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31st March 2020
3 minutes

UK currency drop provides opportunities for buy to let property investors

The UK buy to let market is often viewed as a safe option for overseas property investors. Due to the current climate and a drop in UK currency, the UK housing market is set to attract even more attention from foreign investors.

With the Coronavirus pandemic ongoing, the global economy is under a large amount of strain. Interest rates have hit an all-time low in the UK and the pound has dropped against the dollar again. Whilst the UK currency has suffered during this volatility, the Hong Kong dollar is performing well, making property investment an attractive option for Hong Kong investors looking at the UK buy to let market.

Increases in stamp duty land tax

Earlier in March, Rishi Sunak delivered his first budget speech, updating Parliament on the government’s spending plans for the next year. At the time of writing, we’re assuming that there are no changes to the budget as a result of Coronavirus’ effect on the economy.

Sunak confirmed plans to increase stamp duty land tax (SDLT) to 2% for non-resident buyers of property in the UK. Whilst this isn’t great news for overseas investors, the surcharge won’t go into effect until April 2021. A weaker pound coupled with the upcoming increase in stamp duty land tax, makes for a convincing argument for overseas buyers to invest in UK property sooner rather than later.

Manchester remains a lucrative option for overseas investors looking at the UK housing market

The main draw for overseas investors to choose Manchester over London is price. The average cost of an apartment or house in Manchester is £173,400. The average house price in London is £476,000, which is 176% higher than the average house price in Manchester. In addition to lower house prices, rental yields in Manchester are 67% higher than in London, again making Manchester a more desirable choice for foreign investors than London.

Central Manchester has undergone a rapid transformation in recent years and low residential stock levels coupled with high rental demand has made Manchester an incredibly desirable place for property investment.

Whilst other investment sectors may suffer during this volatility, the property investment market has an opportunity to blossom. Overseas investors are seizing opportunities to acquire assets that deliver huge returns, at a significantly reduced price because of sterling devaluation. This currency window of oppor­tunity won’t last forever, once Britain is no longer under lockdown and the Coronavirus is under control the British Pound will regain its losses.

If you’ve got questions about the current state of the property market or if you’re planning to invest in property and need advice, leave us your details and one of our property consultants will be in touch shortly. Our offices are currently closed but our team continue to operate remotely.

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