1. Property Values are Growing Fast
As for the question ‘Is buy-to-let still a good investment in 2024?’, there’s no question when it comes to house prices.
If you’ve been keeping up with the UK housing market over the past year, you’ll know that average property prices are skyrocketing.
This house price growth may not be good news for first-time buyers looking to get their foot on the property ladder, but for buy-to-let investors, it signals a lucrative investment.
By investing in buy-to-let property right now, you’ll be able to purchase properties at affordable rates before even further property price growth comes into effect.
Due to the recent skyrocketing of house prices in 2021 and 2022, it is widely expected that prices will fall across the UK in 2024 to help counter the cost of living crisis and to keep the market healthy.
This isn’t a cause for concern, however, as it is merely a step towards keeping the housing market stable and helping to encourage more people to buy property in the face of rising prices elsewhere.
2022 saw house prices shoot up to record levels, so when combined with the wider economic situation in the UK, this was a bubble that was always going to burst.
At the peak in October 2022, the Land Registry reported house prices rising to a national average of £296,000, which is an all-time record! This was a rise of 12.9% based on October 2021’s average prices.
Certain areas of the UK are expected to perform better than others though, with the North-West standing head and shoulders above the competition.
Cities like Liverpool and Manchester are expected to only see prices fall by 8.5% in 2023 compared to the national average of 10%, while a five-year growth of 11.3% is anticipated by Savills.
Even with this growth, the North-West will still be highly affordable for investors, so you can benefit more from capital growth by investing here than you would in cities like London.
For example, the Land Registry reports that the average house price in Liverpool as of February 2023 was £181,278, which is over £100k below the national average!
Just look at the predictions from Savills on how the UK property market is set to perform over the coming years.
As these predictions show, there will be a slight dip in 2023 as the market resets due to overperforming in recent years, but this will only be a temporary drop in prices.
This means buy to let investors can expect to benefit from capital appreciation in the coming years, and are set to make considerable profit from investment properties if they choose to sell.
This temporary drop in prices is also beneficial, as it means 2024 will be a more affordable year to begin investing in property than 2022.
2. Rental Yields are High
Securing the highest rental yields is crucial if you want to get the most out of your buy-to-let investment.
The more rental income you can generate, the better. But is buy-to-let a good investment right now when it comes to rental yields?
Thankfully, rental yields in the UK are at some of their highest levels – a major reason to invest in buy-to-let in 2024.
The buy-to-let hotspot cities of recent years, like Liverpool and Manchester, offer some excellent rental yields with no sign of a rental market slowdown.
These North-West cities have both affordable property prices and high demand from tenants, which is helping the rental market in both cities to thrive.
The current average rental yield in the UK is 4.93%, per data from the Land Registry and Homelet, whereas Liverpool has an average rental yield of 7.92% (per Land Registry and home.co.uk), a far higher yield!
This means depending on where you invest, you may find yourself earning around twice the average amount of returns on an investment property, a massive jump!
Buy-to-let property for sale in Liverpool right now offers high rental yields and excellent demand from tenants.
Manchester also has high yields while being one of the fastest-growing cities in the UK. Our development Embankment Exchange is projected to bring in rental yields of 6%, meaning you can make a solid return on your investment.
Recent data has also revealed that the time it takes for landlords to rent out a property has fallen drastically in recent years, which means demand is higher than ever.
In April 2019, it took landlords an average of 31.9 days to rent out a property, while in 2021, it took just 8.9 days on average.
3. It’s Easy to Get Started
If you’re investing in property through a property investment company but wondering how to buy a buy-to-let property, the process may surprise you.
Unlike when investing in some other asset classes, buying a buy-to-let property in this way is simple.
The property investment company you work with can take the hassle out of the process by connecting you with the best opportunities, helping with solicitors, and assisting with each stage of the buying process.
You may choose to use a buy-to-let mortgage when purchasing an investment property, which allows you to spread out the cost of investing over time and use your rental income to help pay for the property.
Lenders will expect a higher deposit than with a traditional residential mortgage, so you will need to have more money upfront to be able to secure a mortgage. Interest rates are also higher, but you pay off the accrued mortgage interest over the term of the contract rather than the actual amount borrowed.
You only need to pay the borrowed amount at the end of the mortgage’s term, by which point the rental income you have collected will hopefully give you enough funds to complete this.
Payment plans are also available to help investors who don’t have the full sum of cash available secure their investment. This allows you to avoid borrowing a buy-to-let mortgage and having to deal with costly mortgage payments while spreading out the cost of investing over time.
So if you are asking is buy-to-let worth it due to the time it takes to organise and set up, the answer is yes thanks to the wide range of ways you can get into property investment.
4. It’s a Great Way to Make Passive Income
If making passive income is one of your main motives for getting started with buy-to-let, you’ll be glad to know that buy-to-let is actually one of the best ways to make passive income.
That’s because it’s possible to make income from your investment without having to get involved with time-consuming commitments.
You collect rental income every month from your tenants, and so long as things go smoothly you won’t have to have much interaction with those who are renting your property. Buy-to-let landlords can often perform their duties around their day jobs and regular lives.
However, you may find yourself being bogged down with repairs, renovations and other issues that could arise throughout a tenancy, so you may find yourself wanting to hand over the responsibility of managing your investment property to someone else.
Hiring a rental management company to help you run your rental property is the best option for this.
This means you can make passive income from your buy-to-let purchase without any landlord duties, as the rental management company does the hard work for you.
There are so many great rental management companies that take the hassle out of managing a buy-to-let investment.
If you’re working with a property investment company to buy your buy-to-let property, the company you invest with will often recommend quality rental management companies to help you manage your investment.
You can use your rental income to pay for the services of the rental management company, meaning you may see less money in your pocket from your property, but your time is free to pursue other ways of making money.
If you’re asking, ‘Is buy-to-let worth it or shall I explore easier options?’, you can rest assured that buy-to-let has the potential to be just as hands-off as any other venture.
