Advantages of property investment UK
Why invest in UK property?
When it comes to property investment, the UK is one of the best places to put your money into. There are many reasons why a property investment UK offers the best possible returns which should be explored carefully.
Purpose of investment
You should be aware why you are buying a property at the first place. You can either make a property investment UK for the purpose of using it as your home or for earning a rental income out of it. In case you are making property investment UK for the purpose of renting, it is a good idea as it offers good returns on property investment UK in the future. However, you must decide on the type of tenants you desire.
Renting out your property to students is a good option as there is high demand for student properties across the UK. The purpose-built student accommodation or PBSA is an attractive option for property investment UK as there is a lack of student accommodation properties in the UK. Rental growth in the UK PBSA segment has been 2.36% for the 2019/20 academic year. This compares to 2.26% growth seen in the sector during the previous year. However, the growth depends on the location as well as the type of property. This shows that property investment UK developers and funders should focus on the local market conditions and demands when analysing the feasibility of each project.
The demand for rooms within cluster flats with shared facilities is higher than self-contained studios, which shows higher demand for properties with modest prices. There is more demand for properties at the lower-end of the spectrum. The university-owned and university-linked student housing market show better rental outperformance. This includes the university-owned and managed schemes with nominations agreements with the universities which ensure full occupancy.
Apart from the student accommodation investment, there are other rental options as well which can ensure good returns on property investment UK.
When looking at and calculating Zoopla’s average house prices and rental costs for the UK, you can generate an attractive rental yield of 5.4 per cent – one of the best property yields in Europe. The current average asking price in the UK is £424,562, while the average asking price for rent stands at £1,938 per month. In a buy to let yield map created by Totally Money, 25 UK postcodes were found to have average rental yields of over 6 per cent.
Liverpool topped rental yield map with a total of six postcodes of the city making it to the list. The city’s L1 postcode lead the list of rental yield map with 10 per cent, followed by the L11 postcode with yields of 8.67 per cent, and the L6 postcode with 8.12 per cent yields. Liverpool was followed by Falkirk and Glasgow in Scotland.
The following factors should be considered before property investment UK:
1. Rental yields:
Rental yield is one of the most important driving factors for property investment UK. With only a right investment at the right place you can hope for high rental returns. You should pay attention to a number of factors when buying a property as making the right choice will determine the return on your property investment UK. Choosing the right property type, the right location as well as the right mortgage, together with the fundamental factor of assessing your finances correctly, will decide whether your property investment uk is a success or not in the future. You need to decide in advance whether you need to invest in a detached house, semi-detached house or an apartment.
The location for your property investment UK should be appropriate for making your venture a success. You should choose a mortgage only after a careful assessment of your finances. You should be aware what type of property will meet your requirements in the best way and why do you want to buy that. Location is a crucial aspect when deciding on property investment UK as a wrong choice at the right location can undermine your purpose of investment, whereas the right choice at the wrong location will also not yield the desired results.
The demand for buy to let properties is high which is another reason for property investment UK. As demand far surpasses supply, property investment UK offers huge opportunity to investors. There are 43 properties per agency on average and this figures is constantly growing, resulting in higher prices for homes. This growing demand is being met as more homes are planned in the future. The UK government plans to build 300,000 new homes a year to help meet the ever-increasing demand for homes among the population. The attention is particularly on the North due to the surging for rental homes in the region.
There has been a recent shift as even Londoners are preferring the North over the capital due to the high cost of living in the city. People across the demographics are looking to the North as they realise the potential which the North holds compared with the capital with its skyrocketing costs. The main demographic in the UK comprises students and young professionals. When looking at the age group of 25 to 34-year-olds, only 37 per cent of these live in a property of their own, showing a decrease from 2006/07’s figure of 57 per cent. During the same period, the number of renters in this age group had grown from 27 to 46 per cent, identifying an opportunity to invest in rental property in the UK.
3. Capital Growth
Apart from rental yields, capital growth is the most important factor when deciding on property investment UK. Investors should plan on a long term basis so that the property ensures high return on investment. If an investor buys a property, there are high chances, that the investors will sell the property also. You may want to sell the property in the future and invest elsewhere. Although it is difficult to predict the property market, as it depends on a number of factors, it is essential to know when to sell the property - whether it is to fund your retirement or selling the property after ten years.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.