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12/12/2019

The Brexit effect is something that many people living in the UK continue to struggle with, regardless of their view on what should happen. Afterall, years of uncertainty and disagreement aren’t easy for anyone to cope with. However, while the UK’s property market has stalled a little and people are more cautious over buying or investing in property, for overseas buyers, Brexit uncertainty has made this a more attractive and potentially profitable market for them.

Indeed, a new report shows that thanks to a slowdown in house price growth and a weaker British Pound, investing in British property has become cheaper and a more profitable option for many people living overseas.

Investing in UK BTL makes sense for overseas buyers

Since the result of the 2016 Brexit referendum, house price growth has slowed sharply from 8.2% per year in June 2016 to just 1.3% on the year in September 2019. Although, the average house price has still risen by around 8% in the past three years from £215,127 to £234,370.

For those living and working in the UK, that’s still quite an increase while earnings growth hasn’t reached those heights. However, for those living overseas but interested in investing in and buying UK residential property, they have the added bonus of the weaker pound. That means that, particularly for those living in mainland Europe or the US, their dollars and Euros are worth more when they exchange them into sterling. And that gives overseas buyers a notable discount on the actual price they’re paying and great value for money.

Once an overseas investor has purchased a BTL property and begins renting it out, they’ve paid less than they would have done three-and-a-half years ago. Meanwhile, rents have also risen during that period, making their annual yield and return on investment more attractive too.

“For the expat buyer of UK property, the Brexit effect has been a gift,” said Guy Stephenson, director of Offshoreonline, who conducted the research. “Not only has sterling depreciated against key currencies such as the euros and US$, which effectively means an instant price reduction, but the domestic uncertainty caused by the Brexit vote had impacted the market too. Over the three years since the UK voted to leave Europe, housing market activity levels have weakened, as domestic confidence evaporated.”

Overseas landlords benefit from proptech developments

Another reason that investing in the UK BTL market from overseas makes sense, is because there are now even more ways to manage your tenants and ensure rent is paid and your property is being looked after.

Of course, letting agents remain an important part of the industry, but they’re now under more scrutiny than ever before which suggests their charges might also rise. For overseas landlords who want to remain in the UK BTL industry, or even grow their portfolio, technology developments are making it easier to do-it-yourself than ever before.

Using a business-led rent guarantor service like the one we offer is just one example of how overseas landlords can gain confidence that their tenants, who they may never have even met, will always pay their rent.

Our sophisticated financial technology means we can assess tenants for suitability to act as their rent guarantor, instead of using a family member or close friend. This makes the transaction more professional and reliable and can put both parties at ease when they agree a new tenancy.