How to invest in property: 7 crucial property investment tips
As property prices remain high across the UK, with investment hotspots becoming more prominent in the Midlands and the North, interest in UK buy-to-let property has increased.
With demand growing from first time investors in particular, we have compiled our seven crucial investment tips to help you to make the most of all the UK property investment opportunities available in the current market.
1 - Invest in an up and coming property market
Perhaps the most obvious place to start – the key for a successful buy to let investment is to do your research and make sure you are investing in an up and coming area, rather than a place which may have been successful in the past. For example, Manchester is a hot spot for property investment in the UK, whereas London was previously more popular.
The latest residential market forecast from Savills has shown the North West will see the highest level of capital appreciation over the next five years. With house price growth expected to reach up to 24.1% in the region by 2025, compared to 15.5% nationally, it is clear to see where prospective buy to let investors should look.
2 - Take advantage of the SDLT Holiday
At the start of July 2020, The Government announced Stamp Duty Land Tax holiday lasting till 31st March 2021. The increase means that buying a property is now a lot cheaper for landlords.
Due to this, The Telegraph reports the property market has seen a massive influx of investment. Agreed sales have increased by 14% between July and August, an increase of 143% when compared to August 2019.
3 - Calculate your potential rental yield
Your rental yield is the potential income you can earn from a buy to let property which allows you to estimate the return on your property investment. It is vital to calculate this before investing so that you can be sure that the property you purchase meets your requirements.
PropertyWire has shown that tenant demand across the UK was up 33% in May compared to the same month in 2019, which means as a landlord, you’ll have no shortage of tenants for your property. However, not all areas are growing at the same pace, making it important to find the cities like Manchester and Birmingham where demand is growing fastest.
An increase in tenants seeking a change of scenery following lockdown restrictions has meant that rental market has been awash with prospective tenants. Despite this, demand is outstripping supply, which means competition for homes is at an all-time high, and landlords can therefore be more confident of their properties being tenanted.
5 - Rural or city property?
Working out where you want to invest plays an important role in maximising your investment. Both rural and city centre properties have their pros and cons, so you need to think about what works best for you.
Rural properties can often be bought for comparatively lower prices compared to their city counterparts, often have lower living costs, have quieter surroundings and represent an ideal spot for those who are thinking of starting a family. However, the pool of potential tenants is smaller, and house prices are projected to rise much faster in city centres over the coming years – leading to higher capital appreciation.
Alternatively, urban properties benefit from a wide range of amenities including shopping centres, restaurants and bars. What’s more, city centre properties are often served by a wide public transport system, have a higher supply of tenants and offer higher rental yields.
6 - Look for a place where business is booming
Where business is booming, people tend to follow, with an increase in job opportunities, career development and a better lifestyle being major driving forces. A growing infrastructure continues to attract business, and alongside this, an influx of young professionals follows suit.
For these reasons, cities like Manchester are at the forefront of becoming a world-class city and a major force in the UK economy.
Massive companies such as Google, Amazon, the BBC and Microsoft have opened offices in Manchester in recent years, leading to a massive increase of professionals moving north. Additionally, HS2 is due to arrive to the city in 2032, providing high speed links to London and further opening the city to the rest of the county, making it a great investment opportunity.
7 - Look for a long-term investment
Finally, we recommend that you look for a long-term investment as the benefits of buy to let property multiply over time. For this reason, investors from around the world continue to invest in the UK buy-to-let property market due to its long-term stability and future potential.
Owning property long-term can be a source of financial security. With mortgage rates remaining low, reductions in Stamp Duty and the rental market showing continued positive growth, now is the time to invest.
