UAE expats and foreign nationals cornering the market in UK properties

As sterling still falters, foreign nationals and expats in the UAE are continuing the rush to purchase British real estate, although London is now at the back of the queue due to its pricey properties.

Figures from providers of expat mortgages show a year-on-year increase of 20 per cent in the numbers of UAE residents investing in British properties, with the majority ignoring London and the southeastern counties. Around 60 per cent of buyers headed for Lancashire and Manchester in particular, with 25 per cent choosing Birmingham. The popularity of London property has now fallen by a massive 60 per cent as a result of projected low rental earnings and ever-rising house prices.

Reasons for purchases ranged from buy-to-let through second homes or even first homes. The increase of interest and investment in the British property market from outside the UK by foreign investors and UK expats is due in part to the recently-eased availability of expat mortgages. Previously almost impossible to arrange, it’s now relatively straightforward with interest rates as low as 2.74 per cent on offer. Average mortgage interest rates in Dubai stand at around 4.25, with similar rates applicable across the entire UAE.

Another reason for the increased investor interest is the overall stability of the British property market with its protective legislation and straightforward purchasing process. According to one mortgage provider, the sector is now dramatically different from a decade or so ago, when only the very wealthy could afford to buy UK property, often on a cash basis. Recently, even expat teachers, nurses and IT professionals who’ve previously been refused mortgages are now queuing up to take advantage of the fall in sterling.

Mortgage lenders were originally based offshore, but several onshore lenders are now in the field, giving a better choice to prospective buyers. Rental yields in the ‘Northern Powerhouse’ in and around Manchester and Leeds range between 7.8 per cent and 5.79 per cent and house prices are lower in the region than at any time during the past decade.