Property redevelopment through buying a house, renovating it and then selling it on for a profit is one of the most popular dreams for many UK citizens. But with house prices currently in a state of uncertainty due to the lack of a solid plan for EU withdrawal and the falling value of the pound, is it now the time for foreign investors to make their mark in both the short and long term?
Overseas investors already attracted to new developments
Even back in 2018, there were already a record number of enquiries from Chinese investors looking to tap into the UK residential property market in cities like Manchester, Liverpool, Birmingham, London and Edinburgh. Since then, property prices haven’t increased much; however, the value of the yuan has maintained its strength despite the continuing trade war with the US.
Property values in places like Manchester and Liverpool could see rent and house values rise over the next five years. New residential housing developments have been springing up around both these northern cities, as well as in Birmingham, Sheffield and Leeds, mainly due to the continued development of the HS2 high speed rail line from London. It makes investment in the regions away from London an attractive option. The new rail network is expected to bring in larger numbers of people – pushing up rental yields and house values markedly, especially in the West Midlands.
While many non-UK investors might be keen to invest in new residential developments, a more traditional method within the UK has been flipping. Essentially, this means buying a house at as low a price as possible and adding value to the property before selling it on for a profit.
Buy to flip has never been so attractive for non-UK investors
The first steps to flipping are identifying where to buy, finding a suitable property to flip, and getting the right price. Then there is getting a mortgage agreed. Waiting for a mortgage approval can take time; as outlined by sites such as Trussle and their resources answering how long does it take to get a mortgage offer approved, the time it takes to get an approval depends greatly upon the lender, but it pays to have all your information available on request to avoid any delays. The next step is undergoing some level of refurbishment in order to achieve the expected value to reach the sell on price needed to make a profit.
What makes flipping an attractive option right now is the value of the pound. Flipping can only work when the sale results in a profit, but there are often innumerable costs involved in getting a house ready to sell, and often there are unforeseen problems to overcome. These could be dry rot, damp, subsidence, electrical upgrades or just underestimating the costs of repairs.
The biggest mistake most people make when it comes to flipping is miscalculating the costs involved and ending up with a property that doesn’t make a profit when it comes time to sell. What makes the present economic climate more attractive to investors is that the value of the pound is so low that it can essentially mitigate any failure to achieve profit in the short term. This could allow non-UK investors the opportunity to either let the property full time or wait until the pound rises in value before selling.
As new residential projects pop up in London and other regions, foreign investment opportunities have followed. Yet it could be buy to flip that might be a safer and more lucrative market for investors looking to build a property portfolio or for those just looking to make profits in the UK housing market. The current fall in value of the pound against the continued strength of Asian economies might yet prove to be the more viable property investment strategy.