Are you planning to invest in property to ensure a stable future by leveraging the full potential of the real estate market? If yes, investing in UK properties would probably be your best bet. Since the 1970s, property prices in the UK have been experiencing a steady growth despite the impacts of the earlier credit crunch, Brexit, and the recent pandemic. In the UK, house prices have seen a faster growth compared to any other European country, according to new research. In reality, home prices have seen a whopping growth of 333% since 1988, which results in average growth of 12.3% each year. Additionally, in the Global Real Estate Transparency Index 2020 by JLL and LaSalle, the UK topped the list.
These statistics clearly indicate that the UK property market is booming and investing here could pave the way for an enviable property portfolio. If you’re still unsure of whether or not investing in UK properties would be an advantageous move, the following section may help make up your mind.
UK property investment: Reviewing the key reasons
Here, we’ve jotted down the top five factors that are making the UK property market one of the most sought-after destinations among property investors.
- Rapid growth in population
As revealed by the Office for National Statistics, the population of the UK is predicted to reach 72.4 million by mid-2043. It means, there’ll be a massive housing demand to accommodate that population. The ONS also predicted that by 2050, one-fourth of the UK population will be aged at least 65 or more. This alteration in demographics might prove to be extremely beneficial for property investors. A 2018 report revealed that more than one million people, who are aged over 50, were living in rented houses at that time. Add to this the housing requirements of young professionals, the property investment market in the UK looks really promising.
- Residential undersupply
Various factors such as growth in immigration, increasing house prices, etc have created an undersupply of housing accommodations in the rental market of the country. While this might be a challenge for people, who’re looking to rent properties, for property investors, it brings a golden opportunity to get attractive returns on their investments. In fact, according to research conducted in 2019, by 2039, there’ll be more renters than homeowners. With the market becoming more competitive, rental prices are bound to increase, which results in higher rental returns.
- Increasing house prices
With the UK population increasing considerably, the demand for properties will automatically go up. And the rising demand for housing, in turn, will lead to increased house prices. As mentioned by the ONS, for the next decade, there’ll be a shortage of more than 100,000 properties each year. If the present trends continue, by 2025, it could result in a severe shortage of one million housing.
- Low interest rates
With the base rate of the Bank of England standing at a historic low, surprisingly competitive mortgage rates are being offered by many lenders. It’s essentially attracting more and more property investors to leverage the opportunity. When you consider the steadily increasing monthly rent along with considerably low mortgage payments, the rental income becomes automatically higher. Needless to say, it brings an incredible opportunity to both experienced and new investors planning to invest in UK properties.
- Reductions to SDLT (Stamp Duty Land Tax)
According to Halifax, which’s one of the leading mortgage lenders in the UK, the average house prices in the country reached a record high in August 2020 with £245,747. This has happened due to the stamp duty cut coupled with the pent-up demand. In its effort to revitalise and safeguard the property market, the UK government announced a temporary stamp duty holiday. This is applicable to all residential property purchases up to £500,000 made between 8th July 2020 and 31st March 2021. And investors, you’re buying additional residential properties like buy-to-let properties or second homes, only need to pay 3% SDLT up to £500k. This initiative helps property investors to enjoy a significant saving on stamp duty. For example, if you’re planning to buy a property having a value of £400,000, you’ll be able to save around £10,000 if the purchase is made before March 31, 2021.
In addition to these, a significant percentage of UK millennials prefer to rent properties. Going forward, if this trend continues, it’ll let the landlords enjoy more security and flexibility.
These days, it has become a necessity for investors to identify alternative ways to safeguard their investments. And investing in properties is always considered a preferred and safer form of investment. As the above factors indicate, you’ll be able to secure your assets by investing in UK properties. If you plan to invest in buy-to-let properties, it’d help you enjoy multiple rewards – a regular monthly rental income and capital appreciation in case you want to sell them in the future. Just be sure to conduct sufficient research before making any investment and partner with a reputable property management company to get valuable insights into your shortlisted properties.