Established as a prime place for overseas investors to invest in property, the UK is known for welcoming investors from across the globe, primarily originating from Asia or the Middle East. Favourable exchange rates, projected capital growth and exponential demand for rental properties are just a few of the desirable benefits of investing for overseas property investors.
As an agent working alongside overseas investors, we have supported overseas investors with finding a suitable property and choosing the appropriate structure to maximise their exemptions.
This guide explains the most common frequently asked questions we are asked by overseas investors who have just purchased property in the UK.
Is it Easy to Find Tenants for My Overseas Investment Property?
Currently, rental demand in the UK is extremely high, with rental properties typically snapped up in a matter of days. With that being said, you may experience a struggle with managing the property if you are away from the UK most of the time.
For this reason, you may wish to use a local lettings agent to handle the logistics and maintenance of the property as this will attract suitable tenants. Tenants will be searching for a rental property with a dependable landlord and a trusted letting agent.
How Do I Apply for a Buy-To-Let Mortgage?
Once you have decided you would like to invest in property, you’ll need to arrange your buy-to-let mortgage. For this, you will be expected to provide comprehensive paperwork during the application process and provide proof of funds for your deposit (typically 25%).
You will also need to prove that you are able to afford the monthly repayments by showing evidence that rental payments will cover your monthly repayments. As guidance, lenders will usually expect your rental income to meet at least 125% of the monthly payments on your mortgage loan.
What Are the Benefits of Using a Letting Agent?
Any overseas investor is well advised to utilise the services of a reliable property management company to act as a dedicated property manager on their behalf. Whether you’re new to the world of property investment, unable to find the time to dedicate to your investment, or if you are located overseas and require someone to take care of your property, you should seek the help of a letting agent.
For landlords who have neither the time nor the desire to manage their properties, sourcing the help of a letting agent who can offer a fully managed service can be hugely invaluable.
Does Using a Letting Agent Mean I Am No Longer Responsible?
The short answer is no. Many investors fear losing complete control of their property, although, fortunately, you are still responsible and have complete control over your property.
A letting agent will take on the leg work and keep everything under control, whether that be complete responsibility or if you’d still like to have some control over decisions. You can decide how much responsibility you have.
If you do decide to hand over all responsibility to a letting agent, you should be aware that, legally, you are still responsible in the eyes of the law. For this reason, you should choose a letting agent that is completely aware of laws and regulations.
This is why, when you get started with a letting agent, they will take on any responsibilities that you wish, leaving you with as much or as little responsibility as you would like. If you really wish, the letting agent can take on complete responsibility for maintenance, payments, repairs and regular inspections, while you just wait for the rent to hit your bank account.
What Happens If My Tenant Doesn’t Pay?
In the unlikely event that a tenant doesn’t pay their rent, they will have broken the terms of their tenancy agreement. We will try to make all efforts to resolve the situation smoothly by liaising with tenants. If they refuse to make payment, we would discuss the options available to you to gain possession of the property by serving the relative notice to evict the tenant.
Hopefully, you would have purchased a Rent & Legal Protection policy at the start of the tenancy as, should this happen, your rental income could be protected until such time as the tenant leaves the property. For more information on this policy and terms & conditions, please speak to our Management Services Director at JOHNS&CO, Graeme Goessen.
How Do I Choose a Letting Agent?
If you have decided that a letting agent is the best solution for you, you’ll now need to carefully select an agent. We recommend choosing a letting agent that you can trust and depend on to manage your investments when you aren’t around, not to mention an agent part of a client money protection scheme.
We advise deciding on the exact services you are looking for, whether that be taking on full management of the property, partial management, handling communication with tenants, arranging repairs and ongoing maintenance, and much, much more.
As well as this, you should find out which marketing strategies are adopted by your selected letting agent as this can have a tremendous impact on how quickly tenants are found.
How Can We Help?
At JOHNS&CO we consider it our responsibility to know the London property market inside out, and we’re committed to providing the very best service to everyone we come in contact with.
And, considering many of our clients are thousands of miles away and are unable to travel to London, we understand the importance of keeping their trust and maintaining properties on their behalf.
If you are particularly interested in using a lettings agent for your property in London, please get in touch.