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Rich Pickings In London For Overseas Property Investors

February 13, 2009Article by Ray Withers

It’s a long time since overseas investors have looked at the UK property or even London as a place to pick up below-market-value property. London investment property has been at a premium for many years and the UK capital was one of the most expensive cities in the world due to the high-flying pound.

Times have changed and so has the economic reality of London real estate investment has hit home on private landlords, developers and homeowners left stranded with huge mortgages taken out before prices started to drop, leaving many in negative equity. The pound is a depressed currency, especially against the Euro, and overseas buyers now have the financial clout to force sellers in to a corner for a good price.

Despite this fall in property prices, a huge rental demand is flourishing because UK first time buyers just cannot afford the large deposits British mortgage lenders are demanding, even though interest rates are at an all time low.

An ideal investment within a few minutes on the tube from Central London is The Shrubberies Mews Townhouses , Streatham, London. This development of two-bed roomed townhouses offers:

  • Exclusive off-plan availability
  • Pricing at 20% below current market valuation
  • A sale price below cost of construction/land purchase
  • A developer in financial difficulties willing to negotiate

The development comprises eight mews houses in a small gated community and off street parking.

Each house has open plan living space and cloakroom downstairs, with double bedrooms and a bathroom upstairs. The price is £300,000 – a huge £75,000 below-market-value price backed by independent professionals Ludlow Thompson. For a cash investment of £87,000 to cover a 25% deposit and purchase costs, investors can register an excellent return from The Shrubberies Mews Townhouses , with a 75% loan-to-value mortgage.

There are two main options for letting the property.

1. Instructing a local agent to seek tenants and manage the property.

2. Letting the properties via the local council, signing five year fully repairing lease. This strategy enables you to completely let go of the property for a five years and have the house returned to you, having had any required repairs completed, in the original state.

Either way, the surveyor predicts gross yields of 6% at £18,000 per year.

The yield is even better if investors already have UK residential property losses to rollover against rental profits arising from The Shrubberies Mews Townhouses , as any other residential rental losses can be set off against profits to avoid income tax. As a non-UK resident an overseas investor should not pay any UK capital gains tax. Adding these factors to the massive below-market-value saving on purchase, this is truly an outstanding opportunity to make money from London property when the UK property market starts to rise again, as it surely will.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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