The Top 5 Reasons Why You Should Invest in UK Residential Property
High net worth individuals are motivated to invest in UK residential property for a variety of reasons. Buy-to-let is always at the top of the savvy investors’ ‘potential investments’ list, but there are a variety of reasons why, ranging from legacy planning to funding a certain lifestyle. People’s motivations to invest tend to change depending on what stage of life they are in – for example, a young graduate will be motivated by income, whereas the arrival of children often changes an investor’s’ motivations to planning for university and inheritance. Below are our top 5 reasons to invest in UK property:
For Your Pension
Pension schemes can vary in their success and returns, based on location, employment and a whole variety of other reasons, and there is no guarantee that when retirement hits, your income will cover the cost of living (you need to consider factors like inflation). Buy-to-let property, when bought well and managed carefully, can provide solid returns almost immediately, supplementing and supporting any lifestyle and making retirement enjoyable and stress free when it comes. A reputable property management agency contributes to this, as not only does the investment provide the income, but the agency ensure your retirement is free of hassle – there is less paperwork, access to a quality network of experts and everything is simplified. The FT recently discussed using property as a supplement to a pension, and concluded that a well-made retirement plan is the most important thing for any individual.
Early Retirement
The clever investor who spots the right property investment opportunity to buy in the UK can soon generate a high enough income to retire early. A well chosen property portfolio can rival a salary, and requires little to no effort when a superior management agency is chosen. Make sure, whichever agency you chose, that they offer a competitive fee, the best property investment advice, a single point of contact across your portfolio and are really hot on tenant safety – ask about regular inspections, HMO licensing and fire safety regulations. (Think of the bragging rights when you retire at 40!)
For Your Children’s Future
One of the most common reasons for buy-to-let investment in the UK is the investor’s family. A child currently studying or preparing for university in a UK city like Edinburgh or Manchester is the perfect motivator. Bristol University, for instance, is about to build a brand new Enterprise Centre. This £300m project is at the centre of a larger urban regeneration project, so if you have a child starting at university in September, now is the ideal time to buy! UK residential property is the ideal investment choice where legacy planning is concerned because it serves two purposes; an income generator for the parents and a safe, comfortable, conveniently located home for the student when required.
Better Than Cash in the Bank
Buy-to-let returns can be more reliable and offer much higher yields than cash sitting in a bank account, as well as achieving 7% pa capital appreciation historically. Bricks and mortar are a fantastic choice for the risk averse investor because your investment is a tangible reality – property can be improved easily and on demand with repairs and renovations – and isn’t reliant on the bank remaining afloat (I doubt many people have forgotten those iconic photos of the queues outside Northern Rock)! The housing supply in the UK is also at a 100 year low, and demand is growing daily; it is predicted that 25% of households will be privately rented within the next 5 years.
A Safe Investment
Any investment carries risks, but historically, property is a much safer choice for your money compared to other asset classes (few other investments can tout the 7% historic returns pa over 30 years). The 2007 crash made its mark in almost every investment sector, but UK residential property performed comparatively well due to the simple fact that people always need somewhere to live. This notion is particularly true of the traditional UK property market because there is a finite amount of Georgian/Victorian property, and it is always in favourable locations – nobody is building the same high ceilings and cornicing anymore, making the asset even more valuable. Edinburgh, for example, has a city centre full of beautiful traditional property, with new build property being erected on the outskirts and in secondary locations – these don’t rent for as much, get lower occupancy etc, etc. Prime traditional buy-to-let in prime locations ticks every box for a secure investment.
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