Tuesday, November 24, 2020
Real Estate

Property investment UK advantages

London Property

Investment in UK property is one of the most lucrative options to those looking for a safe haven in these times of global economic uncertainty as property prices usually rise over time. Though the UK property market may be somewhat subdued over the recent years, it has the potential to come back up again. Within the property sector, there are a number of options which can be explored for a successful property investment UK.

Whether it is a long-term, BTL or a student accommodation investment, UK property has been an attractive market for investors. Property investment UK is known for its good returns on investments as there is a great demand for UK properties among international investors. However, the extent and type of investment varies, depending on a number of factors such as the reason for investment, financial objectives, the level of personal involvement etc. Property investment UK is an attractive option as it ensures capital growth as well as attractive yields over time.

Therefore, there are a number of reasons why property investment UK is viable and worth the money, which include:

Low risk

Investment in UK property is a relatively low risk investment as against some of the other types of investments such as investing in the stock market where prices may vary over a short period of time. They may go up and come down quite significantly and quickly, causing a significant loss on ROI, whereas prices in the property sector usually appreciate over time. Property prices mostly go up and they may be down by a slight amount at times when the economy is on the downturn. If the economy is stable and performing, the property prices rise by high volumes.

Two sources of income out of a single investment

An investment in property meets a dual purpose since it ensures both a rental yield and capital gain. It ensures a positive cash flow in the form of rental income which may start immediately. If the property remains occupied for the majority part of the year, it may generate a decent amount of rental income and also contributes to paying off the mortgage. Capital growth is another advantage of investing in property as property has an incremental value and there is incremental value to property prices over time.

Value addition

The owner of the property can also raise the value of the property through a number of measures. These involve relatively small costs but boost the value of the property significantly. These innovations can be implemented through various measures such as through add-ons and renovations. These are very important if an investor desires to rent or sell a property as the investor can buy a property and rent it or sell it after renovations, thereby generating a decent profit.

Inflation protection

Investing in property is also better than many other investment options as it protects from inflation. Since property prices usually at least match the inflation rate, they are better than some of the other investment options such as savings accounts which usually grow at much lower rate than the rate of inflation.

Though the property sector in London, and the UK overall, has seen some downturn over the past few years, it may bounce back over time. Overall, there is a mixed scenario at present as some regeneration in the sector has been seen in London property market as house prices in the city witnessed growth in October.

A renewed buyer demand and a shortage of property coming to the market saw London house prices rise in October.

House prices in the capital grew one per cent in October following a period of year-on-year price falls. London house prices dropped 1.1 per cent year on year in October 2018.

Southwark reported the strongest year-on-year growth of 2.5 per cent to an average price of £490,800. The other Boroughs which saw a growth in house prices include Hounslow, Kingston upon Thames, Islington and Newham.

Though, there were places across the UK which reported a drop in house prices, as well. At the other end of the spectrum, were the commuter towns where house prices declined during the period. The greatest decline was seen in Mole Valley – a district in Surrey to the south of the capital, where house prices fell 1.8 per cent year-on-year.

Woking and Runnymede in Surrey and Dacorum in Hertfordshire also saw large drops even for London house prices. And Kensington and Chelsea suffered a 1.5 per cent decline in house prices to bring its average price to £1.17m.

Richard Donnell, research and insight director at Zoopla, said: “After a three-year repricing process accompanied by a sizeable decline in housing sales, the London housing market is finally showing signs of life.

“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.”

According to figures from UK Finance, mortgage lending dipped in October. Buyers were still hesitant to commit and waiting for stability in the property markets amid Brexit uncertainty and the upcoming general election.

Gross mortgage lending across the residential market last month was £25.5bn, a dip of 0.9 per cent compared to October 2018.

Mortgage approvals for home purchases by the main high street banks increased three per cent and remortgage approvals soared 12.7 per cent.

Therefore, at present, it is about investing at the right places as the prospects of the market vary from one place to another. As the General Elections are scheduled and Brexit crisis continues, both buyers and sellers may be waiting for the property sector to stabilise and holding on their plans to engage in transactions. Sellers may be waiting to see if the new government makes changes to stamp duty and other regulations. The property sector in the UK is traditionally a stable one and it may bounce back in the future. This will provide buyers an opportunity to buy properties in the UK as the country is one of the most-renowned destinations for property investment.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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