The property market in the UK is an interesting one. While there are still some areas of London that offer good value for money, it’s not always easy to find affordable properties without spending a lot of time searching. If you’re looking for somewhere to invest your money, then look no further than this article. It will cover all aspects of the UK property market and whether or not it’s worth investing in.
Why the UK?
There are a few reasons why the UK property market might be a good investment. Firstly, the UK is still recovering from the global financial crisis, and as such, property prices are relatively low in comparison to other countries. Additionally, London is still seen as a desirable place to live by many people and this is likely to continue driving up prices in the capital.
In the wake of the Covid-19 pandemic, the UK real estate market has also experienced a boom in growth. According to RWInvest, prices rose so high– and so quickly – in the UK that 2021 was the highest overall growth for the country in 15 years. With forecasts predicting a similar trend across the next couple of years, it’s clear that this is seemingly only going to continue – making UK property investment ideal for both overseas and home investors.
Currently, there are two types of investors in the UK property market; those who invest for rental income and those who invest for capital growth. The former usually buy properties in areas that have high demand from tenants, such as university towns or city centres, while the latter will look for properties that offer good value for money but may be less popular with tenants.
As is often the case with residential properties, those looking to invest in the UK property market will need to make a choice between freehold and leasehold. Freehold properties can be bought and sold as you see fit; they also tend to yield higher rental incomes over time than their leasehold counterparts. Leasehold properties, on the other hand, come with leases that restrict what you can do with them.
Investors who are looking for capital growth would usually choose freehold as they’re able to buy and sell whenever they like; those who are happy with making regular fixed returns may prefer to go for leasehold.
There is an argument that says buying a freehold property offers better value for money as a leasehold property comes with a ground rent that must be paid. This is because the value of a freehold property includes the value of the land it sits on, whereas a leasehold property does not.
Where to invest
As mentioned above, investors will typically buy property for rental income or capital growth. If you’re looking to invest in the UK property market for rental income, there are certain areas that offer the best value based on rental returns. For example, if your investment property has an 85 percent rental yield, this means that each year you would be able to charge an annual rent equal to 85% of the total yearly cost of owning and maintaining that building.
According to research carried out by YouGov on behalf of Barclays, Milton Keynes is currently offering the most affordable properties with high yields, with rents equaling just under 30% of house prices. This is followed by Peterborough (23%) and Luton (22%). Property investment in Leeds has also steadily risen over the last few years.
On the other hand, the research also found that London is currently one of the least affordable places for buyers looking to invest in the UK property market due to high prices and low yields. But if you can afford it, why not buy somewhere nice?
If you’re buying for capital growth, some areas are more favourable than others. “Souterrain” or “down-landing” flats have seen huge price rises over recent years on account of their affordability and good returns on investment. This is because they tend to be smaller properties located outside city centres, but still relatively close by, which helps keep rental costs low while enabling tenants to commute into towns/cities easily.
What training do I need?
There is no specific training required to invest in the UK property market. However, it’s always a good idea to get some advice from a professional. Try searching “property investment courses UK” and see what comes up. You’ll have loads of quality options in no time. A mortgage adviser can help you find the best deal on a mortgage, while a property lawyer can guide you through the purchasing process and help you avoid any costly mistakes.
So, is the UK property market worth investing in? It really depends on what you’re looking for. If you’re happy to make a regular fixed return, then leasehold properties in certain areas can be a good option, but if you’re looking for capital growth, then freehold properties in the right places are probably your best bet. Whichever route you decide to go down, it’s always a good idea to get some training and advice from professionals first.