South Africa is the continent’s most industrialised economy, but still struggles to gain traction since a 2009 recession. Political turmoil has since plagued the country. In 2015 when Nhlanhla Nene was removed from the position of finance minister, two credit rating agencies downgraded their assessments of South Africa, and the rand lost 5% of its value against the dollar merely hours after the announcement.
Taking advantage of the pound sterling’s short term weakness
It is understandable that many South Africans are concerned about the value of their current savings and assets, and are considering more stable places to invest in temporarily weakened markets where they can get more value for their rand.
The United Kingdom has historically been a stable country, although its vote to leave the European Union and the uncertainty surrounding negotiations has had a short-term effect on the country’s currency.
In 2016, the pound was the most devalued major currency, beating the Argentinian peso and losing more than 15% of its value since the start of the year. Until negotiations are confirmed, the sterling is not predicted to recover much ground, so now is an ideal time to invest in UK property to ensure best value for money.
The UK’s housing shortage, rental culture and how this can benefit investors
Housing has always been in short supply in the UK due to a low number being built every year and compounded by a rapidly growing population. The government has pledged to build one million houses by May 2020, but a report released by the National Audit Office has revealed that they are already on track to miss the deadline.
The shortage and growing population has led to a dramatic rise in house prices, and coupled with the unequal increase in wages and stricter lending policies, has meant that homeownership is now outside the grasp of the average person. In fact, homeownership has been in decline since the early 2000s, down from its peak in the 1980s.
The Resolution Foundation – a think tank that analyses living standards – reported that home ownership stood at 63% in 2002 and is now at 51%. The decline is particularly pronounced amongst people aged between 25-34, where in 1991 67% owned their own home, compared to 36% towards the end of 2014 (according to the Office for National Statistics). A decline in home ownership has increased the number of people renting, and PwC predicts that 59% of 20-39 year olds will be privately renting by 2025. Nowadays there is almost a preference to rent rather than buy, as individuals can easily move around the country chasing jobs and opportunities, rather than be tied down to one property with a mortgage.
An investment case for Manchester
As we have shown, demand for rental property in the United Kingdom is strong, especially amongst younger citizens. UK property investment company, One Touch Property specialise in seeking out the best areas for investment. One such city is Manchester, and its credentials stack up if you are considering investment property in the UK.
According to Commercial Real Estate Services (CBRE) Manchester has the highest proportion of 20-34 year olds, the age range with the most demand for rental property. It also has a rapidly growing population, second only to London in percentage point terms. In the ranking of European cities, Manchester came third, beating prestigious cities such as Berlin, Barcelona and Edinburgh. Unsurprisingly, people are attracted to Manchester due to its strong economy. Greater Manchester’s economic expansion is predicted to outperform the rest of the UK bar London.
Young professionals moving to the city are requiring good quality accommodation close to the city centre and their workplace so they can maximise the use of their free time. Manchester buy-to-let property such as Downtown offers residents almost a hotel-like experience, with a dedicated concierge team on hand to help with their everyday chores such as collecting shopping and dry cleaning.
It is also conveniently located along the banks of the River Irwell and close to the city centre, ensuring residents have a pleasant living environment and that local entertainment is easily accessible. One-bedroom apartments are priced from £146,250 and 6% + yields are achievable due to the demand.
There are also loan note investment opportunities available on Manchester property. The developer rejuvenates neglected buildings in Manchester, and has a solid record of delivering excellent results, of which is has received many accolades for. For £20,000 net yields of 8% are guaranteed, and the investor is not tied in to any long-term contract as the initial investment is returned after five years.
Liverpool – A New City to Consider
Liverpool has made a spectacular recovery since its 1970s employment slump. Significant investment has been channelled into the city, and key areas such as the Albert Dock have been regenerated. Now the city is consistently named as one of the best places to invest in UK property. Demand for property in Liverpool has soared over the past few years, so much so that the Baltic Triangle was named as the coolest place to live; an area that has seen an influx of start-up businesses and pop up club nights.
Another area that is undergoing significant regeneration is Liverpool Waters. Officially approved in 2012, 60 hectares of a historic dockland site is being redeveloped into a high-quality, mixed use waterfront quarter. More than £300m of construction work is expected to be underway across the site by the end of 2017, and the final aim is to create 21m sq. ft. of new commercial and residential floor space including 23,000 apartments and four hotels.
It is no surprise that developers have had a heightened interest in the area since the project was announced, this area is expected to be popular with renters and buyers due to its central location and idyllic waterfront views. Reliance House is one development that sits within the area, and its grand Edwardian-style exterior sets it apart from other buildings in the area.
Buildings with period features often perform better in terms of capital growth. Buyers tend to fall in love with the characteristics of a building, which makes these sorts of properties highly appealing for investors looking to achieve good growth. The limited supply will ensure continued demand for these buildings in the future.
One bedroom apartments in Reliance House are available from £119,950, and developers are guaranteeing an income of 7% for the first year. The low entry point, guaranteed income and excellent capital growth prospects make it an investment worthy of consideration.
Typically, mortgages would not be available to overseas investors, and are hard to obtain for student or commercial property due to the size of the unit. Our investment opportunities are cash-only, so before you start your investment journey, it is important to make sure you have the capital available. Here at One Touch Property we can assist you through the acquisition process, and suggest an investment opportunity suitable for the equity you have available.
For those looking for investments that offer high yields at a low entry point, our UK commercial property investments such as loan notes are ideal. Starting at £20,000, these do not require a large sum of money, and the returns that can be achieved are impressive.
The purchase process is straightforward and transparent, with clear communication of each step with the investor.
- You will receive information about the property, detailing floor plans, location, yields on offer and the purchase price.
- You would then need to discuss the investment with their solicitors.
- The contracts would then be exchanged (taking transfer).
- As the property is being built, funds are released in stages (usually at intervals, or at certain points of completion).
- Remaining balance to be paid upon completion.
Your Tax-Free Allowance as an Overseas Investor
Overseas investors can earn up to £11,000 in the UK before they are required to pay tax, this is rising to £11,500 in the tax year running from 6th April 2017 – 5th April 2018. If investment is your only income in the UK, you may not be required to pay tax if it falls under this threshold. We recommend that you obtain financial advice from a qualified professional before proceeding with any investment.
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Who is Arran Kerkvliet?
One Touch Property has been helping people invest in UK property for the past 8 years. Arran Kerkvliet, the investment director, is originally from South Africa and has a degree in Economics and property valuation. He is keen to share some of the common things to look out for before investing in UK property. His company sources a wide range of property including student accommodation investments, high yield property such as hotel rooms and buy-to-let investments for people looking for income producing investments and diversity to their property portfolio.