Top 10 UK Property Investment Questions

1. Why should I invest in UK properties?

The UK is in the middle of a buy-to-let boom as property prices have risen beyond the reach of many people who would normally buy. This means the supply of tenants is rising quickly.

Property prices are still below their peak value in many locations, which means there is plenty of room for growth; rental returns in key regional cities are now well above levels that should be a green light to investors.

There are few developed markets in the world that can compete with the UK on rental yields right now.


2. What types of properties should I be investing in?

This really depends on your approach to buy-to-let investing. You can either invest in an older property, refurbish it to a good standard and let the property; or you can choose a more hands-off investment that will return equally high yields.

Property types to consider in the UK at the moment are London apartments, hotels, student accommodation and care homes. All of these sectors have become extremely popular in recent years, and in some cases provide an opportunity for those who prefer to be hands-off and simply enjoy a guaranteed rental return.


3. Can I get buy-to-let finance as a limited company in the UK?

Yes, however lenders will expect that the limited company has been formed for the sole purpose of owning and managing properties.


4. How much capital growth can I expect?

The capital return largely depends on where you invest in the UK. In London, capital growth will be higher than elsewhere as there is far more upward pressure on prices.

Within the next four years, however, we are likely to see growth return to other cities and towns as economic recovery continues and finance becomes more accessible for homebuyers.


5. So how do I profit from an investment in UK property and what is the expected time period of return?

There are a number of ways you can profit from an investment in UK property.

If you invest in prime property in the most popular areas of the UK, and London in particular, you are likely to see very good capital growth in a short space of time.

However, markets can also fall depending on local and economic conditions so we recommend investing and holding for a minimum of five years to benefit from the high rental yields available. 

If you are an investor who is reluctant to commit too much money up front, then by investing in areas with high tenant demand, strong yields and low property prices, this will make the investment cash flow positive from day one.


6. Can a foreign national legally buy real estate in the UK?

Yes, there are no restrictions on foreign ownership of property in the UK.


7. How much tax will I need to pay?

The main taxes that will affect investors are Capital Gains Tax (CGT), Stamp Duty (SDLT), if the property is worth more than £125,000, in addition to tax on any rental income.

Investors are required to file their tax return annually; when it comes to the sale of the property, if it is worth more than the original value, some of this gain may be taxable; however, this really depends on individual circumstances.

It is best to seek the help of tax professionals who specialise in both resident and non-resident tax affairs to guide you through the process.


8. How long do you suggest an investor holds the property to achieve maximum capital gains?

We suggest holding the property for a minimum of five to seven years, for maximum appreciation potential.


9. What is the outlook for rental rates in the near future?

Rents are expected to increase, particularly in London and other major cities like Manchester or Liverpool, as people are priced out of buying. People will consider renting as an alternative to buying while they save for deposits.


10. Should I let the property furnished or unfurnished?

If the rental property happens to be a family home, it is likely that the tenants will have their own furniture or they will be prepared to buy their own traditional furniture.

Apartments, on the other hand, often attract younger tenants who will expect the property to be at least part-furnished. Many will not have the means to buy expensive furniture items such as sofas; the same will apply to student accommodation.