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Where are UK property prices and rental growth forecast to rise the most?

Property investors, landlords and owner-occupiers should all be looking to the north for the best property investment opportunities for the future.

Manchester will lead UK cities with the most significant increase in sales prices and rental growth over the next five years. This is according to JLL’s recent Living With 2020 Vision Regional Forecasts Report.

Across the UK housing industry, the report says there will be stronger price growth and more transactions in 2021-2022. This is partly due to the greater political and economic certainty we saw at the start of 2020.

From the end of 2020 through 2024, Greater London, the north-west of England and the east will see the most growth, says the report. There, property sales prices could rise by 17%, 16.5% and 16.4%, respectively. Regional cities in particular could see some of the most significant amount of growth.

Manchester leads the way

JLL believes Manchester will see the largest increase in sales prices over the next five years, up by 17.1%. This is markedly higher than the national average of 14.8%. The report also predicts Manchester will rank highest for rental growth at a 16.5% increase.

The city’s growing economy and rising population are big reasons behind this growth. A Stone Real Estate report recently named Greater Manchester as the most lucrative new-build property hotspot in the UK. The north-western area has seen a huge amount of growth and development in the last few years. Nevertheless, the city’s property market is set for another record year with rafts of new developments due to complete.

As Greater Manchester’s population continues to rise significantly, the city region still has room for growth in the rental sector and property market. Manchester is now classed as the best city in Europe for business in 2020/2021, according to a Financial Times Report. This means more businesses and young professionals could be on their way to the city.

As more people come to Manchester, demand in the rental market is likely to increase. This will continue to provide lucrative opportunities for landlords and investors in the coming years.

Other property hotspots in the north of England

Leeds and Liverpool are also continuing to evolve as strong UK property investment hotspots. Both areas have a number of developments currently in the pipeline. Property sales prices in Liverpool could increase by 13.1% over the next five years, while rental growth could rise by 14.8%, says JLL.

Recently named the most profitable city to become a landlord in the north of England, Leeds is expected to see prices rise by 13.7% and rental growth by 14.2%. Both of the cities’ economies and populations are likely to see significant growth in the next couple of years. As a result, forecasters expect a boom in the regions’ property markets, bringing forward rewarding investment opportunities.

As numerous cities in the Northern Powerhouse are set for an exciting future with a significant amount of development and regeneration in the works, the property markets in the north will continue to thrive. And the region is likely to be home to a plethora of profitable investment choices for investors and landlords across the next five years.

Credit Source: Kaylene Isherwood

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Expat mortgages – what you need to know to invest in UK property

For expats, owning a UK property for rental income or the security of having somewhere to live if they want to return home is an attractive proposition. However, applying for a UK mortgage when you live abroad is not as simple as a regular mortgage application.

Expat mortgages are less cost-effective for lenders since the Mortgage Credit Directive (MCD) was introduced by the European Commission in 2016. For borrowers paid in a foreign currency, it means lenders cannot use their automated affordability checks. Ultimately this has increased the burden of administrative and regulatory monitoring of foreign exchange rates resulting in fewer mortgages being available to the expat market.

As an expat, you should expect the mortgage criteria and application process to be more complicated, and the available mortgage products to be more expensive than if you were applying for a regular UK residential mortgage.

Buy-to-let from abroad
If you want to buy a property to generate rental income while you live and work abroad, borrowers will need a “buy-to-let expat” mortgage, but property purchased to be your primary residence will require a “residential expat” mortgage.

UK Property Investments

To apply for either, borrowers will require a substantial deposit (ideally held in a UK bank account), evidence of the deposit’s source, proof of residency (for the past three years) and proof of income for a residential mortgage; for a buy-to-let mortgage, borrowers will be assessed on their expected rental income.

Consideration should also be given to the repayment currency. MCD means that lenders must monitor exchange rates to ensure foreign currency loans remain affordable for the borrower, and some specialist lenders have an “approved currency” list.

Benefits of an expat mortgage
The fall in sterling means that it’s currently cheaper for international buyers to purchase property in the UK. Expats looking to invest in the UK have to save less for a deposit because they’re getting more Sterling for their foreign currency. Plus, as the mortgage repayments will be made in Sterling, they work out cheaper too when they revert back to their earning currency.

Expats seeking to buy a rental property will find that as long-distance landlords they can take advantage of specific mortgage products and join the HMRC’s non-resident landlord scheme which exempts them from UK income tax. In addition, having a buy-to-let property is a great way of maintaining a UK credit rating, which means securing UK borrowing in the future will be easier.

An expanding market
Andrew Sadler, senior business development manager at Ipswich Building Society, said: “By far the biggest hurdle for expats is the lack of choice when it comes to mortgage providers, with many of the high street lenders seeming reluctant to get involved due to the perceived risks and challenges involved…

“This underserved area of the market is where we and other smaller lenders really come into our own, with our ability to manually underwrite cases in-house and look at the details more carefully.”

And it seems that lenders might finally be seeing the opportunities in this neglected market. Skipton International recently launched a remortgage deal for the British Expat and Foreign National Market, and Tipton and Coseley has announced that it is considering expanding its expat mortgage offering to include residential properties and foreign income loans.

Credit Source: Samantha Taylor.