Unlocking Financial Immigration: Strategic Investment in UK Property to navigate poor Exchange Rates
It’s the talk of the town here in South Africa and everyone is weighing in on the conversation. When the British Pound hit 24,6 to the Rand in June this year, South Africans had to sit up and listen. Whilst many are furiously applying to live in the UK, others are happy to live out their days in sunny South Africa and simply financially immigrate.
Let’s look at the latter, financially immigrating has huge advantages, stay close to family and friends, and enjoy everything South Africa has to offer, from our beautiful coastlines to the big 5. To having braais on the weekend and close to our infamous ‘Bokke’ rugby team.
Financially immigrating through investment property, is an excellent option. Buy-to-Let property in the UK is in high demand, as rental demand is at an all-time high and will be for years to come.
Where to invest in the UK?
The UK government is acutely aware of the lack of housing, which the UK government is trying desperately to resolve, by investing billions into infrastructure and regeneration, of towns and cities north of London. The north is the key, giving rise to the biggest property boom the UK has seen in decades.
Manchester, Birmingham, Liverpool, Sheffield, Nottinghamshire, plus smaller commuted towns, are experiencing immense change and transformation. The north’s is sustainable, due to a staggering amount of large corporates companies setting up their head offices north of London, combined with the work from home trend.
How does it work?
Buy-to-Let Investment Property in the UK is for all South Africans, who want to start the journey to financial immigration, as your rand goes further when you buy in the UK, due to the following reasons.
South Africans can get up to 70% bonds/mortgages in the UK, with a UK Bank. The interest rates in the UK are half of that of SA. The UK Banks also offer Interest only mortgages. The coverall costs to purchase & finance a UK property are also less. The running costs equivalent like levies, rates & taxes are lower.
To elaborate on the above. It is the norm for investors in the UK to use interest only finance for buy-to-let properties. This is a game changer for South Africans who can now access UK finance, which has a lower interest rate and an interest only option, further considerably lowering your monthly repayments. The combination of the interest rate, interest only bond and lower running costs, means your UK tenant allows you to be cashflow positive from day one of your investment, an impossible feat in SA.
Addressing the Shortfall.
Many South Africans have the appetite to deploy 30% down for a property in the UK, plus costs to purchase, roughly R1.5 million on a R3.3-million-rand 1 bedroom bathroom in the UK. Knowing that their Rands is converted to Pounds is already a positive.
Being far from away from the UK and living in a fluctuating exchange rate with the Pound, is what scares South Africans. The possible monthly shortfall could catch up to them quickly if the Rand loses more to the Pound.
The truth is when you run the numbers and compare apples with apples, a property in the UK is in the pound seats. If you purchase a property in SA for the exact same value as the UK and use an interest only UK bond, you will have a little to no monthly shortfall in the UK, which eradicates your risk, exposure, and fears. Compared to SA, where the same investment will display a jaw dropping monthly shortfall.
This comes back to high running costs in SA vs UK, the lower interest rate in the UK vs SA and the power of the interest only bond.
LIO-International’s role in your UK investment property journey.
Lio offers off plan property Developments and Buy-to-let Investment Properties to their South Africa clients with benefits.
Main reasons to invest in the UK?
- We reduce your risk with well researched assets.
We only source off plan Properties from the most trusted names in the industry, who have a proven track record. Confirming you are buying a solid asset and its brand new. By ensuring we work with house hold names, we eliminate risk. You will received a well-researched development, in the best location with well-known architects, designers and builders. Certifying their product is well located, market related and always pushing the boundary’s to attract the elite tenants.
- We cover you with warranty insurance
New Off Plan properties in the UK offer a 10 year warranty insurance, which is taken out by the developer to cover any defects found, once the buyer moves in, further reducing risk. Being new apartments also means they are the most sought after in their respective areas. Distance is a major factor for us in SA and many buyers may never see the investment they purchase. To ensure peace of mind, our colleagues are on the ground in the UK, can do a video walk through of the show flat with you online or take you around in person.
- We sweat the assets
We work closely with the developer to deliver all the facts to you. The imitate breakdown of the costs, floorplans, design elements, timelines and more. We recommend holding onto the investment for a few years, maximising the rental returns, enjoying the initial low maintenance requirements and exiting when the development is in full stride, to ensure the greatest capital growth.
This methodically works for foreign investors, like us, to guarantee we always keep our investment properties new, up-to-date and attracting the grade A tenants.
- We offer a turnkey solution
Rental managing agents are also crucial to your property investment. We offer a turn key solution. You will work closely with our trusted partners who will source the right tenant for you. Either for long or short term rental, furnished or unfurnished, depending on your requirement. Handle prospective property viewings, inspections reports with the tenant. Hold the tenants deposit. Collect the rental income and pay it over to you, with a statement.
It is vital to use their services. Rental agents always know the highest appropriate rental returns possible in market year on year and will warrant you are getting the most out of the rental market. Their fees as the same as in South Africa and will go a long way in ensuring piece of mind for the years you own the investment.
If you looking to financially immigrate to the UK, we can help you understand all the facts and figures and endless merits of investing in buy-to-let property in the UK.
