Despite the Covid-19 pandemic and the fallout from Brexit, the UK property market remains buoyant, providing investors with a regular income and long-term growth. While other markets have experienced significant economic uncertainty in recent months, property remains one of the most popular forms of investment. Nevertheless, for first-time investors, the purchase process can be somewhat daunting.
Choosing an Investment Niche
When starting out, the novice property investor needs to decide their niche. How do they want to generate income? Are they seeking a straight-forward doer-upper to sell on quickly, or would they prefer a long-term investment option?
With the buy-to-let market continuing to flourish in the UK, many first-time property investors opt to buy residential property. Zuneth Sattar, Director of Xaviar Investments Limited, started his investment portfolio buying residential property, which continues to account for a significant proportion of his investments.
There are several different types of residential property to choose from, for example properties let to a single tenant or family versus houses of multiple occupation. The prospective landlord needs to think carefully about the demographic they want to target. For example, retirees and individuals on low incomes will have very different preferences, and budgets, to young professionals.
Commercial property is an increasingly popular option for investors. The term ‘commercial property’ is generally associated with warehouses, office buildings, and retail space, but in reality, the scope of commercial property is incredibly broad, encompassing a variety of business premises including hotels, short-term holiday lets, and care homes for the elderly.
Choosing the Right Location
When investing in property, one of the most important considerations is location. There are several key factors that regions offering high rental yields and price growth typically share in common.
University cities have long been a staple of UK property investment, benefiting from sustained demand for student accommodation. With a significant proportion of graduates remaining long after their course has finished, university cities typically benefit from an ever-increasing demand for housing.
A rising population bolsters economic growth, creating more jobs, and in turn attracting more people. Rather than buying in a city that is liable to become oversupplied with property, investors should invest in areas with positive population growth projections. The best areas for investment are under supplied, enabling investors to command high asking prices and premium rents.
A city that benefits from a thriving economy typically boasts excellent transport links, providing easy access to rail networks, road networks, and international airports, not only increasing the city’s attractiveness to the resident population, but promoting business and leisure tourism too.
When we think of prime property locations, the South East dominates. However, square footage in London can be prohibitively expensive, even for the seasoned investor. With a population of over 60,000, Manchester attracts huge amounts of interest from global buyers, with demand for residential properties vastly outstripping supply, particularly in the city centre.
Similarly, Birmingham and Cardiff present exciting investment opportunities, enabling investors to buy in areas that have experienced exponential growth without the exorbitant sale prices commanded in London. Located at the heart of the UK, Birmingham offers excellent transport links, as well as having undergone an impressive transformation over the past 20 years. With development of the UK’s High-Speed 2 rail line still underway, further growth is yet to come.
Cities benefiting from new infrastructure projects are likely to offer significant investment potential. Property investors should therefore seek out areas with a thriving economy. As we move through 2021, several regions of the UK present exciting investment opportunities, whether the investor is on the first rung of the property ladder, or seeks to add to an already burgeoning investment portfolio.