By purchasing a property and renting it out, investors can generate a steady stream of rental income. Rental yields vary depending on the location and type of property, but diligent research and market analysis can help identify areas with high rental demand and attractive returns.
The prime and super prime markets remain strong but the demand for the best properties can be very high. Residential property in the UK (and in London in particular) remains a great long-term investment for many overseas buyers. Buying a home in the UK is generally attractive for cultural and educational reasons.
Is property still a good investment in 2023? Despite falling house prices, property remains a good investment. This is particularly the case for landlords who are looking to hold on to their properties for the long term.
As an investment, buy-to-let has much to offer: a regular source of income, plus a potential long-term yield from any increase in the property's value. However, it is a high-maintenance investment, and your asset is locked away for a long time and hard to access.
A long term investment in stock and shares will usually outperform a comparable-length investment in property, but there are no guarantees of that. You can mix your investment up to diversify and spread the risk involved.
Warren Buffett: "A Storm is Brewing" in the Real Estate Market
Is it better to save money or invest in property?
Steady growth in value
Investing in property provides an exceptional opportunity for capital appreciation. Historically, the UK property market has shown steady growth, making it a reliable asset class for investors. Over time, property values tend to increase, allowing investors to benefit from significant gains.
Liquidity. Shares are generally more liquid than property, meaning you can buy and sell shares more quickly. While selling a property could take longer, the benefits of investing in this asset class are seen in its long-term capital appreciation and rental income.
In 2023, around 27,520 rental units are saying goodbye, a dip from last year's 47,250. Still, it's a telltale sign that landlords are downsizing their portfolios as they grapple with bulging mortgage bills and tighter rules.
A further 24% claimed that rising mortgage costs and/or changes in the tax landscape was also a motivation. Our clients said they were also selling because they owned a problem property, found the investment unprofitable, had management issues or had tenants in rent arrears.
However, property investment can still be a viable and lucrative option in 2023. While success in this field requires more than just taking advantage of market trends, there are several factors to consider for a fruitful property investment journey. Is property still a good investment? In short, our answer is yes!
Right now, house prices haven't fallen as much as expected, while mortgage rates remain at 5% or higher, so housing still looks expensive by recent standards. Faster growth in household incomes over 2024 would improve buyers' affordability, along with mortgage rates falling over 2024.
If you do not currently live in your property in the UK, now is a great time to buy. We are experiencing increases in the costs of living currently. This cost of living increase has yet to be felt in the housing market, prices remain positively stable. It is a great time to buy.
It was estimated that house prices would drop by 5% in 2023, and are expected to drop further in 2024. At the moment, the most recent data shows that house price growth is slowing down - in October 2023, house prices were -1.1% lower than a year ago, with the average UK house now costing £291,000.
In summary: buying requires a bigger upfront cost, but renting is more expensive in the long term. A good rule of thumb is that buying a property becomes better value after around 10 years, compared to renting an identical property. Whether it's cheaper to buy or rent depends on several factors.
Key Takeaways. Home values tend to rise over time, but recessions and other disasters can lead to lower prices. Following slumps, home values can increase in some areas of the country because of strong demand and low supply, while other areas struggle to rebound.
The pros are straightforward: if successful, it will make money – but it takes time. In a survey into property flipping conducted in August 2022 by brokers Finbri, 62pc of respondents said they made between £10,000 and £75,000 profit in the last two years. Do not underestimate the amount of work involved.
Should I invest in property as landlords are pulling out?
Undoubtedly property investment is more challenging now than it has been in the past, and it may get worse before it gets better. Landlords are concerned about the Renters (Reform) Bill making it difficult to evict nonpaying tenants, potential new legislation and what an incoming Labour government might mean.
The Government has given buy-to-let landlords two compelling reason to sell-up, and fast: first is the overhaul of the rental rules coming next year, with indefinite tenancies and the end of section 21 evictions, and second comes the eroding of capital gains tax, tax free allowances.
“It isn't the end for buy-to-let but it has certainly quietened down,” said Claire Chambers of Chambers estate agents in Birmingham. She has had landlords sell-up part of their property portfolios as profits shrink but said there are still plenty of investors if properties are put on the market at the right price.
Despite a heightened interest rate environment, other recent regulatory changes and predictions of increased rental prices mean there is still appeal in becoming a landlord.
Buy-to-Let has long been considered a lucrative investment option for landlords looking to generate steady rental income and benefit from rising property values. However, recent years have seen a shift in the market, with more and more Buy-to-Let landlords selling up.
Goodlord reports that 98 per cent of estate agents in London said that “at least one of their landlords was selling a property. As a whole across the UK, 47 per cent of the landlords have tried to shift their property in the last 12 months.”
Property can be leveraged to improve your return, rented out or developed. Yet investment 'experts' claim stocks and shares (equities) outperform property over the long-term, take less time to manage and can be held in an ISA.
1. Commercial Real Estate: Commercial properties, such as office buildings, retail spaces, and industrial warehouses, can offer substantial income potential, especially in prime locations with high demand. Long-term leases with businesses and corporations can provide stable cash flow.
Steady rental income: Buy-to-let properties provide a consistent income stream through monthly rental payments. Long-term capital appreciation: Over time, the value of the property may increase, leading to potential capital gains.
