In Detail - Why invest in UK properties?

The UK Government puts much effort in improving the country’s infrastructure and regenerating older regions amongst different cities. Major on-going projects include Liverpool Waters, Spinningfields in Manchester, and Big City Plan in Birmingham. Last but not least, we also much anticipate the completion of the first phase of High Speed 2 (HS2) in 2030, which will connect London and Birmingham and cut the transport time by half.

According to JLL’s 2020 study, UK’s legal system ranks no.1 in the world. This is based on 210 independent criteria ranging from legal compliance, monitoring, transactions, sustainability, etc. For example, it is very convenient to look up the details and past sales record of any properties on Land Registry, free of charge. In other words, information in the UK is highly transparent and will help investors make more informed decisions. Boasting a healthy economy, concentration of global talents, a large financial centre and incoming investments from across the world.

It is expected that the UK population will increase by 5,000,000 in 20 years, but the housing supply has been far from sufficient. Whilst the government aims to build 300,000 houses per year, on average the number of new builds has only reached 60% of this target. The systematic under-supply of houses will continue to fuel the increase of UK house price. 

Like many developed countries, the UK faces the challenge of an ageing population. That being said, if there is one upside from this, that would have been the fact that over the past 10 years the number of renters over 55 years old has actually doubled. In the same period, the UK has witnessed an increase of nearly 800,000 renters aged between 25 and 45 years old. Both observations demonstrate a strong and growing rental demand in the UK, which subsequently leads to a steady increase in rent.

Apart from the good old buy-to-let, there are a lot more other property strategies in the UK, such as Buy-and-refurb, HMO, Serviced Accommodation, and Joint Venture. All these strategies can bring a lot more higher returns, but of course there are also a plethora of finer points that investors must pay attention to.

UK house price has witnessed a very steady growth over the past 23 years thanks to the country’s economic stability and favourable policies. On average, UK house price doubles every 7 to 10 years and fluctuation has been minimal despite a small drop during the 2008 Global Financial Crisis. Looking into the future, based on data from reliable sources such as the Oxford Economics, several forecasts have projected that UK house price will increase 16% over the next 5 years despite challenges of Brexit and Covid-19. 

The UK’s education system needs no introduction. After the US, the UK possesses most top-performing universities in the world, with a total of 8 top-100 and 18 top-200 universities in the country. This is reflected by the huge population of international students that the country has attracted, reaching almost half a million.

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Countries arranged by Number of Universities in Top Ranks. Source: https://www.webometrics.info/en/distribution_by_country
Source: https://www.studying-in-uk.org/international-student-statistics-in-uk/

Most UK mortgages are interest-only, meaning you only repay the interest over the mortgage term (e.g., 25 years), only then will you have to repay the capital – or re-mortgage. Moreover, buy-to-let mortgage does not require proof of income as long as the expected rental income is going to be 25-30% above your mortgage payment. That being said, this is only applicable to people who already have a good credit history in the UK.

Ever since the 2008 Global Financial Crisis, the pound has been weak. Back in the days, GBP stood at 12:1 against HKD, whereas now it mostly hovers around 11:1. In other words, you would only be spending HKD$91,000 for a property that you would otherwise have bought for HKD$100,000, i.e., a 10% discount.