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UK Property Investment

The worldwide property market is performing at a mixed rate. According to house price and rental cost data, the average rental yields for a number of European countries show that certain areas are performing at an unimpressive rate. Examples include Spain which has average rental yields of around 2.3 per cent, and Germany with slightly better average yields of 4.6 per cent. When looking at the average rental yields for specific cities around the world, these figures reach even lower rates of 2.52 per cent in Sydney and 2.79 per cent in Paris.


It comes as no surprise then, that the UK property market stands as one of the most popular areas for investment. With average yields of around 5.4 per cent, and certain UK hotspots generating rental yields of over 9 per cent, savvy investors from around the globe 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? Find out everything you need to know about the property investment opportunities UK cities have to offer and why you should consider investing in UK buy to let in 2019 and beyond.

What is considered an investment property?


An investment property is a property which has been purchased for the sole purpose of generating income. Investment properties can produce a return on investment in the form of rental returns or capital growth when the properties value has grown by the time of sale. Properties that generate rental returns are classed as buy to let investments.

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Why invest in UK property?


When it comes to buy to let investment, there are a number of reasons why property investment opportunities in the UK are ranked so highly. Here is a breakdown of the four top reasons why you should consider making a UK property investment.


1. Rental yields


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 – you take the monthly rental costs of a property and multiply this by 12, then divide your result by the overall cost of the property. You then multiply this figure by 100 to generate your percentage. The higher your rental yield, the larger the rental returns you can expect.


When looking at and calculating Zoopla’s average house prices and rental costs for the UK, you can generate an attractive rental yield of 5.4 per cent – one of the best property yields in Europe. The current average asking price in the UK is £424,562, while the average asking price for rent stands at £1,938 per month. In a buy to let yield map created by Totally Money, 25 UK postcodes were found to have average rental yields of over 6 per cent.


At the top of the rental yield map is Liverpool’s L1 postcode with 10 per cent, followed by Falkirk and Glasgow in Scotland. A total of six Liverpool postcodes made their way into this list, including the L11 postcode with yields of 8.67 per cent, and the L6 postcode with 8.12 per cent yields.

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2. Demand


For buy to let investors, a high level of demand for property is another of the most crucial elements to ensure a successful venture. 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. With an average of 43 properties per estate agency, demand is increasing, and house prices are growing as a result.


The UK government is paying attention to this demand for property, with plans to build 300,000 new homes a year. The North, in particular, is an area of the UK that’s expected to see a boost in new housing developments and will receive an £8.9 million investment to build new properties. Since areas with high rental demand tend to perform well in terms of buy to let, it’s for this reason that buying property up North is so popular, with a recent rise in the number of people choosing to move up North from London. In 2017, record numbers of Londoners were reported to be moving to Manchester, while the city centre population of Liverpool has also been growing in recent years. With the average cost of living being so high in London, it makes sense that so many people, including young professionals, are making the most of the offerings available in these Northern cities.


Both young professionals and students tend to be the main demographic of renters in the UK. When looking at the age group of 25 to 34-year-olds, only 37 per cent of these live in a property of their own, showing a decrease from 2006/07’s figure of 57 per cent. During the same period, the number of renters in this age group had grown from 27 to 46 per cent, identifying an opportunity to invest in rental property in the UK. The UK student market also has some of the biggest influence on investment appeal, home to around 2.3 million students, many of whom are from overseas.


A number of factors have contributed to the rise in UK tenants. Some tenants choose to rent rather than buy, preferring the freedom of living in a different location and having fewer responsibilities. Students, for instance, would never typically buy a property as they’re only staying in student accommodation temporarily, and so finding a suitable rental property is vital. On the other hand, many tenants simply can’t afford to get on the property ladder themselves, making renting the only option. New property developments like Liverpool’s One Baltic Square are being built as a way to cater to this growing demand for high-quality, stylish rental accommodation in popular UK areas. Because demand is so high, rental costs have been increasing, with rental prices in the UK (excluding London) having grown by 1.5 per cent from March 2018 to March 2019 according to the Office for National Statistics.

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3. Capital Growth


When researching the best place to invest in property, 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 which can provide you with a huge return on your investment. Whether you decide to sell the property five years after purchasing it, or you wait until later life to use the funds from the property sale towards your retirement, selling at the right time is key.


For property investment returns, UK property hotspots tend to have a different level of impact than other areas when it comes to capital growth. For example, when you look at statistics for UK house price growth, cities in the North West are highlighted as the best places to invest in property in the UK for 2019 and the years to come. Between 2017 and 2018, the North West region rose faster than anywhere else, with a 5.6% increase. By 2022, the North West is predicted to see house prices grow by 21.6 per cent, which is why the region is often considered the best place to buy property in the UK. In comparison, the next best areas for property growth predictions are the North-East, Yorkshire and the Humber, Scotland, Wales, and the Midlands.


So what exactly is causing this UK house price growth? With the North West being right at the heart of extensive regeneration schemes, it’s clear that redevelopment plays a big part in housing market growth and UK property investment appeal. Many big regeneration projects have already begun within the North West region, including Liverpool’s Project Jennifer and Knowledge Quarter redevelopment, and Manchester’s ongoing development of MediaCityUK. Future plans like Liverpool Waters on the Liverpool waterfront and St Johns village in Manchester are expected to continue this property growth and place even more focus on the investment opportunities these UK cities have to offer.

4. Overseas investment


Not only does the property investment UK cities offer attract the attention of British investors, but the UK buy to let market is also very popular with those from overseas. High numbers of overseas investors are seeking an investment property for sale in the UK after recognising the strength of the market and its higher potential for returns compared to a lot of other worldwide countries. With some of the best property yields in Europe, a thriving student market, and rising property prices, the UK welcomes a lot of overseas interest. Research shows that from January 2017 to January 2018, the number of enquiries into Liverpool property from Chinese investors had risen by 160 per cent, while interest in Manchester properties had grown by 255.6 per cent during the same period.


According to property portal Placebuzz, 6.2 per cent of searches for UK property had come from overseas buyers throughout the first three months of 2019. Unlike some other countries such as Germany which has quite strict laws and regulations for foreign investment, the UK property market is highly accommodating towards overseas investment. International investors are welcomed in the UK, but urged to take some time to read up on all the necessary information that anyone investing in the UK buy to let property market needs to know. This way, overseas investors will know what to expect and can ensure their UK property investment venture runs as smoothly as possible.

How to invest in property UK


So now that you understand the reasons behind the appeal of property investment in the UK, it’s important to understand how to invest in property in the UK. Here are some tips on how to identify the best property investment opportunities and ensure you’re getting the most out of your UK buy to let investment.

Research UK property hotspots


Since different cities and regions have different potential to offer, it’s important to research the best place to buy property in the UK. Since the North West region and the cities within it – Liverpool and Manchester – score so highly for rental yields, demand, and house price growth, focusing on this area is a good investment move. However, rather than simply looking at each city as a whole, you should delve a little deeper by analysing the best buy to let postcodes of each area.


An area might have high rental yields on average, but this doesn’t mean that every postcode within the city performs at the same rate. In Manchester, for instance, the M6 postcode in Salford generates yields of up to 7.43 per cent, while, in comparison, postcodes such as M35 generate lower yields of 2.79 per cent. This shows the importance of properly researching the area you choose to invest in, as some postcodes come with varying potential yields and levels of demand. Along with rental yields, you should also aim to invest in a postcode with a good likelihood of capital growth. Even if you buy a property that generates some amazing yields, you still want to be sure that the property will sell easily and grow in value over time. Without doing this, you’re missing out on the opportunity to benefit from two types of returns.

Research property types


Once you’ve identified the best place to invest in property the UK has to offer, you should think about the property type itself. The two property types you’ll be choosing from are residential and student buy to let, and the one you select will be dependent on your desired tenants. If you want to invest in rental property that attracts student tenants, then purchasing high-quality student accommodation that’s close to university campuses is the way to go for your UK property investment. On the other hand, if you buy a residential apartment in a thriving city centre area, you’ll likely attract young professional tenants.


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 select a property which you think will appeal to them and hopefully help you attract tenants more quickly and regularly.


Alongside student or residential, another decision that UK investors need to make is whether they want to buy an off-plan or refurbishment property. Off-plan properties are those which are purchased while the property is still in the planning or construction stage, allowing investors to benefit from below-market rates and have the potential for instant capital growth if the property value has increased by the time its completed. Many investors opt for off-plan new build properties for these reasons, but also because new builds tend to be more attractive to a lot of tenants. On the other hand, certain tenants may favour the charm of refurbished period properties, so it’s a good idea to think about your target tenant and weigh up the pros and cons of each investment type.

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Is it worth investing in property UK?


If you want to boost your income with significant returns, it’s definitely worth considering the UK property investment market. Owning a buy to let property allows you to generate regular rental returns, while capital growth can enable large returns later in life when you decide to sell your property.


Many people who choose to invest in UK property do so as a way to grow their finances ahead of retirement. Owning such a valuable asset helps you to save up funds for a significant retirement fund which could even allow you to retire early and spend more time enjoying life.


In some cases, you could find that you’re earning enough money from your UK property investment portfolio to turn this into a full-time career. If you’ve ever dreamed of a career that lets you work for yourself while generating an attractive income, investing in the UK property market is not to be missed.

Is property still a good investment with Brexit on the horizon?


Despite the result of the EU Referendum and ongoing Brexit negotiations, property investment in the UK is still considered a good investment. While property prices have stagnated and decreased in certain UK areas like London, the evidence shows that in key property hotspots such as the North West, the market is only expected to continue thriving.


Following uncertain times when the result of the EU referendum was announced, there were speculations that the UK property market would crash. However, since the referendum in 2016, UK property prices grew by 4.5 per cent in the year to October 2017, the average UK property price hit £225,826, and average rents increased by 4.3 per cent. It’s possible and likely that after the UK leaves the EU, the property market will follow a similar pattern and defy any negative predictions in the same way it has in these past years.

How much do you need to invest in property in the UK?


The amount of money you’ll need for your property investment will depend on different factors like the location and property type. While some property types like off-plan investments will normally require you to pay the full cost upfront, certain other properties are able to be purchased with the help of a buy to let mortgage.


When using a buy to let mortgage to pay for your investment, you’ll need to put down a 25 to 40 per cent deposit. So, if you find an investment property for sale in the UK for £200,000, you can expect to pay around £50,000 or more upfront. Since this is still quite a large amount, a lot of investors will instead opt to buy an off-plan property and pay for the investment without a buy to let mortgage.


Off-plan properties tend to be offered at below-market prices, such as our Poets Place development which is available to purchase from just £70,950. By buying this investment outright, you’ll be paying near enough the same amount you would for a deposit on a non-off-plan investment, without having to worry about the extra hassle of a mortgage. Better yet, properties like Poets Place often come with assured rental yields for up to 2 years, allowing you to generate a guaranteed return on your investment.

How do you find investment properties?


One of the easiest ways to find property investment opportunities is to look online, checking property investment websites like RW Invest and listing sites like Zoopla. This way, you can sign up to recieve regular emails to find out about new properties that may interest you.


Other ways to find out about opportunities include connecting with other investors or property consultants to find out about new properties through word of mouth. This is a good idea for new investors, as it allows you to build rapport with industry experts and ask any key questions before you go ahead with the investment.

Invest in rental property opportunities with RW Invest


With offices in Liverpool, Manchester, and London and Leeds, we work hard to find you the best possible opportunities. When it comes to property investment, UK investors want to be sure that the company they’re dealing with knows a lot about both property investment itself, and the area in which the development is based.


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!


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

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