Middle East buyers seeking rental properties


hamilton international estates Middle East buyers seeking rental properties

15 Oct 2018

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. The return is above 4 percent, on an average, in the rental sector and the sector offers opportunities in new developments and regeneration programs.  As per the head of residential at JLL Conran, there has been a change in buying pattern after the introduction of tax where the demand shifted to owner-occupied properties in London. Investors are looking for options outside London in Manchester and Birmingham where the entry price is low in comparison and rental yields are growing.

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. The director of Savills, Hassan Farran for cross border deals, said the buyers, traditionally, prefers the UK due to landlord friendly environment, ease of entry and low exchange rates.   The properties outside London are also gaining where the key motive is earning through letting.

Millennials renting

Millennials in the UK are not investing due to the higher cost of ownership, mortgage repayment, maintenance and utilities, which will raise demand for rental properties in the future. Currently, 46 percent of UK’s 21 to 35-year-olds are living in rental accommodations. Transportation is a key factor and sellers are offering opportunities in regions with higher prospects of growth.

Tax and council support

The tax system, the support of local councils and housing associations make sure the house gets tenants and in most regions, landlords benefit from rent allowance. The tax system is easy to handle, clear, 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 e.g. 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 diversity and options with new developments and new projects. It gives great opportunities to overseas buyers.  In the last six months of Brexit, the property prices are growing in some buoyant UK regions.  As per RICS house prices were strongest 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 as compared to a decade ago, and the prices are 2.5 percent higher as compared to last year.

Shortage

Nationwide reported highest growth was reported in regions Yorkshire and Humberside, with an increase of 5.8 percent y-o-y.  The impact of Stamp Duty could be felt, while, the growth is supported by the shortage and low mortgage rates. Some of the new buyers returning back to the country from other regions or cities are keen on buying properties where the rates are low.  

Some real estate agencies believe the high-end buyers are limited, and the middle-level buyers are worried about political uncertainties and Brexit.

To know more about UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com).

 

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