportunities are available in buy-to-let as the pound is declining. A number of buyers are grabbing deals in the current uncertain markets amidst mystified eco-political situations.

Tax changes from April 2019

It is assumed non-UK residents will be subjected to tax gains on the property from April 2019, where sale and income through the property will be taxable. Latest modifications have been announced in the proposed regulations, where the non-residents who invest through collective schemes will come under such taxation.  This will prevent the additional layer of direct taxes but still, there are many points of consideration where the companies offering such property will be treated as an offshore unit trust where these unit trusts are included in the tax net property.

Why the market appears worthwhile?

Overseas investors are getting lucrative deals now where Dubai-based landlords have already invested £14 million in the real estate markets in the country, which include the buy-to-lets and newly constructed homes. Such investments are believed to be once-a-generation kind of investment opportunity and there has been a rise in an appeal for such investments in the capital city London, from the Middle East, mostly due to currency advantage and fixed US dollar exchange rate. The chance of sterling recovery has increased the chance of getting the value of property in the near future.  

The decline in property prices in central London attracted investors from UAE, while, investments increased by over 20 percent in some of the foreign-sourced property markets in London.

Brexit has proved beneficial for buyers seeking such opportunities as the confusion during this time led to declining in price and decline in pound rates, further, making the property attractive.

Regions attracting most investments

The new figures from ONS find at least 7 out of the top ten growth regions in the country are in North of England and nine biggest drops in the sale were reported in the southern region.

The average home price in the UK is £228,000 (as per latest Land Registry data) that is 43 percent higher, in comparison to, the average house price in the Northwest i.e. £159,000 – as per ONS data.

Property dealers believe the family homes are still affordable in most regions and sale of such property increased significantly in the regions - Manchester, Leeds, and Liverpool.

London prices increased approximately 72 percent in a decade but the price growth slowed in the last few months offering opportunities to overseas buyers.

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