Best investments for expats are northern powerhouse buy-to-lets

For would-be expats in the process of selling their homes and leaving the UK, it’s still a good time to consider re-investing your capital in British buy-to-let property once you’re overseas.

Low interest rates, the weak pound and affordable property prices outside London, the home counties and the South East have resulted in a surge of interest from Brits already established overseas as well as providing an attractive investment for new expat arrivals looking to top up their pension payments or salaries. In real terms, there’s now a massive north/south divide and house prices are cheaper now than in 2008, with the exception of London and similar prime locations.

However, crunching the numbers before you take the plunge is a must for avoiding the risk of being left severely out of pocket in the long term. Your rental income should be able to pay your mortgage off as well as helping you with contributions to interest repayments and monthly capital costs. Your initial comparison should be between the selling prices of properties you’re considering and their estimated rental value.

Finding a suitable mortgage is the next trick, with deals marketed to expats and non-resident investors as ‘high yield opportunities’ best avoided at all costs. Most UK mortgage lenders view this practice as offering high-risk rather than ‘high yield’. Researching the buy-to-let market is a waste of time if you’re stuck with making higher than normal repayments or you simply can’t get a mortgage om your chosen property. The important first step is getting an agreement in principle based on what you are able to afford. In addition, the vast majority of estate agents expect to see an agreement in principle before they’ll commit their time.

At present, rates of around 2.74 per cent are still available, with minimum loans of £100,000 set at a 75 per cent loan-to-value restriction on typical loan terms of 25 years. The numbers allow expats and foreign nationals to buy properties from around £150,000, of which there’s a good choice in the so-called ‘northern powerhouse’ regions. Cities such as Manchester, Liverpool and Leeds offer the best buy-to-let opportunities, giving rental yields of between 5.7 and 7 per cent. As always in the property market, it’s all about ‘location, location, location’.