Potential Interest Rate Relief In 2024

Not only does this bode well for the UK economy but is welcome news to UK property investors with potential interest rate relief in 2024. We may see more favourable mortgage (bond) products available which could stimulate the property market as a whole. With more affordable borrowing costs, there may be increased demand from buyers, leading to a boost in property prices. South Africans can borrow up to 70% from UK lenders and are looking at current rates around 6.8% – 7%.

The average rate of annual rental growth in the UK for 2023 has been around +10%, with experts predicting another 5% growth rate for 2024.  There is an average of 11 registered tenants vying for one available property, contributing to an increase in rents.  The number of tenants seeking to relocate across the UK is 41% higher than 2019, while the available rental properties have decreased by 35%.  Now is a good to buy and strike while the iron is hot.

I thought it would be helpful to provide a case study from a recent sale of a beautiful one bedroom investment apartment located just outside Nottingham, to a South African buyer.  

The property in question was £157,500.  The buyer was offered 65% loan to value from one UK lender (£96,000).  The bond repayment is £580 per month and the rental income each month is £725 on a long term tenancy.  The buyer was also given a short term rental forecast of £1,992 per month, equating to a 15% yield on the short term let option.

This particular property is located in the north of England, which is experiencing the strongest capital growth.  Rental returns remain impressive across the country and are outpacing inflation. 

I am increasingly meeting with South Africans who feel that taking some rand offshore and investing in a tangible asset class in UK pounds provides a safety net, especially if they have children.  The UK property market has a very long history of stability and incredible growth, in the past 50 years there have been 43 years of growth, which is reassuring for any investor.  Couple this with an incredibly strong rental market and an investment in UK sterling you have the makings of not only a safe, reliable investment but one that will undoubtedly grow in value over time and provide an income from the outset in the terms of the rental income, as shown above in the case study.

Unfortunately, there is a lack of information available to South Africans and most are not even aware you can get UK bonds and that they are interest only, meaning that with just over R1million you are in a position to buy a UK property.  It is vitally important that one speaks to a trustworthy company that can provide the correct information and guide you on what could be 20-30% of your wealth.  The best time to invest in UK property was ten years ago and the next best time is now.  If you want to speak to someone that has recently gone through the process and has been working with investors for the past 15 years then please do get in touch.