For much of history, owning property outside the UK was a luxury for the super-rich. Now, however, technology has brought it within the reach of the average investor. Properties can be thoroughly researched online and then visited in person thanks to air travel.
As a result, UK investors have started to take a much greater interest in overseas property and this interest has been increasing over time as people have become more aware of the opportunities on offer. The signs are that UK investor activity overseas is going to continue to grow, fuelled partly by uncertainty over Brexit, but also by a general desire to diversify.
The basic principle of property investment remains true – location is key
In theory, when looking at overseas property investment, the whole world is your oyster. In practice, while there may indeed be investment opportunities all over the world (and usually are), it’s generally best to make your first overseas purchase in a well-established market. There are several reasons for this, most of which revolve around the fact that well-established markets tend to be easier to navigate. Properties in these markets can also be easier to finance, since the fact that the market is established means that it is a known quantity to lenders.
Even after Brexit, the geographic and cultural proximity of the EU, makes it an obvious place to look for investment property, however, there are plenty of options in mature markets in other parts of the world. In particular the U.S. and Canada are both well-connected with the UK in every sense of the phrase and are English-speaking countries, similar comments apply to Australia and New Zealand, although they are both much further away geographically. Of course, as with the UK, these countries all have their own internal “micro markets”, with their own dynamics, so, as always, you need to do further research in order to identify the right property in the right area.
Managing your assets is usually much easier with local help
Regardless of whether you’re interested in standard residential property, student investment property, holiday lets or commercial property, the basic principles of being a landlord apply overseas in the same way as they do in the UK. In short, managing the property is your responsibility. In practical terms, managing the property effectively means a combination of organising necessary maintenance, dealing with occasional problems and, crucially, marketing the property in the right way, finding, vetting and managing tenants.
The effort involved in doing all of this, while staying within the law, is such that many landlords in the UK turn to lettings agents to do the “hands on” work for them. Lettings agents are, arguably, even more useful when investing overseas and you have to deal with an unfamiliar legal system, an unfamiliar business culture and, quite possibly, an unfamiliar local language as well. A good lettings agent can take care of all of the practicalities involved in being a landlord and can more than justify their fee. In fact, their fee can be much lower than the cost of regular air travel to your chosen destination and that’s before you factor in the value of your time.
For more information on property investment in the UK and overseas, please contact Hopwood House.