Investing in property is considered the best and highly rewarded decision. Though there are many other ways to invest and earn a fortune, given the sheer demand for housing and the government's initiatives to provide homes for every citizen, the real estate sector is a blessing in disguise for both entry-level and advanced investors.
UK is one of the world's prime economies and possesses plenty of benefits for anyone looking forward to buying UK property. The UK has one of the world's most adequate healthcare, social, and economic systems.
Moreover, excellent ease of doing business protocols also attract investors to buy UK property for investment purposes. However, like any big move, some dos and don'ts must be followed to avoid any potential risk/loss.
In complying with this caution, the below details offer an extensive and beginners guide for investment in UK property.
As said earlier, the UK offers many compelling reasons for anyone deeming to investing in UK property 2020. The foremost reason is the UK's residential undersupply.
While this undersupply is cumbersome for the British government, it opens up avenues of the capital gain when it comes to investors. This opportunity is backed up by different statistics, which tells that the UK's rental sector is forecasted to grow by 24% by 2021.
With more and more people looking for housing, the sky-rocketed rental income for those owning a UK property for investment purposes is guaranteed.
Reduction in the Stamp Duty Land Tax (SDLT) also leverages property investors to save about £10,000 if they purchase property between 8 July 2020 to 31 March 2021.
In addition to this, low-interest rates, increased population, and long-term growth is one reason that gives substantial reasons to invest in UK property.
Since beginners feel quite overwhelmed and determined to invest, they must know a lot of things beforehand so that they do not incur any loss or lose their charm of property investment UK in the longer run.
Following are some of the steps which provide a sure-shot yet safe way for beginners to invest in UK property:
There are plenty of different types of UK property investment methods that you can choose from your affordability, relatability, and convenience. Following are some of the key types of UK investment in the property market:
Traditional buying is the most convenient method to invest in UK property. It is also commonly known as a buy-to-let model where the property is purchased by taking two broad perspectives.
The first perspective lets buyers enjoy growth in property prices, and the other one lets them have consistent rental payments every month.
This method of investing in the UK property market allows investors to take full control of their investment. Here the owner/investor is the one who decides that at which price the property should be sold or at what price should a property be rented.
A hefty initial deposit is one of the biggest drawbacks of purchasing a UK property via the buy-to-let method.
Typically, 25% of the property's price is required to be paid as an initial deposit. Moreover, stamp duty is another additional cost that purchasers need to pay while opting for this buying method.
Buying property through the stock market is quite popular in the UK. In this method, investment in the UK property market is made via Real Estate Investment Trusts (REITs).
Since these investment trusts are listed on the stock market, so the property investment is traded similarly as stocks are traded. Such investments must generate 75% of their income through property rents, and 90% of the profits should be distributed amongst the investors in the form of dividends.
As REITs usually own commercial properties, investors' investment profiles get diversified and get guaranteed and elevated revenues from property rents.
Since every investor owns property against purchased/designated number of shares, so there is always a risk where major shareholders can force REIT to sell the property so that cash can be reimbursed to the leaving investor(s).
If you do not want to buy property via the stock market, investing in the UK property sector is possible through private funds. Here a pool of funds is created by multiple investors to buy a certain property, and profit is shared amongst investors as well as the company managing these private funds.
Such property buying methods allow investors (who are low on capital) to own a property and have a profit share.
These private funds have a sort of "investment-holding" where an investor isn't allowed to revert investment for a certain time, thereby resulting in loss of liquidity (for some time) from the investor's point of view.
This is a rather new property investment concept in the UK, where investment can be made through property crowdfunding. Investors purchase the proportion of the property and other investors.
This new method also incorporated property lending where a certain sum of money is given to the company or a person against the property which that person or company owns.
Instead of spending all money on buying one property, investors can diversify their investment portfolio by investing portions of available funds in different properties.
This method is not suitable for new or average investors due to the degree of risk and liquidity issues. Therefore, limiting the viability of only experienced investors.
Since nothing can ever replace the experience, so, in this regard, it is always recommended to take the services of the real estate firms and agents who hold substantial experience in UK property investment.
They know the risks involved and know about the potential areas that match the investor's profile, thereby guaranteeing relevant, risk-mitigated, and promising returns on investment.
Nothing is impossible in this world, and the same rule applies here. All it takes is determination, passion, and the spirit of not giving up. There are multiple ways for potential investors to invest in the UK property sector despite being short on cash/liquidity.
Depending on your interests, the potential methods can be property crowdfunding, Real Estate Investment Trusts (REITs), joint-venture, buying via the stock market, buying via private funds, or assistance from banking or other financial organizations.
There are a lot of benefits for the investors deeming to invest in the UK property market. Following are some of the key benefits that you can enjoy as an investor in UK property:
Is the property a good investment in UK 2020?
Yes, given the higher rental yields, lower interest rate, and high growth, UK property is indeed a good investment.
What is the best property investment in the UK?
Though the best property's determination depends on various factors, generally, investment in commercial property guarantees more consistent and high rental yields.
Moreover, if an investor intends to sell a commercial property, even then, returns are quite healthy.
Is it worth buying an investment property?
Sine investment properties guarantee substantial fortune, therefore it is worth buying an investment property.
Should I sell or keep my investment property?
Though it depends on you whether you want to sell or keep the investment property, given the property boom, it is advisable to keep it for a while to enjoy capital growth.
What are the best places to invest in UK property in 2020?
Birmingham, Manchester, Liverpool, Sheffield, Leeds, Leicester, Nottingham, Oxford, Cardiff, and London are the best places to invest in UK property in 2020.
Is UK property still a good investment?
Despite the Brexit and COVID-19 outbreak, the UK property market is maintaining a stable outlook. This makes UK property still a good investment.
What are the Different Types of Property Investment UK?
Different property investment types include buy-to-let, commercial property, buying at auction, property crowdfunding, REIT, and residential property.