While some people buy property for their own family, others use it as an opportunity to earn some money. Again, this can be broken down again because some will fix up the property before selling again and others will rent it out for additional income. Today, we’re focusing on the latter and how you can buy investment property in the UK.
What is Investment Property?
In simple terms, investment property actually defines itself because it’s any real estate purchased with the goal of earning a return. As we’ve already seen, some buyers in the market look for property that needs a little love and attention. After spending some money on repairs and a fresh lick of paint, they put the home straight back on the market for a profit.
On the other hand, there’s a growing number of people purchasing property in order to rent it to others and earn a healthy income in the months and years ahead. Alongside this, investment property has opened right up for those who could never previously afford the high costs. Why? Because of the introduction of hotel room investments and student accommodation investments.
We realise that this section has probably revealed more questions than you had originally, so allow us to explain not only the principles but how you can buy investment property in the UK.
Invest in Buy-to-Let Property
For many years, this has been a large part of the investment property market and it’s not hard to see why. For those who have enough money to buy a property on top of their own home, having people renting the home and paying rent each month is a great way to supplement income.
Let’s look at some of the advantages of choosing this option;
Firstly, it allows for a tangible asset in the portfolio. Sure, it can be beneficial to have stocks, shares, and other paper assets. However, actually owning a property and having tenants is a completely different experience and one that can be quite rewarding.
Secondly, as is the case in many cities across the UK right now, there’s also an opportunity for the property itself to increase in value. Suddenly, five years of rent is complemented by five years of capital growth.
Thirdly, there are no set rules for how long you can hold onto the investment. While others will have limitations, you could hold onto a rental property for three, ten, or thirty years. Although it can sometimes be hard to sell the property during a slow market, buy-to-let investments have at least some flexibility.
Finally, at Property Invest UK, we have buy-to-let investments that are fully managed. Often, people are put off buy-to-let investments because they don’t want the hassle that comes with being a landlord. These days, you can avoid this process completely (and you can get in touch with us to learn more!).
As well as these advantages, it’s also worth mentioning that some buy-to-let investments will have a secured rate of return for a fixed period of time. For example, it could be 6% NET rental return for two years.
Getting Started With Buy-To-Let Property
Now we know the benefits of investing in buy-to-let property, how do you actually buy investment property in the UK?
Of course, the traditional and perhaps most basic way to get started would be to research the market, search for an applicable property in the location you choose, buy the property, and then find tenants. While there’s nothing wrong with doing it this way, you have to be ready for the hassle that can often come with it. For example, we’ve listed some important considerations below;
- You’ll need to search the market for a property that can be transformed into a rental property or buy an existing rental property.
- You’ll need to advertise for tenants, manage the property, fix any problems that arise, and replace any tenants that cause trouble or leave after only a short time in the property.
- For many, they also forget about Stamp Duty and how this can affect their finances. Back in April 2016, the Stamp Duty laws changed. Even if you’re buying to let, all buyers are required to pay stamp duty on second homes worth over £40,000.
- You should also be looking to set up landlord insurance, so you’re protected against loss of earnings, rehousing costs, property damage, non-payments, liability for accidents, and more.
Alternatively, if you wanted to skip lots of administration and just focus on the returns, you can now find special investment opportunities (such as those we have at Property Invest UK). This way, the location is selected on your behalf and it’s normally a part of a new complex or building. From the very beginning, you’ll have access to pricing, potential returns, and property management.
Normally, these types of investment will come from trusted and experienced developers with a strong track record too.
Other Investment Property
As mentioned earlier, the investment property market is steadily expanding and providing more opportunities for all investors. For those with slightly lower budgets, it’s now possible to buy a hotel room.
With a reliable provider, they can be reserved for a much smaller price but still with generous returns (potentially up to 10%). Additionally, they can come with free legal fees, no ongoing costs, and an experienced hotel management service. As far as hands-off investments go, this is quickly gaining attention.
Elsewhere, more students are heading off to university each and every September which is increasing the demand for student accommodation…another investment opportunity. Again, the locations are normally selected on your behalf and you’re guaranteed a healthy return after investing. What’s more, the accommodation is managed.
If you want to buy investment property in the UK, there has never been a better time and the many opportunities lend themselves to people with all sorts of financial capabilities!