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UNITED KINGDOM at £ 117,500 ( R2.8m ) so for arguments sake I will compare the Sea Point apartment to an available 1 bed priced at £ 132,500 which is R3,047,500 , the same price as the Sea Point flat . If you took a UK bond at 70 % ( South Africans can borrow up to 75 % from the UK banks , interest only ), added the transfer duty ( stamp duty tax ) at R152,375 , the UK legal costs and bond costs , you would be looking at a cash employment of R1,340,900 ; slightly less than the Sea Point flat .
The fundamental difference being that because South Africans have access to UK bonds which are interest only , your monthly repayments would be R8,204 per month . The UK rental market is pumping and this UK apartment would give you a rent per month of approximately R17,000 (£ 700 ). This would cover the bond and the management fees , leaving you with a surplus R8000 per month . (* based on a UK bond rate around 5.25 %).
In the long run , a house or flat in the UK will not only save your money from inflation , but also generate a significant gain if you decide to sell it .
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Sophie Gamborg Property Specialist LIO Global SA
SA Real Estate Investor Magazine APRIL / MAY 2023 130