Buy to let mortgages have recently seen resurgence in popularity because of increased uncertainty in the stock market and low savings interest rates. More and more expatriates are adding buy to let mortgages to their portfolios because of increasing rents, better mortgage deals, and reduced house prices. However, is the expat buy to let mortgage industry all that it’s cracked up to be? What is so attractive that people are choosing buy to let mortgages over other investment vehicles?
Despite frequent slumps in the real estate industry, house prices in major cities often remain consistent. In London, for example, the price of houses remained stable even when prices in other areas dipped in 2012. The same case applied to many big cities and prime properties such as beach houses. As a result, an expat buy to let mortgage is increasingly popular among people who want to make long-term investments.
Increasing interest for properties for rent in certain areas is another driver of popularity for buy to let mortgages. Again, with London as an example, each available property is sought after by an average of seven renters which drives up rent for the properties. Property rent in London saw a 4.5% increase in 2012 over the previous year.
Apart from rents going up, there is increased demand for properties from foreign investors. This makes the prices of properties remain fairly stable and increase gradually over time. Due to the relatively steady demand for properties, markets in certain areas are able to remain fairly stable even in the wake of economic fluctuations in the country.
How the interest of an expat buy to let mortgage is treated also makes the mortgage more attractive for investors. This means that an investor will have more money left over from collected rent. Other expenses can also be offset from tax paid on the income of a property including property valuation and mortgage application fees.
An expat buy to let mortgage can be managed and the investor does not have to worry about things such as property maintenance and finding tenants. This makes investing in buy to let mortgages a hassle-free investment. If an expat with a buy to let mortgage plans to be away from the country for a long time, he can still get guaranteed income from certain letting agents regardless of whether the house is occupied or not. This makes the investment relatively safer than other investments such as the stock market or currency market.