Establish clear goals
No matter where you are on your journey, before establishing a property investment strategy, it is vital to have clear and realistic goals.
For first time investors, establishing clear goals may increase your chance of success, as your objectives will help you to measure results.
To begin with, you will need to take into account the amount of money you are willing to spend, what your financial obligations will be, the type of property you want to invest in,
the location of your property, and whether you want a hands-on investment or take a fully managed approach.
Once you established these important considerations, you will need to set clear goals based on your motivations and your desired outcomes.
Adopting a property investment strategy with goals in place will give you a clear focus and it will help you to gauge eventual outcomes.
Location is key
If you are investing to secure an additional income from a rental property, you will need to consider locations with strong demand from a large pool of tenants such as university towns or cities,
areas in London’s commuter belt, or
Northern Powerhouse cities that undergoing regeneration. By investing in a location where the demand for rental property is consistently high, you will enhance your chances of achieving your goal
of securing a reliable rental income stream.
When it comes to long-term goals like securing strong capital growth potential, it’s important to research destinations that have a proven track record of steady price growth and areas with room to see values climb.
A revised forecast from Savills released in March 2021 revealed that the average UK property will climb by 21.1% from £230,920 to £279,644 by 2025.
With several regions expected to outpace the UK average including the North West (28.8%), property investors who expand their property search outside of London – which is expected to see average house price growth of 12.6% - are set to secure the strongest capital growth potential.
The type of property
When it comes to selecting the type of property you want to invest in, again, you should consider your goals. If capital growth is your main motivation,
residential property is more likely to deliver the strongest gains.
However, if you are looking for a short-term investment that produces higher than average yields, a fully managed apartment within a purpose built student accommodation development has the potential to deliver higher returns.
No matter which objective you are prioritising, clear and realistic objectives will give you a way to measure your results and if you need to adjust your property investment strategy or offload an asset.
What’s in the guide?
Is it a good time to invest in UK property?
Timing often plays a factor during the decision-making process and for first time investors,
now is an excellent time to enter the UK’s buy to let property market.
Currently, there is a high demand for rental property and, according to ONS, the number of households in England is forecast to grow by 7.1% between 2018 and 2028 from 23.2 million to 24.8 million – the equivalent of 164,000 additional households per year.
With pressures on the supply of new build housing and homeownership unobtainable for many households across the UK, buy to let property truly provides investors with the opportunity to secure reliable and robust rental income. A wave of incentives including changes to Stamp Duty Land Tax has seen property investors flock to the market and the good news is that buyers still have time to maximise their savings up until the end of September 2021.
Checklist property investment
Establish your Budget
The number one thing first time investors should consider is a realistic budget. We are not just talking about the purchase price, but the other costs that
come with owning and renting out a property. It is advisable to seek independent financial advice and to consult with a mortgage advisor if you wish
to fund your property purchase using this method.
You must also stress-test your budget and consider what a void period might mean for your finances. One way to ensure that you never miss a rental payment is to enter a property investment with an assured rental period. This means that even if your unit is not occupied, you will still receive your rental return from the Developer.
Location, location, location
Location is the cornerstone of property investment and investors who diversify their portfolio based on location are often able to maximise their returns. It is a good idea to look towards emerging property hotspots – see the location diversity section of this page for more information – with cheaper properties and high demand from tenants are a great option for first time investors.
Use your head, not your heart
Before you buy a property, you must consider who you are renting to and what they would want from their home before you invest however, you need to remember that you are not the one who will be living there. This means that your property must meet the required legal specifications but you do not have to invest in top-of-the-range fixtures and furnishings – especially in your first property investment.
It is always important to consider who will manage your property on a daily basis and, if you opt to manage it yourself, consider how much
time you can afford to spend handling your investment property.
A fully managed property investment – like the options available through Town Square Invest – allows investors to generate a passive income. From maintenance to finding tenants, from marketing to paperwork, a fully managed property is a great option for first time investors as they find their feet as landlords.
No matter what asset class you decide to enter, knowing how you can exit your investment is just as important as the purchase process.
One of the advantages of residential property is that it’s relatively easy to offload assets by appointing a local estate agent to take care of
the sale of your property.
When it comes to purpose built student accommodation, the resale market is relatively small as most investors hold onto their assets for their rental returns. In some cases, some opportunities offer investors an optional buyback, helping investors to sell their property should they wish to exit.
How to get into real estate UK
Whether you are investing for a passive income, boosting your retirement pot, or aiming to build a successful property portfolio, once you have established your
motivations and have a clear picture of your goals, it is time to take the next steps in your property investment journey.
As a first time investor, part of your property investment strategy should always include a significant amount of time conducting research across a variety of different areas.
When it comes to funding your property purchase, it is advisable to seek professional advice from an independent professional service. You should consider talking to two or three services to make sure that you get the best advice for your circumstances. Understanding your budget and your financial obligations from the earliest stage will help you to make informed decisions throughout the investment process.
After you have determined your budget, it is time to consider property investments that are available on the market. Contacting an experienced consultancy like Town Square Invest will provide you with access to market
insights and a dedicated consultant who can determine which opportunities will suit your goals.
Whenever you are dealing with a property consultancy, it is important that you remember your objectives and a reputable company will never pressure you into making a fast decision.
As with everything in life, education is a fundamental part of the decision-making process, so sign up for newsletters and reports from companies including Savills, Knight Frank, and Town Square Invest. If you want to expand your knowledge, consider investing in books, audiobooks, and listening to property podcasts to stay on top of trends in the market.
Once you have done your market research and have selected an opportunity that fits your budget and your goals, you will need to appoint a solicitor to assist you throughout the purchase process. Consultancies often suggest a solicitor to work with – which is often a great option if you don’t have a trusted solicitor – or you can appoint a solicitor of your personal choice.
What is the minimum down payment on an investment property?
According to the Money Advice Service, on average, the minimum deposit for a buy to let mortgage is around 25% of the property’s value.
This rate will vary depending on various factors including the lender, the type of property you are buying, and the amount of rental income the property is likely to produce.
Most big banks offer buy to let mortgage options however, you might be better off finding an experienced Mortgage Broker to get you the best deal.
As with all big financial decisions, you will need to be aware of the costs surrounding your property purchase – not just the repayments – and whether you want to secure an interest-only mortgage, or if you would like to pay off the balance.
Best investments for 2021
The UK is an exceptional choice for property investors, offering plenty of choice and a variety of trends for investors to capitalise on. From mainstream rental properties to niche market segments like student accommodation,
first time investors have to opportunity to build a profitable property portfolio.
With over 50 years of experience working in UK property, some of the best investments for 2021 earmarked by Town Square Invest fall into the residential property and purpose built student accommodation (PBSA) sectors.
Residential buy to let property is an excellent choice for first time investors as it has a well-established track record of delivering steady rental returns and rising values. Student property offers first time investors a lower entry level onto the property market and it has emerged as a popular choice for portfolio diversification.
Both asset classes provide first time investors with the opportunity to benefit from positive trends on the property market and are well place to emerge as the best investments for 2021 and beyond.
Our range of fully managed UK property investments
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For many years, London has been the beacon of the UK’s property market. The prestige of owning a property in the capital combined with the market’s
resilience and extraordinary growth following the 2008 global economic crash, has made it a popular choice for investors however, it is not necessarily
the best option for an investor at the beginning of their property investment journey.
In recent years, house prices have slowed in the capital with the latest forecast from Savills predicting just 12% growth in London by 2025 – a significantly slower pace than the UK average of 21%.
Price growth can vary between regions, with cities like Manchester, Liverpool, Birmingham, and Newcastle set to be at the forefront of rising values over the next five years. First time investors who include location diversification in their property investment strategy and broaden their search outside of London are in a position to maximise the growth potential available on the market and benefit from the lower entry of property in regional cities.
Recent workplace trends – whereby a mixture of office and remote working has become the norm in the wake of the Covid-19 pandemic – have provided property investors with the opportunity to take advantage of the demand from city workers for property in London’s commuter belt. Rents in popular commuter locations including Brentwood located in the East of England have seen rents rise by 8.5% in the year to May 2021 (HomeLet).
Staying on top of trends and being open to investing in regional hotspots are two proven ways to improve your property investment strategy.
Is buy to let property
investment for you?
Buy to let is not a new concept for investors and the familiarity of the asset class has made it increasingly popular with first time investors.
With the average rent in the UK at a record high of £997 according to HomeLet’s May 2021 index, investors have the opportunity to capitalise on the demand for rental property. First time investors will also be in great company, joining two million private sector investors who now own over £1 trillion worth of homes across Great Britain.
Despite Brexit and Covid-19 pandemic, strong market conditions and the emergence of a new property hotspots, investors can be optimistic that buy to let will be a stable property investment strategy for years to come.
What’s in the guide?