Investing in UK property as an expat may still be prudent, but selecting the appropriate location is crucial for achieving high rental yields along with ideally a long-term increase in the property’s capital value. The quandary of whether or not to concentrate their buy-to-let assets in London is very common for many expat investors, who wonder whether or not to examine the potential that London provides along with other options. The London investment option has its advantages and disadvantages, depending on elements such as mortgage lending rates in the UK, property values, tenant needs and rental income of course. In this blog, we analyse London and the other UK regional cities to assist expat investors in making an informed decision.
London: A Prime but Expensive Investment Hub
High Rental Demand but High Entry Costs
London is still a global economic powerhouse, attracting professionals, students, and transnational organisations. London’s strong economy and consistent, ever-growing need for rental properties makes it a very attractive destination for foreign investors. However, property values in London are significantly higher than those in other UK cities, which means that a larger initial purchase price and therefore deposit are required.
Rental Yields vs. Capital Appreciation
Since London’s appeal, demand and living environment command much higher property prices than the UK average, the rental yield is usually low compared to other regions. The average rental yield in London is typically between 3-5%, depending on the area. High property standards and a moderate rental income are nevertheless characteristic of prime locations such as Kensington, Chelsea and Westminster.
Mortgage Lending Rates and Financing
For expat investors, it can be difficult to obtain purchases of properties due to complexities such as foreign income and credit footprints etc. Expat Mortgages UK provides personal advice to reach the UK’s most competitive buy-to-let mortgage rates. Interest rates in London may be slightly lower due to the consistent high rental demand, however affordability often remains an issue due to the higher loan amounts needed.
Regulatory Considerations
London has stringent rules on landlords, including license conditions for certain types of rental properties such as Airbnb and serviced accommodation along with rental restrictions in certain sectors. These variables all need to be taken into consideration as they may affect the generally profitability of a London BTL property purchase.
UK Regional Cities: Affordable and High-Yielding Opportunities
Lower Property Prices and Higher Rental Yields
In comparison to London, regional cities such as Manchester, Birmingham, Leeds and Liverpool all have much lower average property values compared to London. These areas all therefore enable expat and foreign investors to enter the buy to let rental market with much smaller deposit requirements. Furthermore, rental yields in all these cities regularly exceeds that of London, with average yields of 5-8% depending on location and property type.
Strong Demand for Rental Properties
The significant increase in remote and hybrid working activities post Covid, along with the expansion of career markets and the development of international student groups have increased the demand for rental properties in regional cities. Manchester, for example, has a flourishing computer and financial district, while Birmingham benefits from the HS2 high-speed rail project, which makes it attractive to young professionals and commuters alike.
Buy-to-Let Mortgage Affordability
Buy-to-let mortgage costs in UK regional cities are usually low in comparison to London, making them easier for foreign investors to secure mortgages on these rental properties. A competitive fixed rate mortgage with a guarantee of a steady rental return over a period is offered by various expat mortgage lenders, guaranteeing a steady return. It can simplify the process and help expat property investors secure the best fixed rate mortgage rates by working with a specialist broker, such as Expat Mortgages UK.
Fewer Regulatory Restrictions
Compared to London, a regional city, typically has fewer restrictions for landlords. While license restrictions exist in certain areas, they are, by and large, less complicated and more cost-effective to comply with. Furthermore, property managements costs in regional cities are likely to be lower, thereby increasing the overall investment profitability.
Comparing Key Investment Factors
Summary table of key expat BTL investment factors
| Factor | London | Regional Cities |
| Property Prices | High | Lower |
| Rental Yields | 3-5% | 5-8% |
| Capital Growth Potential | High | Moderate to High |
| Tenant Demand | Very High | High |
| Mortgage Affordability | Challenging | Easier |
| Regulatory Restrictions | Higher | Lower |
Best UK Cities to Invest in Property
If you’re going to look for UK regional investment areas, here are a few of the most important cities to consider.
1. Manchester
- Rental Yield: 6-7%
- Growing economy and strong job market
- High demand from students and young professionals
2. Birmingham
- Rental Yield: 5-6%
- Major infrastructure projects like HS2 boost property demand
- Large student population and corporate tenants
3. Liverpool
- Rental Yield: 7-8%
- Affordable property prices
- Growing tourism and student rental market
4. Leeds
- Rental Yield: 5-6%
- Strong business sector and growing rental demand
- Thriving student population
Emerging Trends in the UK Buy-to-Let Market
The Rise of Short-Term Rentals
Several landlords are moving away from traditional buy-to-let models in favour of short-term leases as the popularity of services such as Airbnb and serviced accommodation increases. The current model may lead to higher rental incomes, particularly in cities with large tourist outlets such as London, Liverpool, and Edinburgh. However, the rules and regulations on short-term leases have become much stricter, and investors need to remain informed on regional restrictions before investing.
Green and Energy-Efficient Properties
Sustainability has become a key factor in long term property investment. The overall demand from tenants continues to increase and the UK government is implementing more stringent EPC requirements. Expats investing in current and renewable properties can guarantee the future of their ventures and attract environmentally conscious tenants.
Demand for Co-Living and HMOs
Co-living spaces and houses in multiple occupations (HMOs), especially in cities, together with an increased number of young professionals and students continues to grow each year. HMOs increase rental returns, however they come with additional management and license requirements. Investors seeking HMOs should work with mortgage specialists who are experienced in this niche market.
Conclusion: Where Should Expats Invest?
Ultimately, your choice of investing in London or a regional city depends on your financial ambitions, your tolerance for risk and your budget. London’s stability and capital appreciation still requires a higher deposit and delivers a lower rental yield. Regional cities, with their higher tenant retention, lower investment thresholds, increased profitability and strong rental markets, are proving to be a compelling option for expats seeking stable income streams from their property investments.
Regardless of your choice, obtaining the best mortgage deal is essential to maximising your investment profitability. Expat Mortgages UK is a specialist expat mortgage broker helping foreign national alike with mortgage advisors who understand the intricacies of the UK mortgage market. Our highly experienced advisors work with ALL expat lenders, including the specialists, guaranteeing the UK’s most competitive buy-to-let mortgage rates for expats.
Thinking of Investing in Buy-to-Let as an Expat?
Contact us now to discuss your possibilities of acquiring property in the UK and take the first step towards profitable expat property ownership in the UK.