Property investing: Why U.K. housing may give Aussies a boost

Australian property investors are accustomed to negative yields – giving rise to our love affair with negative gearing. But the opposite is true in the U.K.’s major cities outside of London, with places like Birmingham, Manchester and Leeds providing healthy positive rental yields (after interest). Apartment blocks in Tier-one U.K. cities outside of London form the core of the L1 Capital U.K. Residential Property Fund IV.

Set to close at the end of September, the Fund is tipped to deliver a net rental yield of between 6% and 7% a year with a targeted total return of 10% p.a. (net). The fully deployed Funds I and II have produced impressive returns in-line with the targets for Fund IV.

Over the past nine months, U.K. property has performed strongly on the back of December’s U.K. election and greater certainty surrounding Brexit. U.K. house price growth slowed between March and May as COVID-19 put a pause on housing transactions, but house prices and activity are starting to rebound – helped further by the U.K. Government’s removal of stamp duty. 

Find out more about the L1 Capital U.K. Residential Property Fund IV.