How RAW Capital Partners can facilitate overseas investors’ BTL plans
RAW Capital Partners specialises in supporting global property investors seeking opportunities in the UK property market, which offers attractive prospects for stable capital appreciation and rental yields.
Currently, all our clients are classified as overseas investors. This positions them within the group of foreign buyers who collectively own an estimated £84.2 billion of UK real estate.
This underscores the UK’s ongoing appeal as an investment destination, particularly for those interested in buy-to-let (BTL) properties.
However, recent media reports have raised concerns about the appetite for overseas investment, suggesting that the allure of UK property for foreign investors may be on the decline.
In our experience, such speculation must be taken with a large pinch of salt. Fundamentally, the UK BTL market remains highly desirable, and we have seen first-hand that investor interest remains strong.
In this blog, we’ll explore the factors that sustain this demand and outline how we can help support buyers’ investment strategies in the months and years ahead.
Concerns over Regulatory and Tax Reforms
In July, Labour came to power for the first time in 14 years, sparking considerable uncertainty over how foreign investors would react to expected regulatory and tax changes. Some adjustments have already been introduced, necessitating careful consideration.
On the regulatory side, reforms to Section 21 (no-fault evictions) were presented to Parliament in the Renters’ Rights Bill in September. If passed, this could complicate tenant management, particularly for overseas investors. Additionally, Labour has announced a consultation on stricter Energy Performance Certificate (EPC) requirements, which could impose higher costs on buy-to-let (BTL) owners if they were to be introduced further down the line, potentially affecting rental yields.
From a tax perspective, the Autumn Budget abolished the non-dom tax status, which some commentators fear could drive away international investors. However, an alternative scheme may be introduced to temporarily attract high-net-worth individuals (HNWIs) and global investors, signalling the government’s recognition of the need for foreign investment.
Similarly, landlords were spared from a new Capital Gains Tax (CGT) hike, with CGT rates on residential properties holding at 10% and 20%. This exemption likely reflects the government’s aim to retain landlords in the BTL sector and maintain market stability.
While these moves were expected and, in some cases, less severe than anticipated, the budget did introduce a surprise: an increase in Stamp Duty Land Tax (SDLT) on second homes. Rachel Reeves announced a 3% increase on the second home surcharge, meaning buyers of additional properties will now face a 5% SDLT rate. This could impact landlords seeking to grow their portfolios.
In turn, these changes could cause some investors to pause their investment plans or look elsewhere. However, with a lender like RAW Capital Partners on side, investors will be able to navigate these challenges and benefit from the resilience of the sector in the years ahead.
Speculation rarely becomes reality
After all, this kind of speculation is a frequent occurrence in the BTL market, and it rarely becomes reality.
Time and again, whether it’s concerns over Brexit or new stamp duty surcharges, there are frequent warnings about the so-called ‘death of BTL’ and predictions of a mass exodus of landlords, including overseas investors.
Yet, these forecasts rarely materialise. In fact, the opposite has often occurred. In 2016, for instance, foreign investment in UK property surged as buyers took advantage of the weakened Pound post-referendum.
As such, predictions of declining foreign interest in the BTL market rarely account for the sector's enduring desirability, strength, and long-term potential—especially for investors who can quickly and effectively capitalise on the opportunities the current market presents, which can be facilitated by RAW Capital Partners bespoke financial products.
The BTL market remains healthy
Indeed, the current market is offering a wealth of opportunities for investors, with strong potential for both capital growth and rental yields.
According to Savills, for instance, prices are projected to rise by 2.5% in 2024, followed by steady increases over the next four years, leading to an overall house price growth of 21.6% between 2024 and 2028. Furthermore, forecasts indicate that rental growth will reach 20.5% over the next five years.
Coupled with the fact that the IMF has called for UK interest rates to be reduced to 3.5% by the end of 2025, this level of growth indicates that rental yields will remain strong for investors. With these positive fundamentals in mind, it would be surprising to see foreign landlords selling their properties en masse.
That said, it would be remiss of us to suggest that some challenges do not remain that will require investors to seek lenders who can provide the expertise and experience to navigate them.
Fortunately, RAW Capital Partners has the capability to do just that.
How can RAW Capital Partners support overseas BTL investors?
As the UK’s BTL market faces potential changes due to the upcoming budget, overseas investors may find themselves grappling with uncertainty.
From new regulations to additional taxation, navigating these shifts can be a complicated business – particularly for international buyers. At RAW Capital Partners, we are committed to staying informed about any developments and ensuring our clients understand how the Autumn Budget could impact their investment portfolios.
Our expertise and experience allow us to offer timely, bespoke guidance, helping investors stay ahead of any challenges that may arise in the current post-Budget landscape.
This enables us to ensure that overseas investors are fully prepared for any potential reforms, enabling them to make informed decisions and capitalise on the opportunities the BTL market is still producing.
To discuss how we can support your investment plans, get in touch with us today: https://rawcapitalpartners.com/