The weak pound and why it’s opening the door for foreign investors

The weak pound and why it’s opening the door for foreign investors

Whilst a weak pound might not be ideal for those who’ve headed abroad for their summer holidays this year it’s attracting the attention of overseas investors looking at investing money into UK real estate.

Discounted property prices

The pound is currently at the weakest it’s been for quite some time and many foreign investors are taking this opportunity to purchase property in the UK

Using the AED to GBP exchange as an example. On the day before the Brexit referendum back in 2016 the average exchange of 1 GBP = 5.4175 AED. Meaning that UK property prices at £500,000 on that day would have cost Dh2.7m. Using today’s average exchange rate of 1 GBP = 4.4488 AED that same property would cost Dh2.2m.

In US dollars comparing the same £500,000 value UK property on 22nd June 2016 compared to today’s exchange rate, there is a price difference of over $120,000.

UK property is currently considerably cheaper due to the weaker pound. Even with the costs of buying in the UK, such as stamp duty and legal fees, the discount currently available from a weaker pound far outweighs these.

Market uncertainty presents an opportunity

Not only is the weaker pound causing property prices to be heavily discounted for those putting money into UK real estate from abroad, property price growth across the country has slowed in recent years making it an even more attractive prospect.

Property prices are recorded to have grown overall across the UK, albeit by a small percentage. The latest Office for National Statistics data showed average house prices in the UK to have increased by 0.9% in the year to June 2019.

Related article > Brexit – What’s Occurring? will it affect UK property in 2020?
Related article > Buying versus Renting versus Investing – What should I do?
Related article > TAX GUIDE – Investing Individually in UK Property for Rental Purposes

Generally, house price growth in the UK has slowed since the middle of 2016, coinciding with the Brexit referendum.

The uncertainty of Brexit and what might happen next has caused many domestic buyers to pause and wait for the storm to pass meaning there’s less competition for the best investment opportunities.

The best time to buy

Overall the UK property market hasn’t been dramatically affected by the political uncertainty and the changes to the tax imposed on property purchases – prices are continuing to grow albeit at a slower rate.

Looking at historic trends, those who have worked in UK real estate for many years will have seen rises and falls in price growth – it’s the nature of the market. Opportunities such as the combination of attractive exchange rates and slow price growth won’t continue to present themselves forever.

Undeterred by the outcome of Brexit negotiations and the potential for a no-deal outcome, foreign investors are currently taking advantage and will likely see very impressive returns in the coming years.

A word to the wise, to the savvy investor looking at UK property from abroad and wondering if it’s a calculated gamble worth taking – now is the time to buy into UK real estate. We don’t want to be the ones sat here in a year or so’s time saying ‘we told you so’.

How can we help?

Like all investments, it’s important to make a well-considered purchasing decision. Not all investment properties are created equal. To talk to us about how we can help you with your UK property investment plans you can call us on +44 (0) 2039507939 or send us an email at info@thirlmeredeacon.com.

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Stuart Williams

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