Real estate investment represents one of the most sought after investment classes. Investing in a property in the UK is quite profitable, Uk property prices rose by more than 10% in 2021, representing the fastest growth rate in recent years. Despite Brexit concerns, the UK housing market has remained stable, much of this growth could also be attributed to the global pandemic nevertheless these trends indicate a positive outlook.
Before you invest in UK Property, there are important things to take note of to avoid unnecessary pitfalls. Whether you a native investor or a foreign investor looking to jump into the UK property market here are 5 vital things to consider before taking the plunge.
Understand the landscape
Before you consider buying an investment property research the properties and their locations. Also consider the expenses, responsibilities etc. You can visit the properties or get information online using popular websites including Rightmove and Zoopla. Depending on what type of investor you are whether local or foreign you can consult property investment companies, property managers, real estate consultants or agents to work you through the entire process
Location Is Key
The location of a property greatly affects its value. In the UK, property prices in Scotland will differ from those in England. Rental yields and capital appreciation of properties will differ by location so it’s important to research different areas by finding out the average property price and average rental cost. Low average property prices and high average rental costs will result in strong yields.
The northern and midlands parts of the UK like Liverpool, Manchester, Birmingham offer some of the best options for rental returns with yields as high as 8% in certain postcodes. Properties in areas like London are attractive for their capital appreciation.
Property Type
As an investor, you might want to consider investing in a Residential or Commercial Property? Investing in residential properties is the go-to choice for many individual investors.
Residential and commercial properties vary in a lot of ways but mostly residential properties are easier to finance and easier to sell than commercial properties. You should also decide on the type of property you want to invest in. Decide whether an off-plan, new build, or refurbished property is right for you.
Property Investment Strategy
The two main types of investment strategies are the Buy to Let and Buy to Sell. Buy to let is when an investor buys a property to rent out to earn rental income (cash flow) while Buy to sell, involves purchasing and selling a property for profit. This is also known as ‘property development’.
Both strategies offer attractive returns but differ in several ways, Buy to let produces recurring rental income when done right but it takes time while Buy to sell can yield significant returns over a shorter period but you won’t reap a recurring rental income.
Property Management
Property management means daily oversight of a property. Depending on your preference you can decide to be a hands-off or a hands-on property investor. A hands-off investor will need to hire a property management company to help manage your investment.
Property managers can take on many responsibilities such as help with finding tenants, collecting and managing rental payments, property maintenance and many other management tasks needed. This hassle-free approach to managing your investment.
