Are Investors Hesitant to Buy UK Properties?
Statistically, the United Kingdom’s population has increased by 7% in the last decade, increasing to just over sixty three million according to a recent census. With reported falling property prices and low interest rates, now may seem like the intelligent time to invest in buying a property in the UK. However, with the uncertainty of Brexit, and the statistic of just 285,000 properties being bought with cash alone in 2018, it begs the question, are investors hesitant to buy UK properties?
Below are just a few reasons why people may be hesitant to invest in a UK property in 2019:
- The current and near-future UK economy has to be considered It was shown that economic growth slowed at the end of 2018. Although it’s expected to recover in 2019, it’s set to remain sluggish throughout the upcoming year.
- Changes to taxes act as a negative for certain It’s predicted that mortgage interest relief is set to be capped at the basic rate of 20% by April 2020.
- Foreign investors are particularly hesitant to buy in the In the past, a lot of wealth has previously been poured into the UK by China, Arabic countries and Russia alike. The income of this has drastically slowed down, due to the fear of current political change in the UK.
- The weaker UK pound is also something to be With this pushing up the price of goods imported from abroad, it will inevitably feed into higher inflation rates.
- Then of course, there is the 3% stamp duty surcharge on second homes for those considering a buy to let Landlords can no longer claim full tax relief on mortgage interest.
- Interest rates themselves are set to rise to the highest level in a decade since the financial crash, increasing from 0.25% to 75%.
- Brexit is something that cannot be ignored, and the Bank of England predict that the impact of the UK leaving the EU could be highly significant for the housing If
a “no deal” Brexit is chosen, house prices are predicted to fall by 30%, which compares with the drop of 17% in the average UK property as a result of the financial crisis ten years ago. Again, it also comes back to the political and financial uncertainty of the UK at present, and how this will potentially discourage foreign investors.
However: Some of these aspects could actually be seen as advantageous for new and experienced investors alike.
- Despite there being undeniable risks, it is true that with interest rates being at an all time low, borrowing is actually cheaper. Mortgage payments being low, increases the amount that monthly rent can be charged for, and subsequently landlords are earning a higher rental
- The UK is actually the top European city for property
- There are alternative options for investors, like quick sale companies such as ReadySteadySell; if they end up looking for a quick cash sale, or are alternatively looking to make a purchase of the same.
- Cities such as Birmingham, Manchester and Leeds are flourishing like never London no longer has the monopoly, as many places up North are regenerating. Birmingham alone has gone through a complete transformation, costing over £500 million in development.
- Educationally, of the top universities in the world, 16 are in the
- With record levels of population growth, it seems the UK will continue to grow and flourish.
- If statistics are correct, it’s set that 20% of the population will rent in the next five years, so now is a good time to invest in a buy-to-let
Although there undoubtedly pros and cons to be considered before investing in a UK property, it’s fair to say there are significant arguments for both sides. As with any investment, there are risks and pay-offs, so are investors hesitant to invest in UK properties? The debate is ongoing.