Investing in real estate in the United Kingdom

More and more investors are looking across the border to invest in real estate in the United Kingdom instead of in the Netherlands. How come and why is investing in the UK so attractive? This is mainly because there is a shortage of well-maintained rental properties in the UK while demand is high and continues to rise. The country also has a favourable investment climate, meaning solid returns can be achieved with low risk. This article lists why more investors are turning to the UK property market.

Overheated real estate market in the Netherlands

The housing market in the Netherlands is pretty overheated. There is currently a lot of demand for housing, but the supply is limited, resulting in rising prices. In the Netherlands, people prefer to focus on total renovations and transformations, which means there is still a lot of profit for real estate investors. These projects are less suitable for 30 to 40% of the investors, meaning they look at projects across the border.

A higher return

The UK market (excluding London) for residential or commercial property has always had a higher yield than most European countries. In Europe, you can count on an interest yield of around 3% for rental properties and 4% for most hotels and service flats. The annual return on real estate in the UK is usually around 7–8%, and the annual capital gain rises with inflation which often increases by 1% or 2%, or even higher.

Exchange rate

When you invest in real estate in the UK, you simply invest and receive your returns in euros. Borrowers always apply for a loan in euros, which means that as an investor, you will not be bothered by exchange rate fluctuations when you invest in projects in England. An investor does not have to worry about calculating the different currencies.

Brexit

Brexit (excluding London) has had little impact on house prices in the UK. Nor have there been noticeable differences in real estate prices after the referendum. Even after Brexit, the British will continue to live, study and work, resulting in a real estate market in which the local supply and demand are higher than that of international relations. However, Brexit has indeed had a clear impact on the pound’s exchange rate, which means that it is still lower than the euro today.

Investing in real estate in the United Kingdom is a great way to diversify your real estate portfolio. Besides the fact that the real estate market in the Netherlands is overheated, the English real estate market also generates a higher yield.