UK Property – Case Study on Buy-to-Let Residential Investments
Portfolio Property Investments (PPI) are increasingly meeting with clients who wish to invest in a UK buy-to-let property in London or other high-growth Urban Regeneration areas of the UK. Demand from investors and tenants in prime residential areas of London is consistently high and rentals achieved are strong. This combined with low UK interest rates of 5.00% and a healthy economy results in an excellent UK Sterling investment opportunity.
Many clients also have a need to buy a property that would be suitable for their own occupation or perhaps for children or grandchildren attending University in the UK.
Tens of thousands of South Africans currently own residential property in the UK and have benefited from a self-supporting investment positioned in the stable economy and high capital growth associated with the Britain Isles.
Case Study – Client A
For example ‘Client A’ – a Doctor from Pretoria - purchased an off-plan residential investment property in Highbury, Islington, London in a development known as Vision 7. This development, by a leading UK house builder Taylor Woodrow, was part of a comprehensive regeneration of the Highbury area linked to the relocation of the world-famous Arsenal first division football club. Due to its outstanding track record Arsenal wished to trade up to a larger stadium and, as part of its bargaining process with the local authority to obtain planning permission/zoning they agreed to assist with the redevelopment of the surrounding Highbury area to meet the needs of the local population. Vision 7 was built as the first phase of this mixed use residential/commercial development. A select number of off-plan apartments were offered to the South African market.
As an area Highbury, Islington is very close to downtown London only two tube stops from Kings Cross station and only 90 minutes from London-Heathrow.
In December 2005 Client A selected a two bed apartment in Vision 7 for an off-plan price of £309,000. This purchase price included a furniture pack and stamp (transfer) duty which saved the client £15,000. The client had a UK £ Sterling bond arranged for 80% of the purchase price and invested liquid funds of around £65,000. A professional tenant was placed in the apartment within a month of transfer by the property management company, signed an Assured Shorthold Tenancy and the rental payments (£1,560 per month) covered the bond payments (the bond arranged at an interest rate of 6%). In May 2007 the property was re-valued at £390,000 in order for the client to release funds for investment in other projects. This is a capital gain on the property value of £81,000 (greater than 26%) in 18 months. Bear in mind though that Client A actually invested only £65,000 in liquid funds so their Return on Investment is greater than 124% in 18 months.
Case Study – Client B
Another example of a client’s success story focuses on the largest and at the time the fastest growing regeneration project in London; Canary Wharf in London’s Docklands. One of the UK’s largest and most successful developers, Berkeley Homes, purchased and refurbished a riverside tower on the south side of the River Thames in the Depford area of London. The development, The Z Apartments, offers spectacular 360 degree views of the Thames from all windows. Only minutes by river bus to the new financial heart of London - Canary Wharf - the apartments were in high demand. The developer redesigned and refurbished the building to a luxury standard providing high-quality triplex two bedroom apartments.
In June 2005 Client B – a lawyer from Saxonwold, Johannesburg - purchased a two bedroom triplex apartment in The Z Apartments for a price of £250,000. Rentals achieved were £1,200 per month covering a monthly bond payment at 6%. In May 2007 the property was revalued at £350,000 a capital value gain of £100,000 or 40% in 23 months. The client originally invested in liquid £ Sterling approximately £65,000 which by gearing with a low-interest bond gave a Return on Investment over a 23 month period of 65%.
The key to success in off-plan residential investment in the UK is centred on 3 main factors:
- Selecting the right area of London or the UK in a prime residential or Urban Regeneration area.
- Securing a bond offer that will gear your investment with low-interest funds and keep the monthly payment low enough to ensure it is covered by the rental income.
- Working with a reputable and reliable team that can provide assistance with legal matters, property tenanting and ongoing management.
The PPI Group has an established and highly reputable international network and we are able to provide clients with appropriate professional advice on current investment and residential opportunities in the low-inflation, low-interest, high property growth UK economy.
Clients who are interested in finding out more about UK off-plan residential opportunities should contact us so as to set up an appointment with our UK property consultant.
FOR FURTHER INFORMATION
Contact: Bradley Hancock
Tel: ++27 72 0196192