Placing money behind UK property remains significantly appealing, with Thisismoney.co.uk stating most investors obtain trust in property as an asset with the ability to add value. Below you will find five key considerations in which every individual should follow before confirming a decision, followed by FAQs we hope you find of interest.

1. Know your Investment Goals

The first point of call is to consider a few essential factors to path the right direction to arrive at your final decision.

Beginning with your budget, are you a cash buyer or do you have accessibility to a mortgage or bank loan?

Expanding this, have you in mind your aims and short or long-term goals to achieve? Are you looking to invest in a singular to few properties or an entire property portfolio?

Once confident in the answer to these questions, you’re all set to begin your property investment search, outlined in the following four considerations.

2. Location

Selecting the location of property to invest in, is a strong consideration to make, with different investment locations offering varying levels of benefits, infrastructure, amenities and more. It is important to understand a location and what it offers. It is not uncommon to have your heart set on a particular location, however there is no need to be concerned if this is not the case and you are open to different UK property opportunities before arriving at a decision; in which case, the remaining three points may be necessary to consider first. Whichever side you take, the location is a very exciting prospect to think about.

To assist with this decision, do you happen to know anybody living in certain UK cities who would give a reliable first-hand opinion of their experience of the area? Have you ever overheard family, friends or colleagues expressing favourable reviews of a certain city? If you are lucky enough to be in the position to answer ‘yes’ to either of these questions, this could provide you with fantastic additional information to reflect upon.

3. Type of Property

There are different routes and options with regards to property investment opportunities, in which the following will outline. The first and most common investment property lies with residential buy-to-let, defined by purchasing a property/properties for the purpose of long-term rental. The most thriving buy-to-let property markets include Manchester and Birmingham, with rental yield’s in both cities higher than many other areas of the UK.

Secondly, a home of multiple occupation, otherwise known through the acronym ‘HMO’ is a property rented by a minimum of three people sharing communal facilities such as the kitchen and bathroom by those who are not from a single household or family. These are most often found in cities and towns with large universities and subsequently a significant student population, therefore a visible demand for landlords. On the other hand, HMO’s are used by working professionals in house share arrangements outside of student areas.

Away from residential property, the healthcare property sector can include opportunities in facilities such as care home and specialist care centres. These are especially attractive when investing in the elderly care sector. The Office for National Statistics (ONS) demonstrates the visible rise in the aging population within the UK with further projections for experiencing growth in terms of percentage. Over half of local authorities by 2036 project to have 25{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} plus of their population aged over the age of 65. This is coupled with recent media reports outlining the shortage of care homes in the UK, with a projection of 14,000 people who will be requiring residential care home rooms each year by 2026. This provides evidence to the significant demand in which the health and care sector is receiving and set to continue to rise at a constant rate, promoting the attractiveness of investment even further.

Another property investment option is ‘Furnished Holiday Lets’ (FHL’s), used primarily for holiday purposes and therefore on short-term rentals. These are commonly in holiday locations close to the coast and are rising in popularity. Moreover, FHL’s bring several benefits to landlords, the biggest being exemption from recent changes to taxation present on residential buy-to-let properties. FHL’s follow the rules that the property must be available for letting as holiday accommodation for at least 210 days each year and specifically be let by the public for at least half of these at 105 days each year. For a guide on FHL properties, please our featured article here.

The last aspect to consider when choosing the property type is the decision whether to pay a third party to manage the property on your behalf such as an estate agent or to take personal responsibility to manage yourself. This decision naturally comes down to your location, time and budget outlining your ability to manage the property.

4. Rental Yield Returns

Different locations and property types deliver varying yield returns. Yield provides you with how much annual return you are likely to receive from an investment and is calculated by dividing the property value by the yearly rent received. Thisismoney.co.uk offer a helpful buy-to-let yield calculator here.

The Lloyds Banking Group, one of the biggest buy-to-let lenders in the UK reported that the average gross rental yield was 5.2{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} with returns in all regions of the UK except London rose in 2017.

5. Determining an Exit Strategy

The last area to consider links strongly to point one of outlining your investment goals. Ensuring that these goals incorporate an exit strategy is important to consider, with some opportunities designed for short-term investment, for example up to five years versus various with the option for a long-term strategy.

Many will invest in property for financial gain, to act as a pension income or to expand beyond their lifetime to pass onto their children. Others may choose reaching retirement age to be the necessary stage to exit from being an active property investor or landlord. Dependent on whether you are a cash buyer and therefore own the property outright or have a monthly mortgage on the property, your choice may be different in terms of capital growth. Therefore, by having a clear perception of how and when you wish to exit your property investment can provide a boost of confidence in your investment choice.

FAQ’s

What is the difference between Net and Gross Rental Yield?

It is important to understand the difference between Gross and Net rental yields when evaluating property investment returns.

  • Net Rental Yield – Incorporates further costs such as property service charges, estate agent fees and on-going maintenance.
  • Gross Rental Yield – Only includes a percentage calculated by dividing the cost of the property by the annual rental payments.

Where do I start in looking for property?

There are a number of online property portals which offer excellent research and insight into property opportunities, alternately, you can work with an investment property specialist such as Gower & Mae.

At Gower & Mae, our current opportunities are available by contacting us, with over 30 properties across a number of major UK cities with a varying number of bedrooms, bathrooms, floorplans, other attributes and prices. Within each property, we often have multiple units available for your consideration.

How do I decide the right property type for me?

Choosing the correct property to match your requirements is a balancing act of various elements. At Gower & Mae, being an independent property consultancy, our dedicated in-house team will spend time discussing various options and available opportunities with you alongside providing a comprehensive answer to any questions you may have. You can reach our helpful team by phoning 01483 230 430 or alternatively feel free to contact us and we’ll be in touch with you.

Read more of our informative news and features content here.