Local and foreign investors are showing greater interest in UK properties as ways to gain profit. The residential market remains undaunted by the coronavirus pandemic, and it offers excellent potential as property demands outpace the supply.
Experts estimate a 21.1% increase in UK property prices and predict that the housing bubble will continue until 2025. Although this presents an investment opportunity for many, investors know that good research is crucial. Knowing when and where to buy properties is part of any successful investment strategy.
UK Property Investment 101
Residential properties are in demand in the UK for this year and even in the years to come. Investors who want to venture into this market need to identify suitable investment types and locations to bring considerable short and long-term returns. Here are some things you should know:
#1. Residential Property Investment Types
Financiers who want to venture into UK property can choose from buy-to-let, property development, or new-build flipping.
Buy-to-let entails buying properties then renting them out as rooms, flats, or entire homes. As a long-term investment, buy-to-let generates income and ensures capital growth.
They’re the hottest trend in UK property investment as most people find it more convenient to rent rather than own. Foreign and local investors can consult UK investment property companies such as Thirlmere Deacon and others to provide a range of options.
Those who prefer short-term investment can consider property development instead. In this scheme, investors renovate or refurbish the property then sell it at a higher price. They can look for below-market value properties and improve them according to buyer preferences.
This method looks promising for the UK housing market as demand for renovated homes is rising. Buyers are looking for bigger homes that can accommodate work-from-home arrangements. They also prefer homes with gardens as they seek to spend time outdoors despite intermittent lockdowns.
New build flipping is another investment option to consider. Investors buy a property while construction is still ongoing then sell once the parcel is complete.
This investment strategy addresses the increasing demand for homes and guarantees a hassle-free approach for passive investors. New builds guarantee upgraded features, lesser maintenance costs, and additional benefits depending on the property developer.
#2. Investment Hot Spots
Apart from investment types, it’s also essential to know the best places to buy property. UK hotspots support the north-south divide with the north and midlands boasting of lower prices and higher rental rates.
The Office of National Statistics shows that house prices have increased across the UK with the following regions leading the housing boom:
- North West: Liverpool North, Liverpool South, Crewe
- Wales: Wrexham
- East Midlands: Nottingham, Mansfield, Newark
- West Midlands: Coventry, Wolverhampton
- Yorkshire & Humber: Barnsley, Bradford, Dewsbury, Halifax, Huddersfield, Leeds
Aside from these, investors can likewise explore regenerated cities that offer additional residential, commercial, and leisure amenities. These areas are upgrading transportation networks and repurposing public spaces to conform with safety protocols due to the pandemic.
They should also consider up-and-coming locations such as Falkirk and Kilmarnock in Scotland, Slough in Berkshire, Cleveland in North East England, and Sunderland in Tyne and Wear. These are attractive to young professionals, families, and even retirees because of the suburban vibe and proximity to urban centers.
#3. Generation Rent
Aside from suitable investments and market hotspots, investors should also know their target market—generation rent in the UK. This span ranges from the 20s working in the gig economy, professionals in their mid-30s, up to aged 65 and above who are downsizing to get more value from their retirement money.
Renting is becoming a sensible option for many as house prices continue to increase along with higher costs of living. Investors can take advantage of this trend by venturing into the private rental sector, providing single-family homes, flats, or houses in multiple occupations (HMO).
With HMO, three or more individuals who aren’t biologically related rent a single property and agree to use the same bathroom and kitchen. This can produce three times more rental yields, lesser arrears, and provide certain tax advantages for landlords.
Flexible housing options are in demand as most of the UK population continues to rent rather than own. This is a welcome opportunity for investors who want to take a slice of the rental market.
#4. Take Advantage Of Tax Breaks
Buying a real property can also come as an advantage for investors in tax incentives and other benefits. As announced by the UK government, property owners can still apply for Reduced Stamp Duty Land Tax until September 30, 2021. This extended tax break, along with other incentives, applies to local property owners and foreign investors.
Conclusion
Investors looking for profitable ventures can consider UK properties as additions to their portfolios. With increasing demands for buy-to-let accommodations and extended tax breaks, they can explore housing hotspots and offer affordable housing across ages of UK renters.
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