This article was prepared in collaboration with Belleveue Mortlakes, a certified Royal Institution of Chartered Surveyors (RICS) valuer firm in the UK.
The satisfaction of purchasing the right property is like finding a hidden gem. It takes much research, some disappointments, and maybe a field trip or two to find a property that has the right combination of location, amenities, and rental potential.
Whether you're looking for an investment or a home in the UK, let this guide be your trusted companion on your UK property purchase journey.
Key points:
- Rental Potential: Consider factors like transport links, on-site facilities, parking, amenities, outdoor space, specifications, views, and security when assessing a property's rental potential.
- Liquidity in the Market: Be aware that selling a property in the UK can take 6-9 months or longer. Highly desirable properties in prime locations may sell more quickly, but selling quickly may require a discount.
- Neighbourhood-Specific Factors: Consider new developments in designated regeneration zones like Canary Wharf, which offer modern features and amenities. Established developments may present opportunities for lower prices.
From understanding what affects rental potential, to UK-specific considerations, we've got you covered.
Keen to turn your UK property dreams into reality?
Optimising Rentals: Aligning Preferences with Tenant Desires
Dreaming of living in a charming mew house, Georgian-style townhouse, or modern apartments in London’s up-and-coming areas?
In our experience, the features that attract you to a property are the same that will also appeal to tenants. As such, we recommend visiting the UK and seeing properties for yourself to understand them best.
Because it may not be practical to visit every opportunity, we’ve compiled a list of the most important factors for a good rental yield. Presented visually, this is meant to help you narrow down your choices and make good use of each on-site visit to help you narrow down your choices and make good use of each on-site visit.
You can estimate your rental yield with data on similar types of units from various sources, such as free online resources and the developer.
Being an overseas property buyer, it’s wise to include the cost of engaging a professional letting or managing agent to assist you with tenant selection and ongoing maintenance when required. These professionals will save you time and represent your interests locally.
Gem Insights: Navigating Market Liquidity
There’s a common lesson to be drawn from significant events such as the Covid-19 pandemic and UK government crisis in October 2022: It now takes more time to cash out of any investment.
In principle, we’ve observed that it takes at least 6-9 months to complete the sale of a property in London. It could take longer if there are complications in the enquiry or conveyancing process, or if you’re selling a larger, higher value property. That said, highly desirable properties in prime locations such as Belgravia and those with excellent window/balcony views may sell more quickly.
If you ever need to sell the property quickly, it might be necessary to list it at a discount. Therefore, all purchases should be considered carefully.
Property Condition: Polishing Your Property to Diamond Standards
Construction and refurbishment costs have soared by about 38% since 20201, as estimated by the Department for Business and Trade and industry experts. Conversely, the Office of National Statistics reports a slowdown in price growth inflation to 3.1% in December 2023, down from a peak of 10.7% in May 20222. We have found that most buyers are willing to pay more for a property in good condition and conversely expect a discount on those which are not up to standard.
Properties within modern developments are mostly already fitted to a good specification and will not require any work. Older buildings in prime central London, such as those built in the early 1900s that are protected by ‘listing’ status and/or are in conservation areas may require specialist restoration and refurbishment to preserve the features and characteristics of the area. Your lawyers or valuers will be able to advise you if the building is protected, and what kind of restoration and refurbishment will be needed.
Unsurprisingly, this will come at an additional cost. Due to the complex nature of such projects, it could be wise to allow more time for the works to be completed, and to consult specialist architects and designers with track records in delivering similar projects. We have found that higher returns in terms of sales and rental are possible when greater attention is paid to the interior and design.
Cladding Concerns: Safeguarding Your Property’s Brilliance
Since the fatal 60-hour fire at Grenfell Tower in 2017, concern about the safety of high-rise buildings has risen, with the result that all multi-occupancy buildings now require a fire risk assessment to be done before renting out a commercial or residential property.
For buildings with cladding that are taller than five storeys, the Royal Institution of Chartered Surveyors (RICS) recommends that you check the EWS1 Certificate for an independent assessment of fire risks. In some cases, the specialist inspector finds no significant risk, and in others, recommendations are made for remediation works. Paperwork is usually provided to confirm that the remediation works have been made.
Neighbourhood Gems: Factors Enhancing Property Value
Take Canary Wharf for instance.
- Developments range from high-rise towers of 40-50 storeys on compact sites, to lower-rise buildings on larger sites and large communal gardens.
- Some are close to London landmarks like the O2 or the Thames Barrier and some incorporate historic buildings such as Battersea Power Station.
- Since opening in May 2022, the Elizabeth Line has reduced journey times between Canary Wharf, Reading (major transport hub) and Heathrow airport.
New flats within these developments often have popular features such as open plan kitchen/reception rooms, en-suite bathrooms and balconies, and winter gardens. The rising popularity of winter gardens is due to the fact that they can be used all year around, whatever the British weather may bring. New build flats and houses generally come with a 10-year new build warranty.
Some buyers may prefer to buy within a development which is more established, tried and tested. They may find that in some cases, prices may be slightly lower to take into account the fact that the flats are no longer new. This can present good opportunities for some buyers.
Craftmanship in Property: Evaluating Developer’s Excellence
We would always recommend considering a developer’s reputation and visiting their previous work, if possible. There are some with a consistent record of completing successful schemes over the capital and surrounding areas.
As previously mentioned, we would recommend visiting the marketing suite or agents personally if possible. It is also important to ask all the questions you need to feel comfortable with the purchase as it may be one of the most long-term and important investments you make.
Keen to turn your UK property dreams into reality?
Sources:
1Cladco Roofing, 19 July 2024. Building Material Prices: 0.8% Rise in May 2024
2Office for National Statistics, 18 September 2024. CPIH ANNUAL RATE 00: ALL ITEMS 2015=100
