Thinking of making a UK property investment in 2022? Then this is the guide for you.
Here, we will cover everything you need to know about property investment UK, including why invest in property, how to invest in property, and five tips for getting started.
Keep reading to learn more.
After a record-breaking year in the UK property market, property investing has quickly become one of the standout choices for investors in the UK.
But why exactly should you consider investing in UK real estate over investing in assets like the stock market, premium bonds, or even a savings account?
Well, here are five reasons buying an investment property is an excellent choice in 2022.
If you’ve decided to invest in property, but are unsure how, this is the section for you.
Here, we will discuss four popular property investment strategies you could consider in 2022.
We’ll also talk about two alternative strategies that are more suited to those with fewer funds available.
The strategies we will discuss are:
Likely the most common way to invest in property, residential buy to let property is the purchasing of real estate to rent to tenants for a profit.
Offering both rental income per month and capital growth returns, residential property is ideal for those looking ahead to retirement.
This is because residential buy to let property offers the strongest capital growth returns out of the property strategies on this list, with cities like Manchester seeing prices rise by 315% since 2001.
As such, residential buy to let is a long term investment and is best suited to those willing to tie up their cash funds for over 10 years before selling.
A more affordable option than residential buy to let, student rental property refers to investing in real estate and renting specifically to student tenants.
There are two main ways you can invest in student property, with both HMOs (houses of multiple occupancy) and purpose-built student accommodation proving incredibly popular for investors in 2021.
PBSA, in particular, has shot up in popularity for those looking to get in the UK property market, with Savills reporting that over £5.77 billion was spent on student property in 2020 – the highest on record.
This is likely because student property is available at a far more affordable price than residential properties, with it common to find student properties below £100k.
The impact of this is that investors can get access to higher rental yields (the annual return on investment earned through rent) with it common to find returns upwards of 8% NET in cities like Liverpool and Manchester.
However, it should be noted that while student property offers lower property prices and higher rental income, it also offers less capital growth than residential buy to let property.
Ideal for investors looking to make shorter-term returns than rental property, buy to sell is a strategy that involves the purchasing of undervalued property and selling it on quickly for a profit.
Typically, this form of property investment is tied with property development, as investors will usually add renovation work to boost the value and selling price of the property.
While property owners can save thousands on buying run-down properties, there are some things investors need to be aware of.
Firstly, renovation work can often exceed budget, meaning you’ll need a sizeable amount of money to cover all repair costs. Likewise, if you don’t sell quickly enough you could be stuck paying for mortgage payments, as there is no need for long term tenants so you won’t be generating rental income.
For these reasons, be cautious when choosing a buy to sell strategy, and be sure to account for all potential costs and the difficulty involved. If in doubt, speak to a financial advisor.
Another example of buy to let investments, commercial property is another lucrative strategy for investing in property in 2021 and 2022.
Commercial buy to let is the purchasing of real estate and renting specifically to businesses.
There are four main types of commercial property that a property investor can purchase, including office blocks, industrial land, multi-family rents, and retail space.
The main benefit of commercial property is that it generally offers longer leases than residential real estate, so you can feel safer knowing you’ll have tenants for a long time.
However, owning commercial real estate can be difficult with a tonne of taxes and maintenance responsibilities you’ll need to research.
While the four strategies we’ve mentioned are likely the most popular ways to invest in property, there are some excellent solutions for those with less money.
Perhaps the two main strategies suited to property investors with a smaller budget are:
So, which strategy should you choose?
Well, the suitability of investing in property will depend completely on your own investment goals.
You should ask yourselves the following questions:
By thinking of these questions, you’ll be able to determine what sort of investment you’re hoping to make.
Overall, though, investing in property with residential or student real estate is likely the best way to go.
This is because you can earn sizeable monthly rent while also enjoying long-term capital growth when your property increases in value.
The first step when investing in property is choosing your ideal investment strategy.
Ideally, you’ll want to focus on more simple strategies as a beginner, with the likes of residential and student buy to let an ideal choice for getting started in property investment UK.
You should also try and choose more affordable properties like apartments, which generally attract high interest from young professionals for a long period.
By choosing more affordable properties, you can eventually buy several properties and start building a profitable portfolio.
The second step for investing in property is narrowing down your search by picking a location to invest.
Due to large regional differences in rental markets in the UK, you’ll need to do plenty of research to find the best choice for you.
Your chosen strategy will also impact your choice, as you’ll want to focus on areas that feature your target tenant.
For example, if you choose student property, you’ll want to target cities that have large student populations like Liverpool, Manchester, and Birmingham.
The criteria you should focus on when picking a location are affordability, capital growth potential, rental yields, strong property market demand, urban regeneration, employment opportunities, and transport links.
Currently, the best places for property investment UK are:
This is thanks to affordable property prices, strong capital growth potential, and huge amounts of regeneration that is economically propelling the areas for the future.
The third step for investing in property is figuring out how much money you need and how you’ll finance your property funds.
The current average property value in the UK is around £269,945 according to official Land Registry data.
While property can be found far cheaper than this in certain places, the reality is you may struggle to afford the entire price.
For this reason, you will most likely opt for a buy to let mortgage. It’s important to note that buy to let mortgages work slightly differently than residential mortgages, as most lenders require a 25% deposit.
BTL mortgages are also interest-only, which means mortgage payments only cover the interest every month without touching the overall debt.
Once the mortgage term ends, you’ll need to cover the entire cost of the capital debt, usually by selling the property.
Be sure to get expert advice from a mortgage advisor to learn if this is the right option for you.
If you’re a beginner to the world of property investment UK, one excellent way to find a good property deal is by investing with a property investment company.
Property investment companies like RWinvest help investors find real estate opportunities and will guide you through every step of the property journey.
They will even provide solicitors for any legal paperwork.
Better yet, some companies will offer payment plans so you don’t have to pay a lump sum of cash upfront for your investment property.
When buying property, it’s important that you get a full structural survey of your potential investment property.
This may be unnecessary if you’re buying an off-plan or new-build property, but is still something to consider.
While this will set you back £800 on average according to CheckaTrade, it can save you thousands in the long run by detecting any issues in your investment property.
Analysis of the property will include:
When it comes to investing, you need to exactly what price property commands before you start buying.
As mentioned earlier, the current average property price falls at around £269,945 according to the Land Registry.
Likely, you’ll choose to pay for this property by borrowing money in the form of a buy to let mortgage, which means you will need to pay a 25% deposit, as well as monthly repayments.
Other entry costs you will need to deal with include:
Overall, we estimate that for a £100k property, you’ll need around £30k to buy the property.
That’s not to mention the property funds needed to maintain your investment, stay on the property ladder, and sell your property.
This can include:
We hope you’ve enjoyed our guide to how to invest in property in 2021.
Helping to generate a tonne of income and money, real estate has become a good investment for those with enough cash and enough money to cover the entry price of investing.
If you’re ready to invest in property and want the best property investment opportunities in the North West, then ELEMENT is the perfect opportunity for you.
ELEMENT is a brand-new eco concept revolutionising the world of rental property.
Ideal for the modern tenant, ELEMENT properties come equipped with cutting-edge eco-technology to save the average person thousands on energy bills.
Better yet, properties like ELEMENT – The Quarter come equipped with the latest facilities desired by tenants like an on-site gym and cinema room to ensure tenant interest for years to come.
Invest today with ELEMENT and secure your investment from only £74,950 needed with huge 8% NET returns available.
