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26 Dec, 2023

4 Property Investment Strategies in 2024

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    Need-to-Know Property Investment Strategies for 2024

    It is no secret that the market has endured a subdued period following months of high inflation and rising interest rates.

    However, inflation fell during the latter months of 2023, and mortgage rates became more affordable. In addition, asking prices fell by £7,000 in November as sellers tried to entice buyers into a deal.

    2024 looks to continue this trend. Property prices should fall further before bottoming out. In addition, tenant demand will remain high, and rents are expected to go up further, meaning property investors stand to make higher yields than they would have done in 2023.

    Today, we’re looking at some of the top property investment strategies for 2024, helping you make better decisions about whether investing in property is a good idea.

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    Single-Let Residential Property Investment

    Kicking off our list of strategies, single-let property investment involves purchasing a home for a single ‘tenant’ – either an individual or family.

    This property investment allows landlords to earn a regular monthly income and enjoy long-term capital growth.

    The current average rent in the UK is £1,279 pcm, according to the HomeLet Rental Index. In addition, Savills predicts rental growth will increase by a further 6% in 2024. As such, single-let landlords stand to make higher rental yields over the next year.

    If this strategy appeals to you, consider investing in an area with young professionals, as they are more likely to rent than older people. This could be down to choice or lack of savings to purchase a property.

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    Off-Plan Property Investment

    Off-plan property investment is a type of buy-to-let strategy that can lead to quick capital appreciation.

    It also helps alleviate the property market’s current demand and supply imbalance. With the government behind on their housing pledge, development companies are helping the rental sector by building new apartments in sought-after areas.

    Investors purchase off-plan apartments for a discounted price before they are built. Once construction is complete, the apartment will be worth more than when it was bought. These apartments will usually command premium rents because they are often fitted with state-of-the-art fixtures and often have high EPC ratings.

    In addition, development companies perform thorough market research to ensure their projects are in areas where people want to rent apartments. For instance, Liverpool’s first eco investment opportunity, Element The Quarter – completed in September 2023 – is situated in the heart of the Knowledge Quarter, close to the student campuses. As you would expect, the development is aimed at students who need a conveniently located base.

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      Purpose-Built Student Accommodation

      This leads us to our next strategy – purpose-built student accommodation.

      Student accommodation investment has become increasingly popular since 2019. This a form of buy-to-let property investment dedicated solely to student tenants.

      According to Savills, investors spent £7.8 billion on the PBSA market in 2022, up 89% from the previous year.

      It is easy to see why people are keen to invest in student accommodation. According to figures, more than 760,000 students applied for university through UCAS in 2023 – over 500,000 were accepted. In comparison, only 314,000 prospective students applied during the previous year.

      These figures make student accommodation one of the most enticing investment strategies, with demand growing higher over the last twelve months.

      Consider investing in cities with high student populations, such as Liverpool, Manchester and Birmingham. In particular, look at areas with high graduate retention rates. This will indicate the kind of areas that command higher rents due to their popularity among young people.

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      Serviced Accommodation

      Serviced accommodation – sometimes known as holiday lets – is a type of short-term rental property aimed at people who need somewhere to stay when visiting another area.

      Like other types of buy-to-let investment, serviced accommodation involves purchasing a property and renting it out for income.

      But how long is a short-term let? According to HomeLet, a short-term let is a contract that is less than six months.

      Investors should take care of what city they choose to invest in – some areas restrict how often you can rent out serviced accommodation. For example, serviced accommodation in London can only be rented out for 90 days out of the year. However, somewhere like Liverpool places no restrictions on how often you can rent out a serviced property.

      These properties are usually listed on sites like Airbnb. As such, investors may need to pay commission fees when renting a serviced accommodation. In addition, you are more likely to endure void periods, especially when investing in an area with seasonal demand. Therefore, you need to consider an area popular with tourists all year round.

      On the upside, serviced accommodation allows investors to make a lucrative rental income and also comes with favourable tax benefits.

      For more information on buy-to-let investment properties in 2024, check out our regional buy-to-let guides. These include:

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      Author

      Dale Barham

      Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

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