Is now the right time to invest in UK Property?
With the Economy subdued, the outcome of Brexit still uncertain and the value of the pound falling, can the UK property market still be attractive to Investors?
To many, the answer is a resounding Yes, as many factors come together to create favourable conditions for those residing in the UAE, foreign investors and expats alike.
Many cities in the UK behave completely differently when it comes to performance of the property sector, offering opportunities for different investor appetites. While many cities in the North are seeing strong growth despite the economic environment, London house prices dropped by 4.4% in the year to May 2019 creating opportunities for those who seek to buy in the capital in addition to those seeking property prices on the rise.
UAE Residents will see a huge advantage and boost to their buying power with UAE Dhiram earnings rising against the weak pound offering an attractive opportunity to get more for their money. Due to the strength of the dollar (and thus Dhiram) against the pound, UAE investors can spend the same capital in Dhirams on a UK property yet afford a higher value in Pound Sterling.
Both mortgage lenders and brokers are subsequently reporting that London is once again being targeted by UAE property investors seeking to take advantage of the greater buyer power exchange rate movements have afforded them.
Lenders continue to encourage easy access to the UK market with low mortgage rates and borrowing up to 75% loan to value available, adding to the appeal of investing in UK property. Typically investors will need to put down a deposit of 25% of the property value to get mortgage rates of between 2% and 5%, while they will have a wide range of lenders to consider from UAE Banks, International Banks, UK based Lenders & Islamic Lenders.
It’s important to consider additional costs involved with the purchase such as mortgage arrangement fees and stamp duty. With currency fluctuations likely on the horizon, it’s important to consider your prefered denomination of your mortgage as UK lenders are likely to lend capital in GBP while UAE lenders are likely to do so in AED.
Given the attractive investment potential in many cities around the UK, even lenders who used to primarily lend for purchases in London now lend in the majority of cities around the UK. There is an added appeal for many cities throughout the UK in addition to London, as many Northern cities emerge with attractive rates of capital growth, more affordable entry prices and strong rental yields.
While prices rose by 2.1% throughout the UK on average in the year to May 2019, there is a great deviation across different cities, with prices in Liverpool rising by 5% and strong growth also demonstrated in Belfast (4.6%), Manchester (4.3%), Edinburgh, Birmingham & Glasgow (all 4%).
The combination of attractive mortgage rates, increased lending availability, the pound weakening against the Dhiram and desirable investment options with high yields and capital growth potential throughout the country there has not been a more accessible time to move into the UK property investment market.