Buy-to-let in the UK remains a strong choice for investors looking for a steady source of income. In the last 20 years, buy-to-lets have been a sound investment, both through the income they provide as well as the increase in property values. Even with the tax changes coming into force now, it is still a solid sector, although investors will not always see the returns that they once did.
One reason that it remains a healthy investment is because of the rising demand for rental properties. When you consider that an average UK first-time buyer is now aged 35, compared to just 24 10 years ago, it means more people are living in rented accommodation for longer. Renting also offers more flexibility. People are not tied to one area if they rent, and they can move where their work is or to an area which suits their changing lifestyle. A tenant aged 24 may want to be near shops, bars or the gym, while a tenant aged 30 with young children may want to be close to schools or the doctor’s surgery. By renting, people have this flexibility to move according to their change of circumstances much more easily than if they had to wait to sell a house and buy another.
Stephen Reade, letting operations manager at Harrison Murray Lettings, said being a landlord provides a ‘steady and sustainable’ return on investment. This is particularly so if you compare it to low saving rates and swings in the stock market. He said investors are buying property hoping that it will return a healthy yield and also see significant capital growth. The current low mortgage rates are also beneficial to buy-to-let investors.
Also, UK property prices are expected to rise by by 6.1% in the next five years, according to new research by Barclays Bank. This research predicts that buy-to-let investments and millennial investors will fuel a surge in prices. Property hotspots are expected to emerge in the north of England, because of employment opportunities and business startup rates. However, growth is expected to be highest in London, with an 11.88% rise forecast, followed by 9.38% in the east of England, 8.74% in the south-east and 6.67% in the East Midlands. These surges will put the average property value at almost £300,000. For good value for money and income stability, the northern regions are attracting investors.
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