UK property investment strategy: Finding the right deal

Photo by Alexandr Podvalny from Pexels

The property industry has remained strong throughout a turbulent past fews years. Although an 8% year-on-year increase in house prices has made it harder for investors to profit from buy-to-let properties, stamp duty holidays have provided ample opportunity to expand property portfolios without paying the usual tax (resulting in savings of up to £15,000). The growing staycation trend, in particular, is generating attractive investment opportunities across the UK.

Ideal time to invest  

With people increasingly turning to staycations as an alternative to holidays abroad, holiday property rentals across the UK are lucrative investments. Domestic holiday experts predict staycation demand to persist for at least another four to five years. Throughout 2021, places like Cornwall and the Lake District experienced a sharp influx of bookings with holiday rental companies reporting over a 40% increase in the summer alone. In addition to taking an increase in bookings, holiday accommodation owners also raised their prices to make the most out of this lucrative opportunity.

Making the right investment 

Making the right investment takes a host of factors into account, including, how much capital you’re starting with, how quickly you want to start profiting, and how long you want to be tied to your investment. If you plan on renovating your investment property, it’s important you first ensure the project is cost-effective and maximises your returns. Assess whether the time and expense involved in renovating is worth it and consider consulting a real estate agent for advice on how to increase a property’s value. Ideally, if you’re going to rent or sell, you shouldn’t spend any more than 10% of the property’s total value on cosmetic renovations. Aim for a £2 return on every pound spent (painting generates the highest ROI at £5 to £10).

Best locations to invest 

Birmingham has experienced a 17% rise in property prices over the last five years, making it an attractive location for buy-to-let investors. The city’s growing finance sector is set to only strengthen the property market. Investors can enjoy an average 6.56% rental yield, along with a 19.5% price growth and 12% rise in rents predicted by 2025. Derby is another attractive investment location with property values set to rise to 24% in the coming years. Average rental yield is currently 4.20%.

The UK property’s sector continues to remain strong. By making smart investments in buy-to-let properties, investors can maximise their returns.