Adam Wojnar - Real estate investment broker in England
Adam Wojnar

Investing in property

Investing in UK Properties: Opportunities and Guidance for Overseas Buyers

UK Investment Properties

The UK is highly regarded for its secure property investment opportunities, particularly in the North where property prices remain low and affordable. Investors can achieve rental returns of up to 8% gross (approximately 6% net) on these low-cost homes. Historically, UK house prices have doubled every 10 to 12 years over the past six decades. Find UK Property offers a full suite of services to help both local and international buyers acquire properties easily. Properties priced between £70,000 and £120,000 in the North West and North East are considered the best value, offering strong potential for capital and rental growth over the next 15 years. Conversely, London properties are now too costly, providing poor rental yields of around 3%, making them less attractive for investment.

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Investment in real estate abroad
Investment in real estate abroad

Residency in the UK

The UK allows property investment from any national, but purchasing property does not grant automatic residency, visas, or citizenship. Most overseas clients buy properties for future personal use, holidays, or as long-term investments, often renting them out through Find UK Property. Retaining rental income in the UK can cover various expenses such as holiday stays or university fees for children. This strategy offers flexibility and cost-efficiency, enabling investors to choose properties that maximize yield and growth potential.

While owning property increases your financial ties to the UK and allows you to register with HMRC, you may not owe tax if your income is below £12,570 per year. This purchase could be beneficial if you plan to spend more time in the UK in the future. However, if your main goal is residency, it’s better to seek visa or immigration advice. The Home Office website provides useful information on this matter.

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Find UK Property Assistance

We specialize in assisting serious overseas buyers, expats, and property investors in finding the most suitable and affordable UK properties. With high prices in the South and London, the best value and highest rental yields are found in lower-cost properties in the North. Therefore, we focus on 28 areas in the North, particularly towns north of Leeds, including Middlesbrough, Stockton, Darlington, Hartlepool, Teesside, and Durham County.

Once you acquire your property, you have full control over its use, whether for personal, holiday, or rental purposes. Most clients prefer renting out their properties for long-term income and capital growth. You have the option to rent the property yourself, use any letting agent, or have us find a management company for you.

Investment opportunities England - Adam Wojnar
Investment opportunities England – Adam Wojnar

Property in London

London properties are significantly more expensive than those in other UK regions, offering lower rental yields and less promising future growth. Post-COVID, many people have realized they can work remotely, reducing the need to live in a big city. Properties outside London generally offer better value and higher rental yields, leading most investors to avoid London due to its poor investment value.

Currently, we advise against purchasing properties in or near London or the South due to their high prices and low rental yields. Properties sold for £75,000 in the North can cost over £300,000 in the South. While London has historically seen strong capital growth, future prospects are less certain, and the risks are higher. Many clients prefer renting near London when necessary and investing in multiple low-cost properties in the North. This approach provides higher income and better growth potential with lower risks. With a budget of £300,000, you can buy four houses in the North, yielding twice the gross rent compared to a single house in the South. Historically, capital growth percentages have been similar in the North and South, but future growth may favor the North.

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UK Property Prices

UK house prices have historically doubled every 10 to 12 years on average over the past 60 years. Low-cost houses in the North are expected to continue this trend, although future growth cannot be guaranteed. Property prices surged during and after the COVID period (August 2020 to August 2022), particularly in London and the South. However, prices have since fallen significantly due to high mortgage interest rates, making properties unaffordable for many buyers. This decline has been most pronounced in the South and London. In contrast, the North has been less affected due to lower costs and greater affordability without mortgages. Currently, demand for low-cost houses in the North is rising as investors shift from expensive Southern properties to affordable Northern options. Thus, Northern prices are likely to grow at a better rate than those in the South.

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The market price of existing houses varies based on factors like included amenities, renovation status, and overall condition. Online property portals show that prices for low-cost properties can vary widely within the same area. This variation is due to differences in the internal state of the house and the degree of renovation. Derelict houses with structural issues are priced lower, average prices are seen for houses needing renovation, and recently renovated houses command higher prices. These are not new or identical properties, so prices are not uniform.

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Use by Children as University Accommodation

If you plan to buy property near a university for your children’s future studies in the UK, it is advisable not to purchase property yet. The selected property might not suit their needs or be conveniently located, even if it’s near their expected university. Initially renting university accommodation offers flexibility and ensures they are in a safe and convenient location for their studies. Many overseas buyers have found that they do not end up using their properties for this purpose.

Instead, consider investing in rental properties and using the income to fund your child’s university accommodation. This approach offers greater flexibility for you and your child.

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Holiday Use

For holiday use of one or two months a year, it’s generally best to buy an investment property and rent it out continuously. Keep the rental income in the UK and use it to pay for holiday accommodation when you visit. This strategy provides flexibility and allows you to invest in properties with the best yields and returns, regardless of their location. UK properties should not be left vacant for long periods as they may develop dampness, and tenancy agreements are typically for 12 months. Managing a property for occasional use involves legal notices to tenants, cleaning, renovations, and utility changes, which can be impractical and spoil your holiday. Renting is a better option unless your holidays are very long (over six months).

Future Own Use

If you are considering future relocation or retirement in the UK, it is better to rent initially to ensure satisfaction with the location before buying. Investing in rental properties first provides income, growth, and future options. Use the rental income from your investment property to pay for any property you rent for personal or family use, offering more flexibility and the ability to move around until you are certain where you want to live. Your investment property can also be used for personal use if needed; simply give the required notice to relocate tenants fairly.

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Overseas Nationals

Many overseas buyers seek UK properties for secure medium to long-term investments. They often have connections to the UK, such as plans to send their children to study here, relatives in the UK, or personal studies in the UK. These buyers are looking for a company that offers a complete solution, including finding investment properties, managing the purchase process, providing letting and management options, paying net rent, dealing with UK authorities, and potentially managing the future resale of the property.

Some clients may plan to use their property or sell their investment properties to buy a personal residence in the UK in the future.

Are you considering investing in a property in England or have you already started negotiations? Over the last two and a half years I have been involved in the purchase of 34 (and counting) investment apartments and houses in the UK. I own four investment homes there myself. My colleagues and I are now opening our own estate agency around Newcastle. We will be specialising in foreign investors. Let’s set up a video meeting  (click on the link) and pick a date in my calendar. I’ll be happy to lend my assistance to your purchase as well.

Adam Wojnar

Adam Wojnar - Real estate investment broker in England
Adam Wojnar

My name is Adam Wojnar. I’m the author of an established blog about investing in foreign real estate, and have been helping my clients to buy investment properties abroad for over 2 years. If you’d like any more information, or simply want to get in touch, you can contact me here.

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