Property Investment UK Property Investment UK

The Ultimate Guide to Property Investment UK

The worldwide property market offers varying levels of success for investors. According to house price and rental cost data, European countries offer different levels of property investment potential. Examples include Spain, with average rental yields of around 2.3%, and Germany with slightly better average yields of 4.6%. When looking at the average yields for specific cities around the world, figures reach even lower rates such as just 2.79% in Paris.

It comes as no surprise then that the UK property market stands as one of the most popular investment areas. With average yields of around 5.4%, investors worldwide are taking advantage of the opportunities available with UK property investment.

Figures like these show that the market for property investment in the UK is thriving, but is investing in the UK property market a good idea? If you’re keen to find out everything you need to know about the different UK property investment opportunities available and why you should consider UK property investment for 2020, 2021, and beyond, make sure you read our detailed guide. Keep reading for the ultimate guide to buying an investment property in the UK.

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What Is Property Investment UK?

So what is UK property investment? To answer that question, we need to break it down into two parts – the definition of an investment property and the different types of property investment UK investors embark on.

An investment property is a property that has been purchased for the sole purpose of generating income. Investment properties in the UK can produce a return on investment in the form of rental returns or capital growth. Capital growth occurs when the value of the property has increased over time.

What Are the Different Types of Property Investment UK?

The two main types of property investment in the UK are buy to let and buy to sell investments. However, there are also some additional ways that people invest in real estate in the UK. Let’s go into more detail on the different types of investments to consider for your UK property investment.

Buy to let investment is one of the most popular UK property investment strategies, and for good reason. Buy to let allows UK property investors to make significant returns through both rental income and capital growth. This is the only investment type to offer two types of return on investment, which is why it’s such a common choice for property investors in the UK.

Buy to sell is another common type of investment in the UK. With this strategy, investors will buy a property that’s in need of refurbishment and then sell it for a higher price. This type of property investment strategy is good for investors looking to generate a large lump sum of cash through a short-term investment. Buy to let investment, on the other hand, is more of a long-term venture.

Similar to buy to sell strategies, some UK property investors will choose to develop a new build property themselves. This involves the planning and construction of the building. Once the property has been built, the investor will normally sell it on for profit. Many investors choose this type of property investment as a way to have full freedom over their venture. However, this strategy is a lot more time-consuming than some others and requires a lot of commitment and expert knowledge to be a success.

Those who don’t wish to invest in UK property directly have the option to invest in REITs (real estate investment trusts). A real estate investment trust is a company that owns investment properties, and REITs are traded like stocks, which makes them more of a liquid investment. REITs are beneficial for anyone who doesn’t want to commit to buying a property themselves, and prefers stock market type investments. However, REITs are limited when it comes to capital growth returns.

Based on the potential returns available and the current state of the UK property market, buy to let is the best type of property investment UK investors should consider. By investing in UK buy to let, investors can gain both regular rental income and capital growth returns. Those who invest in buy to let in the UK are also able to choose a hands-off investment if they prefer.

Buy to Let

Buy to let investment is one of the most popular UK property investment strategies, and for good reason. Buy to let allows UK property investors to make significant returns through both rental income and capital growth. This is the only investment type to offer two types of return on investment, which is why it’s such a common choice for property investors in the UK.

Buy to Sell

Buy to sell is another common type of investment in the UK. With this strategy, investors will buy a property that’s in need of refurbishment and then sell it for a higher price. This type of property investment strategy is good for investors looking to generate a large lump sum of cash through a short-term investment. Buy to let investment, on the other hand, is more of a long-term venture.

Property Development

Similar to buy to sell strategies, some UK property investors will choose to develop a new build property themselves. This involves the planning and construction of the building. Once the property has been built, the investor will normally sell it on for profit. Many investors choose this type of property investment as a way to have full freedom over their venture. However, this strategy is a lot more time-consuming than some others and requires a lot of commitment and expert knowledge to be a success.

REITs

Those who don’t wish to invest in UK property directly have the option to invest in REITs (real estate investment trusts). A real estate investment trust is a company that owns investment properties, and REITs are traded like stocks, which makes them more of a liquid investment. REITs are beneficial for anyone who doesn’t want to commit to buying a property themselves, and prefers stock market type investments. However, REITs are limited when it comes to capital growth returns.

What is the Best Type of Property Investment in the UK?

Based on the potential returns available and the current state of the UK property market, buy to let is the best type of property investment UK investors should consider. By investing in UK buy to let, investors can gain both regular rental income and capital growth returns. Those who invest in buy to let in the UK are also able to choose a hands-off investment if they prefer.

Different Types of UK Property Investment

Property Investment UK



Property Investment UK



Property Investment UK



Property Investment UKProperty Investment UK



Why Invest in the UK? – Reasons to Invest in UK Property

Now that we’ve covered some of the most popular types of investment that property investors in the UK embark on, you might be wondering ‘why invest in the UK?’ Here are some of the reasons why investing in the UK is considered such a lucrative venture.

 

Rental Returns

Rental yields are one of the biggest factors to consider when looking for a buy to let investment. If you’re not familiar with rental yields, they’re a percentage figure which indicates the level of return you can expect from your investment. Calculating a rental yield is simple. Divide your annual rental returns by the price of the property, and then multiply the resulting figure by 100 to generate your percentage. The higher your rental yield, the larger the rental returns you can expect.

In the buy to let postcode map from TotallyMoney, 25 UK postcodes were found to have average rental yields of over 6%. The highest rental yield is currently in Liverpool’s L1 postcode, which boasts impressive 10% rental returns. This means that those planning to invest in the UK – particularly top UK property investment areas – are set to see some of the most attractive yields worldwide!

Capital Growth 

When researching property investment opportunities, UK investors should also pay close attention to capital growth trends. Along with high rental yields allowing for attractive returns, capital growth is another important factor that can provide property investors in the UK with a huge return on their investment.

Whether you decide to sell the property five years after purchasing it, or you wait until later in life to use the funds from the property sale towards your retirement, selling at the right time is key. A prime example of potential capital growth returns available to savvy UK property investors can be found when analysing past and present house prices in London.

According to the Office for National Statistics, the average property price in London stood at £115,000 in 1998, increasing to £351,000 by 2008. This means that in ten years, property investors in the UK who purchased London property made average capital growth returns of £236,000. While capital growth in London is looking less promising for 2020 and 2021, these past house price growth trends highlight the importance of researching the property market before investing in UK property. When done correctly, you could be in for some huge returns through capital gains!

Demand

For property investors in UK cities, a high level of demand for property is another of the most crucial elements to ensure a successful venture. Without consistent demand, you can’t make money from property in the form of rental income. With property investment UK, an investor can ensure a high level of demand due to the number of people seeking a rental property surpassing the number of properties actually available.

Both young professionals and students tend to be the main demographic of renters in the UK. The UK student property market also has some of the biggest influence on the UK property investment market. The UK student market is home to around 2.3 million students, many of whom are from overseas.

Research made in 2018 concluded that only 37% of 25 to 34-year-olds in the UK live in a property of their own, showing a decrease from 2006/07’s figure of 57%. Many young people are also more likely to rent a property by choice, as they enjoy the freedom of being able to move home more easily. Not having to deal with the responsibilities that come with homeownership, like paying for unexpected home repair costs, is also appealing to young renters.

Reasons to Invest in the UK

Property Investment UK



Property Investment UK



Property Investment UK



What Steps Should I Take to Invest in UK Property? - How to Invest in UK Property

If you’re interested in buying an investment property in the UK, your next step before exploring the UK property investment opportunities available should be to carry out in-depth research and planning. If you’re wondering ‘how do I become a property investor in the UK’, here are some of the most crucial steps you need to take in order to get into property.

When it comes to property investing, UK first time buyers may feel overwhelmed when trying to figure out which area to invest in. The internet is filled with conflicting information about the best place to invest in property. For example, certain statistics will point towards Birmingham, Nottingham or other cities in the Midlands being best for UK property investment, while other data highlights the strength of the North West property market. This is where doing your own research comes in, by analysing the information available on trusted online sources.

Property investment statistics for the UK show that the North West region, home to Liverpool and Manchester, boasts the best potential for those who wish to invest in UK property. With some of the strongest house price growth rates, the highest rental yields, and the fastest-growing rental market in the UK, the North West offers unmissable property investment opportunities for UK investors to take advantage of. Six of Liverpool’s postcodes make the Totally Money list for the best rental yields in the country, while Manchester boasts ever-growing demand, with the UK’s second highest graduate retention rate. Savills predicts that North West property prices will see the most significant growth by 2024, with an increase of 27.3%. This rate is followed by Yorkshire and the Humber with expected 24.1% growth, Scotland which is set to see 25.4% growth, and Wales with expected growth of 22.3%. The worst performing region is predicted to be London with a rise of just 12.7%, followed by the South East, South West, and East of England’s 17.3% growth.

While researching the best areas to invest in UK property falls into the property market research stage, you should also spend as much time as possible learning about the market as a whole. Get clued up on every piece of property terminology, spend time reading guides or listening to property podcast episodes, and even consult with an expert. As the famous Benjamin Franklin quote goes – “An investment in knowledge pays the best interest”. Before looking for investment properties, UK investors should become as knowledgable in the field as they can.

The more time you spend reading up on property investment in the UK, the easier it will become to identify the best UK property investment opportunities. Researching the market will also help you work out whether you’re interested in a student property investment or a residential property investment in the UK. Knowing and understanding your target tenant is key when it comes to property investment in UK cities. For instance, young professional tenants may typically want a property that features a stylish, modern design and is close to transport links and local amenities like bars and restaurants. The more research you do about your tenant, the easier it will be to secure tenants more quickly and effectively.

Read about the pros and cons of residential and student property investments to understand which investment best aligns with your goals. You’ll find that there are small differences between each property type, such as stronger potential growth with residential investments. However, whether you invest in a student or residential city centre apartment, your potential for lucrative returns is strong.

Those exploring investments in the UK housing market will likely have built a substantial investment fund that they’ll use towards their venture. Many investors will even be lucky enough to have enough money to pay for their property in full. However, for those with smaller investment budgets, UK property investment may seem out of reach without some form of financial aid. While property investment in the UK with no money at all isn’t an option, there are finance options available for investors to consider.

Obtaining a buy to let mortgage is the most common method that UK property investors use if they aren’t able to make an upfront payment for the property. Buy to let mortgage’s are similar to regular residential mortgage’s. There are, however, some differences, such as requiring a higher mimum deposit of 25% – 40%. It is usually easy enough for investors to secure a buy to let mortgage on a UK property investment purchase. It can, however, sometimes be tricker to find a lender to offer a mortgage for off-plan property, or a property investment purchase being made by an overseas investor.

Another option is to pay for your investment property in UK cities by using a payment plan. Many property investment companies, such as RWinvest, will offer payment structures that allow investors to split the cost of their property into smaller amounts. This way, it’s possible to buy a UK investment property with under £100k in the form of a deposit, with the rest of the property value being paid at a later date.

If you’re a first time buyer who’s looking to invest in UK property, you may not know about the different deals and discounts that are available. If this is the case for you, you’ll be happy to know that property investment in the UK can be highly affordable for investors who opt to invest through a property investment company.

Property investment companies will often collaborate with developers to offer the best prices, especially when investing in off-plan property which is generally priced at below-market rates. This is especially true of 2020. Due to the Covid-19 pandemic and the resulting nationwide lockdown, developers began to offer their off-plan properties at discounted rates as a way to entice investors. Other deals such as assured rental yields also became available, allowing UK investors to secure some fantastic UK property investment opportunities.

A prime example is with our latest UK investment property, Merchant’s Wharf. Based in Manchester, Merchant’s Wharf is currently available with up to 55% below market value rates, with prices starting at just £149,950. This is unheard of for such a thriving UK area, and highlights the appeal of property investment in the UK in 2020. Another opportunity for UK investors to save money on their venture has been introduced with the new stamp duty tax holiday. Launched in July and set to last until March 2021, the stamp duty holiday allows investors and homeowners to make huge savings on stamp duty tax. This tax break allows buy to let investors in the UK to save up to £15,000 in stamp duty tax.

Research Buy to Let Hotspots to find the Best Areas for Property Investment UK

When it comes to property investing, UK first time buyers may feel overwhelmed when trying to figure out which area to invest in. The internet is filled with conflicting information about the best place to invest in property. For example, certain statistics will point towards Birmingham, Nottingham or other cities in the Midlands being best for UK property investment, while other data highlights the strength of the North West property market. This is where doing your own research comes in, by analysing the information available on trusted online sources.

Property investment statistics for the UK show that the North West region, home to Liverpool and Manchester, boasts the best potential for those who wish to invest in UK property. With some of the strongest house price growth rates, the highest rental yields, and the fastest-growing rental market in the UK, the North West offers unmissable property investment opportunities for UK investors to take advantage of. Six of Liverpool’s postcodes make the Totally Money list for the best rental yields in the country, while Manchester boasts ever-growing demand, with the UK’s second highest graduate retention rate. Savills predicts that North West property prices will see the most significant growth by 2024, with an increase of 27.3%. This rate is followed by Yorkshire and the Humber with expected 24.1% growth, Scotland which is set to see 25.4% growth, and Wales with expected growth of 22.3%. The worst performing region is predicted to be London with a rise of just 12.7%, followed by the South East, South West, and East of England’s 17.3% growth.

2. Research the Property Market to Gain Knowledge

While researching the best areas to invest in UK property falls into the property market research stage, you should also spend as much time as possible learning about the market as a whole. Get clued up on every piece of property terminology, spend time reading guides or listening to property podcast episodes, and even consult with an expert. As the famous Benjamin Franklin quote goes – “An investment in knowledge pays the best interest”. Before looking for investment properties, UK investors should become as knowledgable in the field as they can.

The more time you spend reading up on property investment in the UK, the easier it will become to identify the best UK property investment opportunities. Researching the market will also help you work out whether you’re interested in a student property investment or a residential property investment in the UK. Knowing and understanding your target tenant is key when it comes to property investment in UK cities. For instance, young professional tenants may typically want a property that features a stylish, modern design and is close to transport links and local amenities like bars and restaurants. The more research you do about your tenant, the easier it will be to secure tenants more quickly and effectively.

Read about the pros and cons of residential and student property investments to understand which investment best aligns with your goals. You’ll find that there are small differences between each property type, such as stronger potential growth with residential investments. However, whether you invest in a student or residential city centre apartment, your potential for lucrative returns is strong.

3. Explore Finance Options

Those exploring investments in the UK housing market will likely have built a substantial investment fund that they’ll use towards their venture. Many investors will even be lucky enough to have enough money to pay for their property in full. However, for those with smaller investment budgets, UK property investment may seem out of reach without some form of financial aid. While property investment in the UK with no money at all isn’t an option, there are finance options available for investors to consider.

Obtaining a buy to let mortgage is the most common method that UK property investors use if they aren’t able to make an upfront payment for the property. Buy to let mortgage’s are similar to regular residential mortgage’s. There are, however, some differences, such as requiring a higher mimum deposit of 25% – 40%. It is usually easy enough for investors to secure a buy to let mortgage on a UK property investment purchase. It can, however, sometimes be tricker to find a lender to offer a mortgage for off-plan property, or a property investment purchase being made by an overseas investor.

Another option is to pay for your investment property in UK cities by using a payment plan. Many property investment companies, such as RWinvest, will offer payment structures that allow investors to split the cost of their property into smaller amounts. This way, it’s possible to buy a UK investment property with under £100k in the form of a deposit, with the rest of the property value being paid at a later date.

4. Look for Deals and Discounts

If you’re a first time buyer who’s looking to invest in UK property, you may not know about the different deals and discounts that are available. If this is the case for you, you’ll be happy to know that property investment in the UK can be highly affordable for investors who opt to invest through a property investment company.

Property investment companies will often collaborate with developers to offer the best prices, especially when investing in off-plan property which is generally priced at below-market rates. This is especially true of 2020. Due to the Covid-19 pandemic and the resulting nationwide lockdown, developers began to offer their off-plan properties at discounted rates as a way to entice investors. Other deals such as assured rental yields also became available, allowing UK investors to secure some fantastic UK property investment opportunities.

A prime example is with our latest UK investment property, Merchant’s Wharf. Based in Manchester, Merchant’s Wharf is currently available with up to 55% below market value rates, with prices starting at just £149,950. This is unheard of for such a thriving UK area, and highlights the appeal of property investment in the UK in 2020. Another opportunity for UK investors to save money on their venture has been introduced with the new stamp duty tax holiday. Launched in July and set to last until March 2021, the stamp duty holiday allows investors and homeowners to make huge savings on stamp duty tax. This tax break allows buy to let investors in the UK to save up to £15,000 in stamp duty tax.

How to Invest in UK Property

Property Investment UK



Property Investment UK



Property Investment UK



Property Investment UK



Ready to Get Started With Property Investing in the UK?

Invest in Rental Property Opportunities With RWinvest

If you’ve enjoyed our UK property investment guide and want to find an investment property for sale, don’t hesitate to get in touch with RWinvest today. With offices in Liverpool, Manchester, London and Leeds, we work hard to find you the best UK investment properties on the market, and take pride in the amount of positive feedback and customer reviews we receive.

Throughout our wide team of property consultants, client care professionals, post-sales managers and marketing experts, many of us have been born and bred in the cities we choose for our investments. By offering investment opportunities in cities like Liverpool and Manchester, we’re able to offer information on an area we know and love, allowing our passion to shine through! We can advise you on the best buy to let investments available, ensuring you secure the best rental yields and potential house price growth. We’re also happy to guide you through the investment process and prepare you for building a lucrative property portfolio.

If you’re interested in property investing in the UK market and want to find out more about our current UK investment properties, we’d love to hear from you. Get in touch today and we can help you begin your buy to let journey.

If you’ve enjoyed this guide, make sure you read our other informative property investment content. Here, you’ll find articles on property prices after Brexit, guides covering the difference between freehold vs leasehold property, and more. For more information, check out the latest in our buy to let news page.

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