According to Finder, around 4.7 million households in the UK are living in privately rented accommodation. Buy-to-let property investment in the UK remains one of the most popular options for investors as it comes with a number of potential benefits. There are millions of buy-to-let landlords in the UK, who choose to invest in property for long-term capital growth, but also want to make money in the short term from rental income.
While there are other reasons that people may invest in a buy-to-let property, the most common reason is as an investment. While some people invest their money in the stock markets, others choose to property investment UK, which requires a different set of knowledge and skills but can be a very lucrative money-making method nonetheless.
Benefits of investing in a buy-to-let property:
Property investment in the UK can be an excellent way to earn a passive income. With rents across the country on the rise, if you invest wisely, you will be able to earn a very handsome amount even after paying the tax and mortgage.
There is currently a very high demand for rental properties as an increasing number of people are having to rent for longer, rather than buying their own home. Among other reasons, this is down to lack of affordable properties, strict guidelines for mortgage underwriting, and a challenging economic climate.
Due to fluctuations in house prices, new investors might avoid investing in properties but it is important to think of long-term goals. A seasoned investor knows that a suitable buy-to-let property investment UK could increase in value after a few years. A smart investor also performs real estate property analysis to reap maximum benefits in the long run.
Costs could be offset against tax
Landlords are liable to pay tax by way of a Self-Assessment Tax return for HMRC, however, it is possible to offset some of your costs; These costs include the fees that you pay to letting agents, interest on your mortgage payments (SPV), money spent on advertising your property, repairs, and council tax. UK authorities also offer tax relief for maintenance repairs and renovations.
Discounted prices are available
It is not always necessary to pay the full market value while purchasing a property. Some property-buying strategies help you save up to 30 percent by finding Below Market Value properties. Some of these strategies include buying homes at auction, repossessions, short leases, cash deals, and using a Buy, Refurbish, Refinance strategy (BRR). All of these methods can aid in recouping your investment and growing a property portfolio.
Not all real estate agents from the UK have access to such property deals. You may find one or two agents that specialise in these deals but your options will likely be limited. A reliable online tool, on the other hand, could be a better resource to discover and evaluate such property deals instantly.
Best UK cities for Buy To Let investment
A survey of landlords by insurance provider Simply Business revealed the best places to invest in buy-to-let property in 2020 are: London, Manchester, Liverpool, and Birmingham. The research also found that regional cities across the UK are considered some of the most attractive buy-to-let hotspots.
London and Manchester were tied for the top location to invest in buy-to-let with each city receiving 18% of votes when landlords were asked which city provides the best buy-to-let investment opportunities. Liverpool and Birmingham were joint second with both cities winning 10% of the vote.
Property prices have dropped in London, which makes now an appealing time to invest in the capital. Properties close to major regeneration sites are forecast to see strong growth in house prices over the coming years. Transport and infrastructure improvements are a major part of successful regeneration projects, improving the area’s liveability, and thus boosting the local property market.
With the Crossrail line currently expected to open in 2021, connectivity will be improved throughout London as the line crosses the capital from east to west. This is Europe’s largest infrastructure project and is likely to increase property prices near stations joining the new network.
Manchester’s city centre population is expected to grow by 100,000 more residents by 2025. This continued growth, paired with increasing job opportunities, is forecast to further fuel demand in the rental market.
There is also a steady stream of both Strong investment and development in Manchester. Property prices, rental yields, and residential demand are expected to increase dramatically in the coming years with lucrative opportunities for both short and long-term rentals.
Liverpool is forecast to see significant growth, development, and regeneration. A major regeneration masterplan is expected to transform Liverpool into a world-class business location as more jobs and investment will be brought to the city centre.
The £5bn Liverpool Waters regeneration scheme is completely revamping the city’s northern docklands area. And Liverpool is seeing nearly £14bn worth of regeneration schemes in the pipeline or in progress across the city.
To improve the city’s road infrastructure, Liverpool City Council is investing £150m, and a new cruise terminal has also been approved. These types of investment, along with significant population growth, are improving the city’s appeal and therefore boost local property prices and rental yields.
As one of the most quickly improving places to work in the UK, Birmingham is seeing more businesses and professionals move to the city. British Telecommunications (BT) even recently confirmed it will be opening a new office in the city. Additionally, Birmingham is home to the highest percentage of flexible office take-up in the UK, providing modern workspaces for startups, tech companies, and freelancers.
With a growing population of young professionals and a significant amount of job opportunities, Birmingham is also seeing a boom in the build-to-rent sector. The city is home to four universities with good retention rates, which continue to increase rental demand.
Buy-to-let investment continues to be an attractive option
Despite tax changes and the impact of Brexit being at the front of some investors and landlords’ minds, there could be a lot of value in the changing buy-to-let sector. Historically, buy-to-let is considered a good investment, with many still seeing the benefits and long-term promise of investing in buy-to-let property in the UK.
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.