Middle East Buyers Seeking Rental Properties
15 Oct 2018
Middle East Real Estate
There are more than 5 million rental homes with a combined value of over £1 trillion in the country, which provides an ideal situation to buy -to -let investors. On average, the return is above 4 per cent in the rental sector, which offers opportunities for new developments and regeneration programs.
As per the head of residential at JLL Conran, there has been a change in buying pattern after the new tax; also, the demand shifted to owner-occupied property in London. As a result, investors are looking for options outside London in Manchester and Birmingham, where the entry price is low in comparison, and rental yields are increasing.
Ease Of Entry and Weak Exchange
Saudi Arabian asset management firm SEDCO Capital bought three properties worth $179.9 million as a part of the UK and French investments. For cross-border deals, the director of Savills, Hassan Farran, said the UK buyers traditionally prefer the homeland offers due to the landlord-friendly environment, ease of entry and low exchange rates.
Theretofore, the property outside London is also gaining as the key motive is earning through letting.
Millennials in the UK are not buying homes due to the higher cost of ownership, mortgage repayment, maintenance and utilities, which will raise demand for a rental property in the future. Currently, 46 per cent of the UK's 21 to 35-year-olds live in rental accommodations. In addition, transportation and connectivity are key factors, so the developers offer opportunities in regions with higher growth prospects.
Tax and Council Support
The tax system, the support of local councils and housing associations, ensures the house gets tenants, and landlords benefit from rent allowance in most regions. Moreover, the tax system is easy to handle and has clear guidelines, and the investors get rent without many deductions in case of an absence of outstanding tax or obligations.
There are various tax exemptions and provisions; from April 2020, the mortgage repayment for buy to let owned by private landlords may not be taxed.
Diversity in Properties
The northern powerhouse offers diversification and options with new developments and new projects. It gives great opportunities to overseas buyers. In the last six months of Brexit, property prices are growing in most buoyant UK markets. As per RICS, house prices were highest in the West Midlands and Northern Ireland.
The key reason for the increase in rental markets is the growth in demand. Halifax found the number of homes for sale reduced compared to a decade ago, though the prices are 2.5 per cent higher than last year.
Nationwide reported the highest growth in regions Yorkshire and Humberside, with an increase of 5.8 per cent y-o-y. The impact of Stamp Duty could be felt while the shortage and low mortgage rates support the growth.
Some real estate agencies believe the high-end buyers are limited, and the middle-level buyers are worried about political uncertainties and Brexit. However, some new buyers returning to the country from other cities are keen on buying a property at lower rates.
To know more about UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com).
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