Expats take advantage of weak pound to invest in UK property

Warren Lewis
28th November 2017

New research reveals that expats and foreign nationals in UAE are snapping up UK property, while the pound is week and prices remain very affordable outside London and the South East.

The new figures, produced by Liquid Expat Mortgages, show that there has been a 20% year on year increase in expats and foreign nationals within UAE investing in UK property. These buyers are investing in both buy-to-lets and first, or second homes.

The research also reveals that in 2017, 60% of UAE expats and foreign nationals buying property in the UK, opted for Manchester, while 25% choose Birmingham.  However, London has seen a 60% drop in buyers, as a result of high property prices and poor rental yields, compared with other regions of the UK.  

What may surprise many is that in real terms, property prices in the UK have fallen compared with a decade ago and there is a huge North/South divide*. In London, the average property value has risen by nearly 70% in 10 years, whereas in Northern Ireland it has fallen by more than 40%.

This growth in investors from UAE is partly down to the availability of a wider selection of mortgages designed for working expats and foreign nationals, which offer interest rates as low as 2.74%.  This is significantly cheaper than the average mortgage interest rates in the UAE of around 4.25% for Dubai property.  

According to Liquid Expat Mortgages, investors are also attracted by the UK’s robust legal system for property acquisition, which makes it one of the easiest places in the world to buy property.

Stuart Marshall, Managing Director comments: “There is plenty of legislation in the UK to protect property buyers and the process is straight forward, compared with many other parts of the world.  

For a long time, being an overseas investor was the preserve of those with wealth, who could afford to buy prime London property and take on a mortgage in excess of £700,000.

Over recent years, there are many teachers, nurses, IT workers who have been turned away from UK mortgage companies and have found it unaffordable to use brokers in UAE, as the deposits and interest rates are much higher. We have worked hard over that last five years to persuade lenders to create mortgage products for UAE expats and foreign nationals.  We have also been able to secure mortgages for foreign nationals from offshore lenders and UK lenders, with a minimum £100,000 loans.

Now, expats and foreign nationals can easily buy in the UK, as there is a wide choice of mortgages on offer. Many are choosing to buy property in the cities and towns in what is known as the Northern Powerhouse, as they offer the best investment opportunities in buy-to-let, with rental yields of 7.08% in Salford, 5.96% in Leeds and 5.79% in Manchester.

In fact, Manchester, the unofficial home of the Northern Powerhouse, sits in the Top 10 buy-to-let postcodes in the UK, with rental price growth of 7.53% and yields of 6.11%.

There has never been a better time to buy a property in the UK. The average house price has fallen compared with a decade ago and interest rates are at an all-time low, despite the recent rate rises. Think tanks are suggesting that the scrapping of stamp duty for first time buyers will push up prices.  It is unceratain if this will be a reality, but whatever happens, the UK remains one of the best places in the world to buy property.”

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