Landlords Rent Guarantee Insurance | Expats see the future in London’s buy-to-let market
We will regularly inspect your property, to ensure it is well-maintained and that everything is as it should be, ready for when you do get a tenant again. We will also continue to advertise your property, to show it to prospective tenants and to keep you informed every step of the way. And you can relax knowing that all the while this property is empty, you are still guaranteed rent payments and are still receiving a monthly guaranteed rental income.
Roughly 60 per cent of London’s new property builds are being snapped up by British expats, according to recent figures. Here, Zoe Dare Hall explains how carrying out proper research can benefit long-distance landlords.
When a high-profile new development launches in London, its marketing efforts will invariably be focused a few thousand miles away. Buyers from Hong Kong represent 16 per cent of the new-build market in prime central London, according to Knight Frank, while Savills report that 60 per cent of new-builds in London are bought by overseas investors.Landlords Rent Guarantee Insurance
Many of those will be foreign buyers. But a significant number will be British expats, either keeping a stake in the UK property market for when they return, or simply benefiting from its rising values to supplement their life abroad.
Among them is Lynne Brewer, an advertising executive who – since moving to Singapore 15 years ago without any UK property – has bought two buy-to-let flats and is now buying a third.
“Last year, Benham & Reeves, who let the flats, suggested we turn our one-bed in Notting Hill into a two-bed, two-bath to increase the rental. They were right, the rent has doubled to £800 a week,†says Brewer, who aims to sell two of the flats and move into the third when they return to the UK.
“My key tip is to find an agent you can rely on. We looked for a lettings-only one as this would mean they would work harder for us,†she says. “If anything goes wrong, our agent deals with it.â€
Being a long-distance landlord isn’t always that easy, though. With around half of UK landlords selfmanaging their properties, according to research by the independent marketing consultancy BDRC Continental, organising viewings for prospective tenants is also tricky. A reliable and thorough letting and management agent is the only answer. They should also deal with maintenance, checks, renewals and serving notice.
Expat landlords also need to be aware of their tax affairs. Wherever you live, income from a UK buy-to-let is still liable to tax (though there are deductible expenses).
The Non-Resident Landlord Scheme (NRLS) requires UK letting agents to deduct basic rate tax (20 per cent) from any rent they collect. “If the non-resident landlord does not have an agent acting for him/her, and the rent is more than £100 a week, then the tenants must deduct the basic rate tax themselves,†explains Nigel Morton at Charles Russell solicitors in Cheltenham.
Landlords must also provide the tenant with an address in England or Wales for them to serve notice to. To reduce the hassle, many landlords will look at new-build properties – with their 10-year warranties, no chain and more predictable maintenance costs.Landlords Rent Guarantee Insurance
“We have expat landlord clients in Hong Kong who have used us to source new-build flats in Stratford, pre-Olympics, and we are currently sourcing in Hayes, which will be part of the Crossrail 2018 project,†says Robin Campbell from Midas Estates. “An investor needs to assemble a team of experts around them before they buy – a good sourcing agent and negotiator, a good mortgage broker with access to the foreign banks, a good tax specialist with knowledge of both countries’ tax systems and a good lettings agent in the UK.â€
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Off-plan may be a riskier investment, but Thomas McAlister, manager of international property at Colliers International, thinks it’s a low-stress option. “The process is transparent and you know the quality of what you are buying and what the property will rent out for,†says McAlister, who cites London’s Oval Quarter – where one-bed flats start at £259,950 – as a project that attracts overseas landlords.
There is a new-build premium – particularly on high-profile developments. The average price of a London new-build in February was £318,981 – 8 per cent over older properties. However, average prices of new-build properties grew by just 0.37 per cent over a year while older properties in Greater London saw 7 per cent appreciation, according to Land Registry data.
“Investors are paying a premium for newness, which by implication has built-in obsolescence. At resale, units in big schemes can only compete on price,†says Naomi Heaton, chief executive of London Central Portfolio.
Older properties may need refurbishment, but that can provide an immediate uplift in value, rather than paying a premium to a developer. “Flats and houses in London’s classical terraces and quaint mews are difficult to find but offer much greater long-term potential,†says Heaton. “They are one-offs with their scarcity value underpinning price growth. This is a rare case where age is a virtue.â€
The right investment comes down to doing thorough research into an area’s established rental demand and growth potential. “Although most buy-to-let landlords tend to buy new flats or Victorian terraced houses within 10 miles of their home, the reality is that many never need to visit their properties,†says Robin King, director at Move With Us. “More time spent researching where and what to invest in will generate far more wealth than being able to personally change a tap at an hour’s notice.â€
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