The power of currency
The British pound is struggling. In fact, last week saw GBP drop to a 37-year low against the US dollar. For UK residents, that’s a bit of a worry – but for investors outside the UK? It’s an opportunity.
Because it effectively puts all UK property on sale. Whether you’re buying in USD, HKD, or UAE dirhams, your local currency is now worth more GBP than it was before – meaning any investment in UK property will cost you less than when the pound was at its highest.
But, if you were to convert your local currency into GBP and invest today, just how much would you save compared to the start of the year? Let’s crunch the numbers.
Calculating your property price cut
Before working out the potential savings on offer to international investors, we’ve made two assumptions:
- You’re buying a 2-bed property in Manchester, for £250,000
- GBP is worth 1.11 US dollars, 8.71 Hong Kong dollars, and 4.08 UAE dirhams (as of 13.10.22)
Now let’s look at the savings on offer for holders of USD, HKD, and UAE dirhams.
|
Property price (in GBP)
|
Your currency
|
Exchange rate today
|
Exchange rate Jan 13th 2022
|
Cost of property in your currency (Jan 1st)
|
Cost of property in your currency (today)
|
% savings today
|
|
£250,000
|
USD
|
1.11
|
1.3712
|
342,800
|
277,500
|
19.05%
|
|
£250,000
|
HKD
|
8.75
|
10.68
|
2,670,000
|
2,187,500
|
18.07%
|
|
£250,000
|
UAE dirhams
|
4.09
|
5.04
|
1,260,000
|
1,022,500
|
18.85%
|
If you were to buy a property in Manchester now for £250,000, you’d save 18-19%. All because of the falling pound. As we said earlier – for overseas investors, UK property is on sale.
2022: A shaky year for sterling
We’ve shown that the pound’s decline means big savings for overseas investors looking to invest in UK property. But what’s caused that decline?
In the medium-term, we can trace sterling’s struggles back to 2016, when international concerns around the impact of Brexit immediately caused a slump in the pound. More recently, though, domestic and international challenges have arisen, piling even more pressure onto GBP. These include:
- Inflation resulting from Russia’s war in Ukraine
- The appointment of a fourth UK prime minister in just six years
- Recent tax cut announcements from the UK treasury
Broadly, these have combined to send the GBP to a 37-year low against the US dollar. And, because currencies like the Hong Kong dollar and UAE dirhams are indexed to USD, it means investors all over the world are in a strong position to benefit.
No better time to invest in the UK
Favourable exchange rates are a great reason to invest in UK property from abroad. But it’s not the only reason. Here’s a quick reminder of all the other factors that might mean the best time to invest in the UK is right now:
- Regular source of income – the average UK rental yield is 3.6%, but reaches double-figures in some areas.
- Capital growth – UK property has increased in value by about 5% on average over the past five years.
- Recession proof – UK property tends to be resilient. For example, UK buy-to-let recovered its full value just two years after the 2008 financial crash.
- High (and rising) demand – UK renters are always hungry for property. In fact, it only takes about nine days to let a property here. That’s because supply always falls way short of demand.
- A guard against inflation – Both property prices and rents tend to rise with inflation (though perhaps not always as high). This helps to offset some of the increased costs that come with times of high inflation.
The simplest way to save on UK property
If you’re overseas, and you’re keen to save a small fortune on UK property, there’s just one question: where do you start?
Whether it’s creating your limited company, opening your business bank account, or financing your purchase, investing from abroad can be difficult. That’s why we’ve launched our peace of mind package – to put everything you need in one place:
- High-yield properties from across the UK
- Bespoke property analysis
- Introductions to trusted partners for mortgages, property management, and more
- A perfect buy-to-let limited company
- An easy-to-open business account
- Expert support by phone or email
To discover peace of mind, and see how you could save thousands on your next UK investment, book your free consultation today.
This is for your information only – you shouldn't view this as legal advice, tax advice, investment advice, or any advice at all. While we've tried to make sure this information is accurate and up to date, things can change, so it shouldn't be viewed as totally comprehensive. GetGround always recommends you seek out independent advice before making any investment decisions.
