The UK housing market remains a promising option for International Buy-to-Let investment

This editorial was originally published by Mortgage Solutions.

Despite economic challenges over the last few years, the UK housing market continues to appeal to overseas investors. This is largely due to economic stability within the UK, strong laws and policies, together with a number of tax advantages for certain international residents purchasing a property through a Special Purpose Vehicle (SPV)*. And, according to Savills’ latest property market forecasts, this appeal is set to continue into 2025 and beyond, with UK rental growth predicted to surpass 17% over the next five years.

With a 13% uplift in new Buy-to-Let landlords between 2023 and 2024, London is the fastest growing market, but a number of other UK cities are following this trajectory. Rental demand is particularly high in areas with a large population of students and young professionals, including Bristol, Glasgow, Liverpool and Sheffield.

Despite continuing changes to stamp duty and thresholds and the implementation of stricter FCA regulations which have historically included mandatory stress testing and Loan-to-Income (LTI) flow limits, the UK housing market has remained stable. The FCA is also currently considering simplifying other rules to allow more people the ability to access home finance, with one proposed change being the removal of the LTI flow limit implemented in June 2014.

While regulatory change can be daunting, it’s clear that the UK housing market will continue to provide promising opportunities for international investors, with a recent survey by Octane Capital revealing that only one in five landlords across England are expected to reduce the size of their investment portfolio in 2025. In addition, the UK has high rental yields compared to other European countries, which continue to make it a worthwhile option for international investors.

At Gatehouse Bank, we recognise the importance of having a variety of choices in how to finance property purchases for both overseas and UK investors. As a Shariah-compliant provider, Gatehouse Bank is able to cater to customers from various backgrounds, demographics and geographies seeking alternative finance options. Our previous research has revealed that almost half (45%) of UK homebuyers would consider using an ethical finance provider that follows Islamic principles, which clearly shows a growing appetite for ethical home finance options.

In short, overseas investors should not be put off by new regulation or potential challenges when considering the UK as a viable option for Buy-to-Let property purchases. With the right guidance and products tailored to their needs, it could prove a highly rewarding move.

*A Special Purpose Vehicle (SPV) is a company structure set up for a given purpose, with its own assets and liabilities and its own legal status. Within property investment they are formed for purchasing and holding residential buy to lets or for property development.