High rental yields are one of the most important qualities to look for when investing in buy to let properties. Because rental yields represent the amount of rental income that an investor can expect, it’s common knowledge that the higher the yield, the better, something many UK properties can offer over other countries, making it an attractive market for foreigners interested in adding more real estate to their investment portfolios.
But can non-UK residents even buy property in the UK? Many foreign investors will be pleased to learn that purchasing property in the United Kingdom from abroad is permitted, and in fact, encouraged. You can purchase UK property as an investment even if you don’t live in the country. If you’re a foreigner looking to buy property in the UK, there are however a few things you should know before getting started.
Student and residential buy-to-let properties are the two most common property types purchased by investors in the United Kingdom. Both of these types of properties have their own set of advantages and disadvantages.
Residential properties are those that can be rented by anyone, whereas student properties are those that can only be rented by students in the United Kingdom. One of the most significant differences between these two types of properties is price. While residential properties can be purchased at reasonable prices, student properties are typically less expensive. This is because student properties are frequently designed as studio apartments, which are smaller and less expensive than one- or two-bedroom apartments, which are the most common format found in residential flats.
Consider the type of tenant you want to rent to when deciding whether to invest in a residential or student property. If you’re a foreigner buying property in the UK and want to take advantage of the booming student market, a student investment is the way to go. Focusing on residential buy-to-let apartments is a better choice if you want to target young professionals living in city center areas who are looking for a luxury living experience.
Another consideration when looking at different property types is whether your property will be leasehold or freehold. The majority of buy-to-let apartments in the United Kingdom are leasehold, which means that the investor does not own the building or the land on which the property is built. Leasehold tenure is often more advantageous for foreign investors looking to buy property in the United Kingdom because it entails less responsibility.
For instance, let’s imagine that water leaks into the apartment through the building’s exterior walls and damages the property, causing mould or damp. Instead of the investor paying to repair the damage, the freeholder would be responsible, because they own the building. This simplifies the management of a UK-based rental property for someone involved in international property investment who may have difficulty making it to the site in person.
When looking for an investment property, you should look in a variety of areas to find the best deal. When purchasing property in the United Kingdom, non-resident investors may not be as familiar with the various cities and areas as residents.
While you can of course look up the basics on Wikipedia, and view various maps and similar resources, that will not always give you the big picture. Like most countries the demographics, customs and even ‘quirks’ of a neighbourhood in the UK will often change from street to street, let alone from town to town or city to city.
This is where having a local contact becomes so valuable. Working and getting advice from those who know the areas under consideration on a first-hand basis can give the insight you need to make the right real estate investment choices.