Tenanted Property for Sale

There are two main ways of earning returns on an investment property. A more long-term earner comes in the form of capital appreciation, ie. selling the property when its value surpasses that which it was originally purchased for. This enables landlords to profit from capital gains as long as they sell their property for more than the initial price.

In the shorter, more immediate term, a regular rental income is the primary way investors will earn their returns and is the best way to generate a passive income from a tenanted property.

Today, many investors opt to put their money into off-plan property, which brings with it a number of notable advantages.

These include the fact that properties can often be paid for in stages, with the bulk of the payment due upon completion of the development. This means that the value of the property could have increased by the time it’s complete, presenting a great capital growth opportunity for investors.

However, in the nature of the construction industry, this can be a long process with inevitable delays, leaving property investors waiting for a while before they actually see their returns coming in.

In contrast, by investing in properties that already have sitting tenants, a rental income can be earned immediately from tenanted property for sale in the UK.

Like all investments, there is a certain degree of risk when it comes to investing in the property market.

Significant concerns for property investors are whether there is sufficient tenant demand and if rental payments will be made on time. If say an investor purchases a property off-plan and decides to manage it themselves, these risks must be taken into account and can require a lot of research and work.

On the other hand, if investors instead consider only tenanted properties for sale, this extra work and indeed the anxiety that can come with it is almost entirely lost. At present, the UK rental market is booming due to a range of social and economic factors creating endless investment opportunities within the buy-to-let property market.

In a recent report, the Guardian highlights that demand for rental homes in the UK increased by an unprecedented 23% in the space of a year.

In a large part, this stems from high mortgage rates, along with an ongoing cost-of-living crisis that has heaped added financial pressures on average earners, making previously affordable properties like a two-bedroom terraced house simply unattainable for most first-time buyers.

Another point worth noting in terms of this rising demand for rental property is the fact that in many cases, tenants now find themselves competing for accommodation due to a dwindling supply.

By investing in property for sale with tenants, investors can avoid the tricky and time-consuming process of having to go through applications to choose a suitable, reliable tenant and strike a tenancy agreement that works for both parties.

Key among the many variables that investors should consider before purchasing a buy-to-let property is the rental value forecast for the area in which they are investing. Due partly to the factors outlined above, current forecasts place UK rental growth in a very healthy position.

According to Savills, UK rental values are set to rise by 6.3% this year alone, before increasing by a further 18.3% by 2027.

This is highly promising for investors who are hoping to make sizeable returns through rental income in the immediate term. More importantly, these rental valuations will be assured for buy-to-let properties for sale with tenants, as they are completed and occupiers are already paying rent.

In terms of capitalising on a thriving rental market and generating an immediate passive income stream, this is a major benefit of investing in tenanted property for sale over off-plan residential property. The average UK rent is currently sitting at £1,172 per month, with average rental yields above 5%.

As an investor, however, it’s also important to remember that rental markets are definitely not created equal, and there are some areas in the UK that generate higher rental yields than others.

Take the North West for example, where property values are expected to rise well above the UK average by 11.7% between now and 2027.

Along with increasing property prices, rental values in key investment areas like Liverpool and Greater Manchester are set to skyrocket in the coming years as these thriving cities become increasingly popular alternatives to London.

Additionally, these growing markets already comprise a host of fully tenanted buy-to-let properties boasting prime city centre postcodes and rental yields in excess of 6% that present unrivalled investment opportunities.

Although they are set to rise in the coming years, average property prices in the North West are currently below market value, making now a prime time to explore tenanted properties for sale in this growing region.

Areas of Growth

Take the North West as an example, where property values are expected to rise well above the UK average by 11.7% between now and 2027. Along with increasing property prices, rental values in key investment areas like Liverpool and Greater Manchester are set to skyrocket in the coming years as these thriving cities become increasingly popular alternatives to London.

Additionally, these growing markets already host a range of fully completed and tenanted buy-to-let properties boasting prime city centre postcodes and rental yields in excess of 6% that present unrivalled investment opportunities.

Although they are set to rise in the coming years, average property prices in the North West are currently below market value, making now a prime time to explore tenanted properties for sale in this growing region.

A simple yet immeasurable benefit of a tenanted investment property, as opposed to an off-plan residential or even commercial property, is that investors can view its performance history before deciding to part with their cash.

This allows them to see exactly what the property will earn them in the immediate term as well as any projections for the future, making the investment a safer and more assured proposition as a whole.

In addition to the performance of the property in terms of the income it is able to generate, investors can also check the tenants’ payment history to ensure they have paid their rent on time and in full throughout the course of their occupancy.

This gives the investor a chance to determine the reliability of the occupier before making a purchase, again reducing the overall level of risk and uncertainty.

Arguably the greatest benefit of tenanted property for sale is the fact that it presents a completely hands-off, hassle-free investment opportunity.

Unlike investing in a brand-new property, where the owner will likely have to find a lettings agent, market the property, choose a suitable tenant and finalise a tenancy agreement, with an occupied property, investors can immediately take over the tenancy and receive rental payments following the purchase.

For busy investors that prefer this hands-off approach, they can ensure that their purchase remains a completely passive income stream by employing the services of a property management company.

This way, the company they choose will assume all the regular landlord duties and will even find a new tenant if the current occupier decides to vacate.

An additional and perhaps obvious selling point of investing in a tenanted property is the fact that it is already complete.

However, the value of this fact cannot be understated when it comes to generating immediate income. With tenanted properties, there are no refurbishments to be made, no setbacks in terms of construction and no void periods where the property is without an occupier.

Instead, investors can start earning straight away and begin thinking about how to further improve their investment portfolio.