When Is Buy to Let Property in the UK a Good Investment?
The answer…RIGHT NOW!
Property in the UK has long been considered one of the safest places to invest into property for a number of reasons. Lack of supply – currently there is a 4 million shortage of homes in the UK, with an annual target of over 300,000 new properties to be built every year. A figure that never has, nor is ever looking likely to be met. This is one of the reasons prices in the UK continue to rise at a stable rate, even through global economic shocks and political unrest, the property market in the UK always out performs many other countries, and there’s no sign of things changing.
Alongside the growth potential in the value of the property, there is consistent growth in the rental market for the same reasons, and with the ability to leverage up to 80% of the value of a residential property when buying for investment, further increasing your returns. There are now mortgage options available to both UK and International investors, making the UK an even more attractive proposition for investors.
When looking at ‘non-mortgagable’ asset classes like Student Accommodation or Hotel Room Investment, these still offer very strong and stable returns in many cases upto 10% per annum. Higher than many other countries, but most of all they are consistent and don’t fluctuate like many other countries offering similar investments in these asset classes.
The key when reviewing any investment is to take emotion completely off the table and look at the figures. Does this property generate me the level of return I need/I am targeting? No? Then walk away. Yes? Then proceed.
Many investors get too emotionally attached to a property and end up paying over the odds, or sometimes miss out on opportunities because it’s not in an area they would live, or the property is not the type of property they would live in…HELLO…YOU ARE NOT LIVING IN THIS PROPERTY! We’re not saying have run down, dilapidated properties, we’re saying focus on what the market wants, what you can afford, and what is going to generate you the highest returns.
Don’t forget to factor in all your running costs like ground rent, service charges, maintenance, and management fees. Maybe allocate a 10% monthly contingency for maintenance and void periods to ensure you are covered if anything happens. Remember it’s not always plain sailing but if you plan it right, there shouldn’t be too many storms you can’t ride out.
Regardless of the claims of thousands of property investors who made millions overnight…property is not a ‘get rich quick’ scheme. It should always be seen as a long-term investment to generate steady income but also to really benefit from the capital appreciation of the property.
For example, if you bought a 2 bed terraced house 20 years ago in Leicester for £50,000, by now it is likely to be worth around £230,000… 20 years of rental income, which by now would probably be £800 a month…you do the math. Now imagine if you’d only put down 25% (£12,500) of the purchase price and mortgaged the rest! And consider this…you purchased 4 or 5 by using a mortgage and putting down the same amount of cash…you’d be a millionaire by now and probably pocketing £4-5k a month!
Do Your Research
Property in the UK goes through ups and downs, and by downs we mean price growth slows. It’s rare it becomes negative, and if it does, it’s usually because the years preceding it have experienced a huge boom!
Keep an eye on where the property cycle is for the area you are choosing to invest in. You don’t want to buy at the top of the market ahead of a decline, and equally you don’t want to miss out on a few years of growth. The key is to look at the level of inward investment in the area, which is usually a good indication of population and job growth in the area, which subsequently has an impact on the property prices and rental market through increased demand.
It may sound a little daunting but don’t worry…that’s what Property Investment Consultant’s are for. Their job is to find you the best possible investment to match with your investing criteria and long term goals. A good consultant is someone who is actively investing their own money. Always ask them what investments they have made and how they have performed to be sure they know what they are talking about. After all, why should you take advice from someone who has never purchased a property in their life?
A good consultant will be able to help you calculate your ROI (Return on Investment), and ensure your funds are invested wisely.
Be aware though that things don’t always go to plan. Property prices may not rise as much as predicted; the developer might be delayed due to bad weather etc. The key to getting through this is to stay calm. Do not jump ship and sell quickly as this is known as panic buying, and buyers can sense this. Stick with it, things will go up again, properties will be completed, and you will generate a healthy return.
There is a famous saying in property that all investors should adhere to:
‘Don’t wait to buy property. Buy property THEN wait.’
By waiting you are simply missing out on potential growth, and even if the growth slows, you are always, without a doubt, making a greater return than leaving your money in the bank.
Many investors chose to sit on their cash once Brexit was announced in the UK…in areas like Birmingham and Manchester, those investors who chose to ignore Brexit and keep investing have made around 15-18% increase in the value of their properties versus those who kept their money in the bank earning less than 1% per year interest, and essentially devaluing as inflation is at a higher rate.
Get in Touch
To discuss how we can help you with your next buy-to-let investment, talk with us directly, you can call us on +44 (0) 2039507939 or send us an email at email@example.com. If this is your first time landing on Thirlmere Deacon Property Investments I encourage you to visit our homepage https://tdpropertyinvestment.com to read more about us and to see what we have on offer.
Thirlmere Deacon Property Investment
7/10 Chandos Street, Cavendish Square
+44 (0) 2039507939