Investing in property has always been seen as a secure and profitable venture, especially if you purchase property in attractive locations. The UK has long been experiencing an upward trend in property prices, so if you buy property now, you’ll likely expect to get a good profit in due time.
There are two main types of property investment: buy to sell, where you wait until the price has grown enough before you sell it; and buy to let, where you can gain income through rentals. The latter is more popular among UK investors since you can get money from rent collection and through the property appreciating over time.
However, if you’re an ex-pat, things are a bit more complex.
It’s easier if you pay in cash
Most brokers would be hesitant to provide a mortgage to someone living outside the UK, so you’re more likely to have a smoother and faster experience if you have the funds to pay in full. There are specialist lenders who specifically cater to ex-pats, so it’s still possible to apply for a mortgage. Note that any property will likely need an upfront payment of 10 to 25% of the property’s total value, so at least have this ready.
Costs may inflate due to exchange rate and international fees
When planning your budget, you also have to consider legal fees, stamp fees, agency fees, and of course, the exchange rate and the money transfer fees.
For example, if you have your eye on a property worth £200,000, a 20% deposit would be £40,000. Even something as small as a 2% exchange rate fluctuation will end up costing you £800. Add to that the possible transaction fees, which could be anything from 1 to 4%, which could again cost you £200 to £1,600. In total, for the deposit alone, you would have spent a maximum of £42,400.
You also need to consider how your income will be affected by the exchange rate and transfer fees. You may want to research the best money transfer options to minimize your expenses and losses. You can also choose to have a family member in the UK hold on to your income or deposit it into a UK bank account until the exchange rate is more favourable.
Set up insurance and hire a letting agent
As an ex-pat, you’ll have a harder time managing the property and tenants compared to landlords who are UK residents. If you’re lucky, you might have a family member or friend willing to help you, but if not, your best bet is to insure your property and hire a letting agent to protect it from any negligent or destructive tenants.
Properties are one of the best investments you could possibly make, and you can maximize your returns if you take the proper precautions and make smart decisions. According to TailorMade Pensions, they’re also a great way to diversify your pension plan, since you can sell off the property in your retirement and use it to top up your pension payments.
