I meet many individuals every month, working overseas in a range of expatriate destinations. APW has a presence in the Middle East and Asia, and we have even been known to get as far off-the-beaten path as Papua New Guinea and Switzerland from time to time.
Essentially, property investment in the UK is so straightforward, and so worthwhile, that’s it hard not to be evangelical about it. Yet, no matter how far we go, we always hear the same questions.
The most important thing to know is that anyone, regardless of their country of domicile, is eligible to own UK property. This is what makes it – in our humble opinion – the best property market in the world. Not only that, but with only 20% of the total number of required houses being built each year, the principles of supply and demand drive prices and rents upwards.
A common question is whether or not mortgages with British banks can easily be acquired by non-residents.
In principle, this is straightforward, and is easiest of all for British citizens and EU citizens. Nationals of other countries also have a good chance of securing one, because although the High Street banks apply rigid lending criteria to domestic customers, other banks (such as Bank of China) have more open-minded approaches. For the banks, mortgages are a major way to make money, and it’s a misconception to say – as some people do – ‘the banks aren’t lending like they used to’.
Of course, clients will benefit most by having this side of the transaction taken care of for them, which is why APW has an in-house mortgage desk whose motto is ‘if we can’t find you a mortgage, no-one can’.
This is another sticking point for would-be investors. Of course, you will require a deposit and a mortgage will be impossible without one. This can be about 20% of the value of the property.
However, one way of getting around this is to look for a company that allows you to build up a deposit from the time of reservation to completion.
This is something we take great pride in: the APW payment plans. We allow our clients to pay a deposit on instalments which are 1/24 of the deposit price, in the 24 months up to completion and handover. This can make your monthly payment level out in the region of £1500 approximately a month, which for expatriates is an efficient way to channel savings from earnings each month.
Brexit is another anxiety that would-be clients often ask about. Brexit has obviously affected the value of the pound (which in fact has made houses cheaper when bought with foreign capital).
However, the effect of this on house prices nationally is a less obvious thing: prior to the referendum, most foreign money came into the London property market. This has seen a relative downturn. Nonetheless, areas outside of London – particularly in the north of England where the new economic powerhouses are located – have emerged unaffected from this.
Indeed, the cities of Birmingham, Sheffield, Nottingham present – in our view – tremendous opportunities for investment due to the economic centres of gravity around them which will drive growth well into the future.
UK tax law is currently favourable to non-resident landlords, through the Non-Resident Landlord scheme.
There are some changes coming to how taxes are applied. At present, you can deduct your mortgage costs from your rental income, meaning you are only liable for tax on the difference between mortgage and rental income. This is going to change, meaning that your tax exposure is going to be higher. However, there is likely to be a 20% blanket discount on mortgage so there won’t be much of an impact felt.
Everyone should be additionally be aware of the new worldwide AEoI: Automatic Exchange of Information, in which all participating countries will share details with worldwide tax authorities for all assets held in their territory. This means you will be required to declare your new property to the tax authorities in your country of residence. (If you don’t, they will still be informed of this automatically). This system started in 2017 and will roll out to over 40 more countries in 2018.
One of the great paths to prosperity in retirement
Property investment is still a worthwhile strategy to make retirement prosperous. Our advice: make sure that, no matter which investment firm you choose, that they take the time to explain your options fully and look for one which cares enough to educate its clients on the upsides as well as the pitfalls.