Investing in UK property continues to generate top returns

For those who conduct thorough market research before making a decision, investing in UK property remains one of the most profitable forms of investment over the long-term.

This is according to the latest comments from Allison Thompson, the national lettings managing director of the Leaders Romans Group, who has called out some of the current stories circulating around attitudes towards the buy-to-let sector.

The sector has been thrust into the spotlight even more recently as a result of the Renters Rights Bill moving through parliament – even though the Bill is relatively unchanged from the Conservatives’ version, titled the Renters Reform Bill, which has been on the cards for a number of years.

Recently, industry body Propertymark debunked a number of ‘myths’ surrounding the Bill, while others have reassured landlords that many of the changes being set out will improve standards within the sector, and should not deter people from investing in UK property to be rented out.

The changes set out range from abolishing Section 21 ‘no-fault’ evictions (meaning instead that landlords will have to give a reason for eviction, such as rent arrears or reclaiming the property for personal use, for example), to boosting the rights of tenants to request to have pets (although landlords will still have the right to refuse where appropriate).

The state of the market

While it is important for landlords and property investors to be aware of any upcoming legislative changes, it is also helpful to bear in mind the current and ongoing strength of the UK housing market and the rental market when considering investing in UK property.

For investors with a focus on capital appreciation, the UK housing market has returned to growth in recent month after a more stagnant period reflecting factors such as rising mortgage costs and the cost of living crisis – and analysts predict current patterns to continue.

The latest house price index from Halifax revealed the biggest jump in prices since November 2022 for September, up by 0.3% on a monthly basis and by 4.7% annually.

At the same time the latest research from the Office for National Statistics (ONS) showed that the number of homes sold in August this year exceeded 100,000 (on a non-seasonally adjusted basis) for the first time in two years, rising to a current provisional estimate of 104,330. This is another important measurement to consider when looking at investing in UK property.

Meanwhile, in the rental market, heightened tenant demand has been pushing up rents and rental yields over the past few years, and this is unlikely to change in the near future due to the supply and demand imbalance.

The latest data from Fleet Mortgages shows that rental yields have risen in every region across England and Wales on an annual basis, with the best yields to be found in the North East and the North West, where investors can achieve 8%+ on average.

These are all factors that can influence the decision of anyone looking at investing in UK property, while paying attention to the various local differences across the market.

Regulation is not a bad thing

Commenting on the upcoming regulatory changes and how it could affect the market for those investing in UK property for buy-to-let, Allison Thompson of Leaders Roman Group added: “Although much has been made in the media of the ‘danger’ to landlords of Section 21 being scrapped and other planned rental reform changes making it more complex and more expensive to be in the buy-to-let business, good landlords have little to fear, especially if they are working with a qualified agent.

“In fact, in most instances, tenants give notice, not the other way around. A more regulated sector with higher standards is a good thing for everyone, and with demand for rental accommodation only likely to keep increasing while new social housing is still well behind building targets, we certainly need private landlords to keep investing.”

Allison added that for those who conduct “solid research into the local market”, while making strong investment choices and managing and letting the property professionally, investing in UK property “can still generate income in excess of returns from other financial investments”.

She concluded: “Rents are currently rising at a rate over inflation, which should help make buy-to-let more financially viable, and prices are maintaining a steady upward trajectory, meaning your equity should increase over time as well.

“Of course, markets and trends naturally cycle and fluctuate, so to see the best returns, you need to be prepared to invest for the medium to long term – around 15 years or more.”

Thinking of investing in UK property?

If you’re considering investing in UK property, get in touch with BuyAssociation today and speaking with one of our specialist investment consultants about our current opportunities.