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The UK property market has been high on the investment buy-to-let amidst unfazed political developments as it has a proven track record of delivering higher growths. Consulting and accounting firm EY found in the last 10 years overseas investments in Britain was greater than the US which held the top investment spot since 2014 confirming the buyers are attracted to the falling pound sterling since June 2016 UK vote to leave the EU. The average cost of new let in London increased 2.3 times the average rent outside the capital in the UK. The city continues to be the global center of wealth offering safe investment, incomparable lifestyle and better education. Some of the most prestigious global schools and universities and over 500 European largest firms’ headquarters can be found in London. Globally a significant percentage of high-net-worth individuals invest in the country where the shortage of homes created an opportunity to gain over more than 30 years through price growth that exceeds many other asset classes.
The study by firm VeriSmart found the performance of UK buy to let market in the last decade as compared to other asset class like gold, fine art, cash and FTSE 100 was third-best where the returns were up to 92 percent beating yellow metal, fine art and cash. FTSE 100 delivered 119 percent in 10 years, in terms of, annual capital gains and percentage yield, and classic cars were up 94 percent during the same time.
Sterling remains undervalued and it is anticipated the gains in the UK buy to let residential property in 3 years can be over 20 percent. Despite Brexit, investors are keen on buying where lower entry cost and higher returns in regions outside the capital offer alternative opportunities. While this may be one of the most sustained investment, the property market is increasingly becoming complex and proper care should be taken to mitigate risks. By April 2020, the non-resident investors will lose exemption from the Capital Gains Tax (CGT). The right structure, changes in capital gains tax and matters concerning rental income should be considered to make a profitable investment.
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