Savvy investors are looking abroad for the chance to own a home

Times are tough for first-time buyers and with the ever greater decline in mortgage lending, the future looks bleak indeed. Yet despite the gloom some savvy first-time buyers are managing to battle their way on the property ladder through some more unusual and creative investments.

Emma Byrne, 26, a surveyor from London, has been trying to buy in London for several years but has recently given up and is now looking overseas: "London is just so expensive; your money seems to go a lot further abroad." With a budget of up to £250,000, Byrne is seeking an apartment or small chalet in the French Alps which she plans to rent out: "I've thought about other countries but France is the typical place to go skiing and I also plan on letting it in summer months for mountain biking holidays." She intends saving much of her rental income towards a deposit: "I've always paid a fortune when I've rented abroad so hopefully others will too." As well as earning income from her investment, Byrne says that she will also benefit from free holidays: "Hopefully I can put money away and, with a bigger pot, I can then afford something here. I wouldn't want to invest in a buy-to-let in Britain. If I'm going to buy here, I'd want to live in it myself."

And Byrne isn't the only first time buyer with her sights set beyond these shores. Alice Weston Baker, of Erna Low Property, sees growing numbers of younger buyers who want to buy French rather than British property: "I think we're seeing much more of it. Buyers aged 25 to 35 find it very hard to get on the property ladder here and so it makes perfect sense to buy in the Alps – especially if they enjoy skiing."

Developments such as Résidence Cybèle in Brides-les-Bains which is linked to well known skiing area Trois Vallées, offer great investment potential says Weston Baker. A studio renting for nineteen weeks of the year can net €8,000 and rental bring yields of more than 9 per cent. Fully furnished apartments start from €85,000 including VAT, which Weston Baker says compare favourably with their British equivalent: "For that sum in Britain you'd have to buy somewhere in a far less covetable location. This way, you can use it yourself for long weekends and rent it out at peak weeks such as school holidays when you'd rather not go yourself anyway."

Stringent mortgage lending may also be pushing buyers overseas. October's figures show just 17,000 applications from first time buyers were approved in Britain, according to the Council of Mortgage Lenders, yet French mortgages appear to be easier to source. Unlike Britain, France still offers 100 per cent mortgages and rates too are typically lower.

Current offers start from 2.3 per cent for a repayment mortgage on a variable rate. John Busby, of mortgage specialist www.athenamortgages.com says that the French mortgage market for 2011 looks positive: "Fixed and variable rates have been rising slowly from historic lows, and rates across the board are still extremely attractive. Lenders in France are not as reluctant to lend as they are in this country"

And, unlike many countries in the Eurozone, France is not awaiting bailout and still boasts a healthy property market. Germany, too, may be a potential target for overseas investors as mortgages are still available to foreign investors with rates as low as 3.6 per cent fixed for 20 years.

The country also has a strong history of rented accommodation according to ProVenture Property's James Kirkman: "Getting up on to the first rung of the property ladder is an incredibly cheap step, even for the foreign investor. Single apartments in good areas of cities in the former East Germany can be purchased for less than €50,000 with a long-term tenant in place who, not only covers your mortgage, but lines your pockets at the same time.

Yields of 10 per cent are somewhat of a norm," adds Kirkman, who advisers investors to target cities with a growing population such as Leipzig which has a large student population and where growing numbers of manufacturing companies including BMW and Porsche are based.

But, if buying a property overseas is a risk too far, then how about a British buy to let? London agent Suzannah Robb, 24, lives with her parents in Chislehurst, Kent but owns a four-bedroom apartment in Newcastle which she lets to students: "I was a student there myself. It was hard to find decent accommodation, so I bought the flat and rented out the other rooms. I'm now letting it to overseas students."

Suzannah paid £236,000 for the apartment and hopes to save the rental income towards a deposit for a London base for herself. So far, being a remote landlord hasn't proved a problem: "I've only had one minor boiler problem. Finding tenants is the hardest part and I use a lettings agency for that."

While average buy-to-let rents across the country fell or remained stable over the past year, one sector that has stayed buoyant is the student buy-to-let market, according to data from property investment specialist Assetz.

With student applications up 34 per cent from 1997 according to UCAS, student accommodation is in demand and rents have risen by 19 per cent over the past five years. Assetz estimate gross yields for investors at around 7-10 per cent depending on location and property type. And while rising student fees are a cause for concern with student landlords, overseas students are still fuelling demand and boosting rents.

"Demand for student property will continue to be high from overseas students who are able to pay full fees, with a 13.6 per cent rise in international applications last year," says Stuart Law from Assetz. "Student property can be a low-risk, high-yielding and hands-off investment, making it ideal for those who are looking for a safe home for their hard-earned cash."

Student numbers, especially in London, are set to rise in coming years. Kinleigh Folkard & Hayward's Carol Pawsey says that student lets provide good yields and consistent occupancy and she advises buying in certain hotspots. "Surrey Quays is particularly popular with Chinese students." Other cities with large student populations include Manchester, Leeds, Leicester and Sheffield.

As well as solid demand, landlords have the advantage of owning a property which is tenanted for almost all of the year and, thanks to pre-lettings, they usually know, seven months in advance, that their property is tenanted for the next academic year. Students may be facing steep hikes in fees and they are also facing rent rises too – last year many student landlords benefited from 10 per cent gross rental increases.

Invest overseas?

Leopold Village, Brussels, Belgium

A new development five minutes away from the European Parliament and near the Université Libre de Bruxelles.

Studios from €179,000

Thornsett Belgium (+32 2 280 3034; www.leopoldvillage.com)

Leipzig, Germany

A second-floor three-bedroom apartment in a 1900-built building renovated in 2000 near the University of Leipzig and four other universities. Offers from €33,500.

ProVenture Property (0115 714 2820; www.proventureproperty.com)

...or nearer to home?

Fiveways House, Leicester

Refurbished "pod-style" apartments within one mile of De Montfort University and 1.5 miles of the University of Leicester. Studios from £23,000

Experience International (0207 321 5858; www.experience-international.com)

Alderson Place, Highfields, Sheffield

A three-bedroomed Victorian terrace, that needs updating, but which is near the popular London Road and within easy access ofSheffield city centre and Sheffield and Sheffield Hallam universities.

On the market for £100,000

Winkworth (0114 255 7873; www.winkworth.co.uk)