Property investment in UK

The UK residential property market continues to prove a popular asset class for resident and non-UK resident investors.  It is easy for UK residents to forget the considerable benefits that UK property investment provides:

  • Long-term demand for property (for rent and purchase)
  • High quality of property
  • Well developed economy
  • Security of UK legislation
  • Comparatively low unemployment
  • Large numbers of well paid overseas professionals on secondment
  • Culture and lifestyle
  • Mortgage lending facilities

 

The rise of demand for UK rental property

The biggest change in the UK property market in recent times has stemmed from the rationing of mortgages by lenders.  Before the often referred to ‘credit crunch’, the UK had one of the most competitive mortgage lending environments in Europe, with banks vying with one another to lend to applicants who previously would not have met their lending criteria.  Easy credit facilitated 125% loan-to-value mortgages and the ability to access mortgages up to six times an individual’s annual income.  Deposits level requirements were low and applicants with poor credit records where still able to gain mortgages.  With such easy credit facilities and at relatively low interest rates the UK ratio of home ownership rose to be one of the highest in the western world. 

The lending excess and the subsequent financial crash resulted in lenders now rationing mortgages.  Higher levels of deposits and good credit records are now required.  This has forced many people to rent property who would otherwise buy.

Today's first-time buyer is putting in a deposit of around £34,000, equivalent to more than their total gross annual household income. Only three years ago the deposit required to enter the market was a much more manageable 37% of annual household income, at £12,700.  The UK Council of Mortgage Lenders (CML) recently revealed a big rise in the number of people renting their homes privately, with their numbers increasing from just over two million in 2001 to just over three million in 2008-09. This trend is set to continue.

 

Lack of new UK property to meet demand

Property developers have drastically cut back building due to constrained access to finance.  Our article ‘Never waste a good crisis!’ discussed this issue in greater detail.  The shortage of supply of new property has increased the imbalance of the lack of suitable rental property to meet demand.  Consequently, landlords are making high rental yields as tenants compete for property.

 

What does the future hold for UK property investment market?

The UK property investment market is currently very attractive for investors; those with the appropriate deposits have the opportunity to buy at competitive price and enjoy rental incomes ranging from 6%-10%.  Experienced property investors, particularly cash buyers, are very active at present as they know that the best property investment opportunities are often to be had when there is uncertainty in the market. A Warren Buffett recently stated “When it's raining gold, reach for a bucket, not a thimble.”

It is important invest in below market value or discounted property as it increases the return on your investment.  Our below market value video explains further the investment benefits investing in this way.

Propertyinvestment.co.uk is as a buyer’s adviser focusing purely on UK residential and commercial investment property .   Our service enables our clients to profit from our experience, contacts and purchasing power to negotiate discounts or financial incentives that might not be otherwise available to a single investor.  Our recommended investment property is below the current market value which enables our clients to profit from property.

Call us today to find out how we can help you achieve your property investment goals.