There are many property investment opportunities in the United Kingdom. These opportunities are significant sources of income for those looking to start a career as a landlord or those just looking for some extra funds. There are several factors to consider such as ideal tenants, rental yields, and property value-increasing opportunities. As a UK investor, consider risks such as falling property values, and difficult tenants as well as the lucrative potential returns. Read on to discover the best property investment opportunities in the UK.
New property builds often attract prospective landlords. Typically, they come with a multi-year guarantee from the builders, ensuring the quality of the construction. Additionally, newer builds usually require less maintenance and upkeep costs than older properties. However, there are some tenants who may prefer older, more traditional properties to newer ones. By only offering newly built properties, you close yourself off to some of these potential tenants. Absolutely, new property builds provide reliable, high quality constructions and reduced maintenance costs.
Property development is another attractive investment method due to the speed and value at which you’ll make a profit. Developing a property involves finding properties in need of work and significantly improving it before selling it at a profit. There are many factors to consider, such as speed of renovations and market conditions. The longer the renovations take, the more likely the market is to change. Additionally, costs tend to rise over time. Therefore, maximize your profits by completing the improvements as quickly as legally possible. Certainly, property development is an excellent real estate investing strategy to earn beginners big returns.
Buy to Let
Buy-to-Let properties were very attractive in the past, but now one-third of UK landlords are considering selling their buy-to-let properties. Sixty-one percent of these landlords cite increases in taxation and regulations as their reasons for doing so. Several recent changes to lending laws have made it difficult for investors owning multiple properties to maintain their ROI. For example, lenders must now consider all a landlord’s properties when determining their lending suitability. Landlords with four or more properties are seen as higher risk and therefore only offered higher interest rates. Additionally, anyone owning more than one property is now required to pay an extra three percent stamp duty. However, buy-to-let properties can be a great investment if it’s the only property you’re investing in. Definitely, buy-to-let properties are prudent investments as long as they’re your only property, and financially inefficient if not.
Property Investment Funds
An additional investment opportunity is property investment funds. Buying into one of these funds provides income and capital growth from the development of areas bought by expert fund managers. Often, buying or selling property funds is easier than marketing and selling other types of property, such as a buy-to-let. Many property investment funds are known as Real Estate Investment Trusts (REIT investments) and are listed on the stock market. You can buy or sell these just as you would with stocks. Moreover, other funds issue units based on the number of investors. Therefore, the price of these funds fluctuates with its popularity. Surely, property investment funds ensures capital growth by enabling you to profit off of expert fund managers.
Property auctions are a final investment opportunity for UK landlords. You’ll need a mortgage Agreement in Principle (AIP) from your bank, building society, or mortgage broker before bidding. UK auction laws require this, as you’ll pay 10% of the sale price on purchase, and have 28 days to pay the remaining 90%. Search the catalogues, decide on a property, and arrange a pre-auction viewing to ensure its a good fit for your needs. Next, ask the auction house for the property’s legal pack, which is usually free. Study the fine print to ensure compliance with local laws and building codes. While not a legal requirement, a survey may be a prudent decision at this point. This way, you uncover any hidden issues with the property’s health. Of course, don’t take the guide prices as a guarantee, and protect your investment with insurance once you’ve successfully bid. Of course, property auctions provide an incredible investment opportunity that circumvents the often longer traditional buying process.
There is a myriad of property investment opportunities in the UK. Newly built properties provide one such opportunity at reduced maintenance costs and high-quality constructions. Developing properties offers quick turnaround profits. Buy-to-let properties provide great opportunities, but only for those looking to manage one property due to recent changes. Property investment funds enable significant ROI by allowing profit off capital from multiple investors. Finally, property auctions allow you to avoid the often lengthy buying process. Of course, these are just some of the top UK rental property investment strategies. For example, you can always explore real estate crowdfunding and many other options if you are still interested. When searching for real estate investment opportunities in the United Kingdom, consider the points above.