If you’re looking to buy property in the UK, you probably already know it can be a fantastic yield-generating asset. But if you don’t do your research or are not fully prepared for what you are about to undertake, it can cost even more money, time and stress than expected.
Most importantly, as an international investor in the UK, you are not alone. When in doubt, join a Facebook group or ask a friend for a case study. Or get in touch with us – our Cantonese speaking experts will be happy to guide you through the process and its traps. Our houzen experts have gathered a short list of mistakes that are most commonly made by international investors.
London: over 60% of all overseas buyers came from Asia, majority from Hong Kong London’s residential property market continues to attract major interest from tenants and buyers from Asia. 9% of new builds sold in Tower Hamlets and Greenwich were sold to foreign buyers*.
If you’re looking to buy property in the UK, you probably already know it can be an expensive venture, particularly if you decide to invest in some of the more expensive areas of the country. But if you don’t do your research or are not fully prepared for what you are about to undertake, it can cost even more money, time and stress than expected.
Need numbers to show you how easy it is to make a mistake while buying a property in the UK?
Purchasing a property will always be an emotional process in some way – there is a lot of money involved in the transaction, all in all – but as an investor, you can work out a way to mitigate emotions and focus on facts. In the past, it was much more difficult – as most of the information was human-generated: by agents and past owners.
But now, thanks to extensive databases, and tools that merge all the information to serve you with a recommendation, it’s much easier. In the UK, there is quite some real estate data to look at – both from public sources (Land Registry, Office of National Statistics) and from 3rd parties (closed rent data, tenant demographic, local migration patterns etc). There are online platforms available, providing property assessment, valuation and analysis fully online and almost instantly. Usually, all you need is a link to the property’s portal listing – in the UK it means on Zoopla or Rightmove.
As an output, you would receive a full analysis on a property deal, recommended price, details about recently closed deals in the area, some comparison with other properties etc. You can then save your search or download it in pdf.
You can have a look at one of such solutions here.
Just as there’s a significant difference between buying and selling property, there’s also a significant difference between buying and investing in it. A lot of overseas investors underestimate just how much they need to understand about how to invest in property: which laws apply, which tax breaks you can claim and so on. Before you buy, ensure you fully understand all aspects of the investment.
The most common mistake investors make is not doing their research – making sure they know what is involved with investing before taking that step. Most agents and websites would only provide general info about the process and not enclose fully all the fees and steps. Look for a consultant or platform that is fully transparent, ideally – buyer/investor-oriented only. This will usually mean that they will care about your investment journey much more than a typical agency.
Skipping legal advice from a qualified lawyer who understands international ownership rules and regulations regarding assets abroad is another common mistake many first-time overseas investors make. Using quick or low-cost methods of acquiring foreign assets without proper legal advice opens doors for higher long-term costs and difficulties when it comes time to sell your assets. Understanding both sets of regulations will help avoid mistakes when setting up your foreign investment plan; researching both sets thoroughly will minimize errors during implementation.
If you’re looking to buy property overseas, it’s likely that many other investors are doing exactly that. Don’t be afraid to reach out and talk to them about what they found attractive about a certain area, which areas they stayed away from, and how long they plan on keeping their property.
Are you buying local? The reputation of a real estate agent is very important for your transaction, so why not ask around? In addition to asking other buyers for recommendations, speak with friends or coworkers who live in that area or check online reviews.
A good place to start is by searching REIA + location, where REIA stands for Real Estate Investment Association.
Read up! A great deal of information can be gathered by reading books (such as Investing in UK Real Estate: Myths & Misconceptions) or blogs (like Richard Branson’s Screw Business as Usual ) about your desired location—and then conducting further research via other media sources.
If you’re going to invest overseas, it makes sense to buy a property in a city with a booming economy. But remember that although London is famous for being a global capital, it isn’t necessarily a great place to buy property.
For starters, an inflated housing market means that prices have risen so much here that they are now among some of the highest in Europe—and way above average wage levels. London also has one of the most expensive rental markets too, so making money from your investment may not be as easy as you’d hoped.
So while it might be tempting to purchase somewhere close to home, consider instead investing outside London; your efforts will reap bigger rewards in other parts of England and Wales too. Finally, even if London does appeal to you, don’t discount opportunities elsewhere in Britain. While cities like Reading still have lower property values than their northern counterpart, they boast all of its growth potential without many of its pitfalls. Who knows? You could find yourself sitting on a goldmine later down the line!