In UK cities, more people are looking for rental properties. But more importantly for foreign and expat investors in the UK, the number of rental properties available is not growing. This indicates that prices are increasing, which benefits investors. According to data by Zoopla, there are 43% fewer homes available to rent in cities than there are in suburban areas, even if demand for rental properties in cities is 43% greater than the five-year average. Rents in the city centre have risen to their highest level in 13 years as a result.
The youth population, who are returning to city centres for study and employment as well as for the bustling social scenes centred around bars, clubs, and restaurants, is largely responsible for the increase in demand for rentals in city centres. These younger individuals are living more flexibly and are content to rent despite skyrocketing real estate prices and an increase in the cost of living. Having a property that will meet the needs of this younger population is vital for UK expat and foreign national investors as this will maximise demand, reduce void periods, and maximise.
Selecting a City
One of the most crucial choices a UK expat or foreign investor may make in their investment journey is the location of a city centre rental property. Targeting a location with high growth rates, high rent, high rental demand, and reasonable prices will be the best course of action for maximising profitability. Throughout recent history, Manchester has regularly provided this ideal confluence of elements.
Manchester is the Centre for Everything
Many investors who are interested in using mortgage solutions for UK expats and foreign nationals frequently choose Manchester as their preferred destination. According to Stuart Marshall, "Manchester routinely checks those boxes for UK expat and foreign national investors" on the aspects.
For UK expats and other international investors intending to invest for retirement or other long-term savings goals, a strong capital growth rate is particularly crucial. In the UK, the Northwest is now expected to grow at a rate of 28.8%, followed by Yorkshire and the Humber at 28.2%. The Midlands and Wales are two additional interesting regions, with capital growth rates of 24 and 22.8%, respectively.
When evaluating the potential for capital growth of a certain property in a specific location, capital growth history is another useful indication. Manchester is the undisputed leader when looking at the period between 2001 and 2021 due to its 344.59% growth over that time. This greatly surpasses Sheffield, which has a historic capital growth rate of 254.73%, which is the second highest area. If we focus on more recent periods of this time, Liverpool's growth in 2020–21 surpassed Manchester's growth, with a rate of 17.59% compared to Manchester's figure of 11.4%. However, it is evident that Manchester consistently outperforms the rest in terms of capital growth.
Affordability is a second consideration alongside capital growth." Stuart Marshall keeps on. "A property is likely to be a wise investment if it is both inexpensive and offers significant potential for capital growth." Numerous locations that are mentioned in the subject of capital expansion also come up when it comes to affordability. Investors will find Sheffield, Liverpool, and Newcastle to be extremely affordable, with typical home prices of £191,303, £152,974, and £167,964 correspondingly. In each of these localities, a terraced home costs, on average, £165,911, £133,680, and £164,647. And the average price of a flat in each of these districts is respectively £124,516, £117,946, and £114,252. As a result, these three places are among the most amazingly inexpensive for investors from outside the UK.
The average home cost in Manchester is £199,235. In Manchester, the average price of a semi-detached home is £247,326; a terraced home is £187,376; and a flat is £171,531. These figures are based on more particular types of property. Manchester does present a distinctive investment opportunity due to its capital growth potential and the highly strong demand for real estate in that location, even though its average affordability numbers tend to be higher than those of Sheffield, Liverpool, and Newcastle. ‘According to Stuart Marshall, it can be simple to look at affordability and believe that the more affordable properties will be a better investment. While this is partially true, there are likely other considerations that are more critical when determining the investment's quality. A cheap house is ultimately meaningless if it is not well-liked on the rental market and consequently rented out to tenants. In addition, rent will typically be proportional to the cost of the property, so even while affordability is a barrier to investment, it is not the only consideration. This is especially true when you consider the tremendous variety of mortgage packages for foreigners and UK expats that are available to support investment.’
Renter demand is a challenging variable to gauge. ‘The quickest property sales, population growth, the number of property inquiries, and rises in rent and home prices are typically the greatest indications to watch for. In each of these categories, Manchester routinely outperforms the competition. In Manchester, the demand to supply ratio for real estate was determined to be 5:1. Due to the high demand for real estate, investors who want to do so will experience few vacant periods.’
Similarly, Manchester has had a staggering 27.8% increase in population since 1991. Additionally, it grew by 7.7% between 2006 and 2016, which is twice the UK's average growth rate. This shows that an increasing number of people are choosing to reside in the city, and the reasons for this become increasingly clearer when considering Manchester's demographics. In Manchester, 37% of people are between the ages of 18 and 34. Given the city's high student population, it is not surprise that young people are attracted to Manchester. Over 100,000 students currently reside in Manchester, and 51% of them decide to stay after graduating. This is a crucial consideration for investors because younger generations are more inclined to rent because they frequently cannot afford to buy their own homes. This is particularly true right now, when housing and living expenses are very expensive. This younger age group is also a very desirable target market for rentals and can be extremely profitable for investors using a mortgage obtained by a UK expat or a foreign national. This understanding of the local population assists in advising international and UK expat investors on the kinds of properties that will appeal to the local market.
The amount of the area's average rent is significant since it clearly determines the rent a landlord may demand for a property. But many of the other characteristics we have just explored are frequently linked to and influenced by rents. Rental demand often determines higher rents because it will constrain supply and put upward pressure on prices. Rental rates frequently increase along with capital growth rates in an area because this generally signals that a location is in demand or "on the rise." Rents in the Northwest climbed by 6.3% between 2020 and 2021, which is partially explained by this symbiotic relationship. Additionally, similar gains in capital growth are anticipated for the Northwest in the future. Rents are likely to continue to rise as well.expenses are very expensive. This younger age group is also a very desirable target market for rentals and can be extremely profitable for investors using a mortgage obtained by a UK expat or a foreign national. This understanding of the local population assists in advising international and UK expat investors on the kinds of properties that will appeal to the local market.