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Reasons to Buy a UK Investment Property

Views • 8th Feb, 21

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Reasons to Buy a UK Investment Property

When reviewing our client’s overall investment portfolio, we try and make sure its diversified to manage the risk approach. One question we are often asked is ‘Should I invest in a buy-to-let property?’.

Our answer is often, 'if it fits with your financial goals and your overall investment portfolio then it can provide a steady income yield'.

Currently in the UK the average rental yield is 3.53%, if you are receiving anything over this amount can be considered as overperforming. It’s important to research your investment location to see which offers the best returns as they vary from postcode to postcode.

Below we list 5 reasons Why to invest in UK Property;

  1. House Prices Set to Rise

The table below from Savills highlights that the UK forecast could see an average rise of around 15% over the next 4 years.

  1. Undersupply Drives Demand

Even with the restrictions and lockdowns in the UK demand for homes has increased. The supply/demand imbalance is supporting the headline rate of growth – resulting in the time to sell a home falling 31% in recent times. For people looking to invest in UK property it represents a prime opportunity to build solid returns and find incredible value, research estimates that UK Renters will outnumber homeowners by 2039.

  1. Low Interest Rates

The current Bank of England interest base rate is 0.1% which dropped from 0.25% on the 19th March 2020 to control the economic shock of coronavirus. This now means many lenders are offering competitive buy to let mortgage rates and several new products. Which offers a number of opportunities for new and experienced property investors.  

  1. Rental Returns Set to Rise

Along with house prices rising, rents are also expected to increase. In the South East rental growth is expected to hit 11.5% with Birmingham and West Midlands predicted at 12.5% over the next few years. As the market becomes more competitive and developments concentrate on delivering quality over quantity, rental prices are increasing.

  1. Living Trends are changing

According to the Resolution Foundation, nearly four out of 10 ‘millennials’ are privately renting at the age 30, while nearly a third of the wider generation are expected to be renting well into retirement. Whether or not you see ‘lifetime renting’ as a bad thing, we’re definitely seeing a shift in culture to a more European way of thinking –  only 45% of people in Germany own their home, for example.

Going forward, it’s expected that similar ‘continental-style’ rules will be introduced that offer more flexibility and security for both landlord and tenant alike.

These are just a few of many reasons why investing in the UK property market could be right for you, to find out more send us an email to speak with one of our property investment experts.

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