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Residential buy-to-Let

Why UK luxury housing holds powerful appeal for global investors

Author: Gemma





UK property has long been an attractive market for international investors seeking out lucrative assets and opportunities on the global stage.

For those planning to invest in British real estate in 2019, some of the strongest prospects can be found in the luxury sector. High-end property features and amenities give landlords greater scope to maximise their yields through higher rents, which could prove particularly valuable in areas where demand for desirable accommodation is high.

Luxury appeal

Appealing to the luxury market – whether it’s through a property’s location, exterior look or interior design touches – will always be a powerful advantage for buy-to-let investors keen to secure the best possible returns from their assets.

Tenants are often willing to pay a premium for desirable features and unique add-ons that might not be available in other properties.

According to a survey by comparison website GoCompare, outdoor areas such as a garden or roof terrace and an on-site gym or pool are among the top five features private tenants look for in their accommodation. Parking spaces and proximity to schools are also important, but by far the most significant consideration of all is whether the property is unfurnished, with 60 per cent of respondents saying they want to choose their own furniture.

The value of additional features is particularly evident in the student housing sector, with the Knight Frank/UCAS Student Accommodation Survey 2018-19 showing that 70 per cent of tenants would be willing to pay extra for fast Wi-Fi. Nearly half of respondents said they would pay a premium for a larger bedroom (47 per cent) or an on-site gym (45 per cent).

Looking at UK luxury property as a whole, it’s clear this is still an attractive market for investors from around the world. A freedom of information request submitted to HM Revenue and Customs revealed a recent increase in sales of ultra-high-end homes in Britain.

Approximately 300 properties sold for more than £10 million each in the tax year to April 2017, the latest period for which figures are available. This marked an increase from 100 in the preceding 12-month period, the Guardian reported.

This is the absolute top end of the market, of course, but it illustrates how luxury housing in the UK is viewed as a strong investment, particularly for wealthy international buyers.

A large proportion of the highest-value real estate purchases take place in London, but recent trends have indicated that investors looking for a balance of luxury appeal and affordability could have a lot to gain from destinations outside the capital.

Regional prospects

Nationwide property market trends have suggested that London is going through a period of stagnation, particularly in terms of price growth, while other regions are showing much stronger performance.

In the December 2018 edition of its House Price Index, Your Move highlighted “the new north-south divide”. Annual price growth in the north-west of England and the East and West Midlands outpaced inflation, while Greater London struggled to maintain any positive momentum.

Oliver Blake, managing director of Your Move and Reeds Rains estate agents, said: “Due to current political and economic unrest it is understandable why buyers and sellers may be taking a ‘wait and see’ approach to the property market but, in turn, as demand waivers, it means that property may become more affordable to more people. This should help buyers.”

For international investors, who might not be as affected by Britain’s current political and economic uncertainty as domestic buyers, now could be the perfect time to realise the potential of luxury property in regional areas.

Locations such as Liverpool and Manchester offer the twin benefits of average prices that are considerably lower than those in London, and clear scope for ongoing capital growth.

These cities are home to thriving business communities and growing populations of university graduates and young professionals, many of whom will be keen to find well-equipped, desirable property close to their place of work.

Experience Invest is currently offering a number of investment opportunities in the north-west, including river-facing apartments at Liverpool’s Infinity Waters, a development of three towers set to transform the city’s skyline. Features including full spa facilities, private gardens, an indoor pool and concierge services will help to ensure this property appeals to tenants looking for luxury.

Also in Liverpool, Percy Place provides accommodation in renovated townhouses and apartments in existing Georgian houses, while riverside apartments are now back on the market at The Residence in Manchester.

The enduring appeal of UK property

Whatever the future holds for the UK economy after the country leaves the European Union, there is a strong likelihood that property owners and buy-to-let landlords will continue to see healthy returns on their investments.

The various challenges and periods of adversity the British property market has encountered over the years – most notably the 2008 financial crisis – have demonstrated its resilience and ability to bounce back in even the most difficult circumstances. Click here to find out why luxury housing will always be in demand…

Indeed, any economic troubles the UK does experience in the wake of Brexit could translate into opportunities for international investors. Sluggish price growth in the housing market will improve affordability, particularly in regional areas, while British citizens’ inability or reluctance to take on a mortgage could fuel demand on the private rental market.

Furthermore, the current weakness of sterling on currency markets – and the possibility this will continue after Brexit – means overseas buyers get more for their money in the UK.

Jonathan Samuels, the chief executive of property lender Octane Capital, told the Guardian that the recent weak state of the pound meant that “some of Britain’s wealthiest cities became a goldmine for foreign investors seeking a bargain”.

He added: “While many homeowners sit on their hands during times of political and economic volatility, the ultra-wealthy often use these periods to acquire assets at a significant discount.”

For international investors that are able to boost their portfolios in some of Britain’s fastest-growing locations in the coming years, luxury housing could prove to be one of the most lucrative asset classes.

Contact Experience Invest today to find out more about these and other UK property investment opportunities.

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