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The population in the UK has been rapidly increasing for many years, and with a growing population comes a growing need for housing.
Recent government statistics reveal that the UK population grew by an average of 4 million between 2018 and 2021.
And while this population growth has led to increased demand from those looking to buy a home, renting is still hugely popular throughout the UK.
Thanks to a thriving rental and property market despite the COVID-19 pandemic and the many lockdowns that came with it, investing in property remains a popular strategy.
At a time when buyer confidence within the UK housing market is at record levels, many people are being driven towards property investment.
But is this the right option for you? If you’re asking, ‘why should I invest in UK property?’, make sure you read this guide.
Here, you’ll learn:
If you’re interested in learning more, keep reading our detailed guide.
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By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
There are so many benefits to property investment and reasons why investing in UK property is a good idea.
The 12 main advantages of investing in real estate are:
In this section, we’ve split each of these benefits into four relevant categories.
If you’re wondering why you should invest in the UK property market, continue reading to find answers to the question ‘why invest in property?’
Cash flow is defined as the net income you make after other expenses have been taken care of.
One of the biggest benefits of property investment is that you can significantly boost your cash flow through rental income.
Depending on how high your rental income is, most investors are left with good cash flow once they pay any mortgage repayments, taxes, and fees. Some opportunities even offer assured rental returns for a set number of years.
Not only does property investment offer returns in the form of rental income, but investors can also benefit from capital growth returns.
If their property grows in value over time, and they can sell it for more than they initially purchased it for, capital growth returns can be made. With the current way the housing market is growing, you can expect the property value of any investments to rise.
Other investment strategies only offer one form of return on investment, so this quality makes property unique.
Put simply, property investment is one of the best strategies to consider if you’re looking to build wealth over time.
As the famous quote from Andrew Carnegie goes:
“Ninety per cent of all millionaires become so through owning real estate.”
Investing in property is one of the best ways to make extra money and boost your income, helping you achieve your financial goals more quickly.
While some investors may see the taxes involved with property as one of the disadvantages of property investment, it’s important to note that tax benefits actually come with investing in property.
Often, property investment interest is tax-deductible, and investors can usually deduct a lot of the costs involved with owning and managing a property.
Occasional tax breaks, such as the stamp duty tax break implemented for a period in 2020 and 2021, allow investors to save money on taxes.
If you don’t have the full amount of cash needed to invest in a property, there are different payment options available to you.
Many property investors choose to use a buy-to-let mortgage to fund their investment, which works similarly to a typical residential mortgage.
Other investors may opt to pay for their property in smaller, more achievable instalments, which is an option offered by many property investment companies selling off-plan properties.
While this is may be more expensive up front depending on the minimum deposit amount available, it means you can earn higher returns over time as you do not need to worry about paying off a mortgage.
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Rental properties are in high demand in the UK right now.
A report from April 2021 found that the time it takes for rental properties to become tenanted has been reduced to just 8.9 days from 31.9 days two years prior.
Rental prices are also high across the UK, with some of the highest rental yields of 6.4% on average being found in top buy-to-let areas like Liverpool.
Property experts Savills have predicted that average rental prices for UK property could rise by 17.4% over the next five years.
House prices across the UK have been rising rapidly over the last few years, making buying a property more difficult for first-time buyers.
The latest data from the UK House Price Index reports that house prices have risen 15.5% in the past 12 months from July, which can be worrying for first-time buyers.
On the other hand, investors have the opportunity to make more affordable property purchases by buying off-plan properties.
Off-plan properties – properties that haven’t yet been completed – are often offered at below-market rates by property developers.
When these properties are sold in more affordable parts of the UK, better investment deals become available. For example, in cities like Liverpool, it can be easy to find lucrative off-plan opportunities for less than £100k.
Commercial property, designed for shops and businesses, is often significantly more expensive than residential property, but some investors favour this as a way to gain more income from rental returns.
Because UK house prices are growing significantly in several key regions, investors benefit from enhanced capital growth returns.
In less than 12 months, UK house prices grew by 8.4% on average between October 2020 and August 2021.
By 2025, average property prices in the UK are expected to have grown by 21.5%, with higher growth of 28% predicted for the North West and Yorkshire and the Humber, and 23.9% growth in the West Midlands.
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If you already have an investment portfolio of different assets, investing in property is a great way to diversify your portfolio.
Diversification is crucial as it means you can spread your risk across various assets.
Since property investment offers different options such as student vs residential investments, properties in different areas, and varying strategies, it’s easy to build a lucrative and diverse property investment portfolio.
If you don’t want to invest in the more traditional property investment strategies like buy to let, there are alternative ways to invest in property that may be a better fit for your goals and requirements.
REITs are one example of an alternative property investment strategy. REITs stand for Real Estate Investment Trusts and work similarly to stock market investments.
With this, you don’t need to directly own property yourself. Instead, you can earn dividends from the properties owned by a company.
One of the best things about buy-to-let, and a big reason many people invest in property, is that investors can make passive income.
Property investment can be an excellent hands-off strategy if the buyer chooses to have a rental management company. Here, the company will manage the property on the buyer’s behalf and take care of any duties usually required of a landlord.
This way, all you need to do is collect the rental income each month, making it one of the biggest benefits of investment property.
Compared to other less tangible investment strategies like stocks and shares, buying property is considered relatively low risk compared to other types of investment.
Property investment can be seen as lower risk because the property market, particularly in the UK, has proved highly resilient and can bounce back from times of economic turmoil. This makes property a good investment opportunity for those with a lower risk tolerance.
This is another of the significant advantages of investing in real estate and a big reason why many people invest in properties.
If you’re considering buying an investment property but asking ‘should I invest in UK property in 2023?’, remember the following property market facts.
If you’ve found our ‘why invest in UK property’ guide helpful, be sure to explore our latest UK property investment opportunities.
With a range of prices, locations, and property types to suit all needs and budgets, you’re sure to find your ideal investment in the UK.
If you’re still asking ‘why invest in the UK property market?’, feel free to contact us via our live chat service or by giving us a call. Our property experts will be happy to advise you further.
To discover more about investing in property, look at our guide to property investment for beginners in the UK, filled with top property investment tips.
John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.
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