The Complete Guide to Investing In UK Property
UK PROPERTY INVESTMENT GUIDE
You probably agree with the fact that investing money in real estate is the best way to ensure a steady income for a long period. No matter how things turn out to your current business or job, a property is an asset that will always be there and generate income, turning into your permanent financial backup plan.
But, making smart property investments is not as easy as it may seem. You probably want to make sure that you will enjoy a decent amount of revenue after deciding to put considerable amounts of money into purchasing properties and that will take some effort from your side.
This present guide was made to help you get to know the UK property market better so that investing in it won’t appear like such a complicated challenge. Every small chapter will give you specific pieces of information and facts that will give you a clear view over house prices in the UK and what it means to make an investment in real estate in this particular country.
WHY INVEST IN UK PROPERTY?
The UK property market has continuously developed in the past decades, with house prices going up starting with the 1970s, in spite of the recession that challenged the country from an economic point of view and credit difficulties. In fact, the UK is the European country that recorded the highest speed when it comes to property prices, which makes it clear that demand was always on the rise.
How much did the prices of houses grow in the UK? Since 1988, each year brought an increase of 12.3%, which means that, in present days, the prices went up with 333% in comparison with a few decades ago. Thus, many UK property owners saw that their houses became more valuable in time, which made property ownership a great way to secure great income for years to come.
Forecasts show that things are not going to slow down in the UK when it comes to the status of the real estate market, as the number of households is expected to grow significantly in the next 20 years. More precisely, specialists say that about 250,000 new households will appear throughout the UK every year from now on until the staggering number of 28 million will be reached in the following two decades.
This means only one thing and that is the fact that the demand for vacant houses will continue to increase, as the new inhabitants of UK or the existent ones that would like to start a household on their own, would like to find a new place to stay. Other factors that should influence you positively when it comes to investing in UK properties are:
- The rental returns will be high due to a high demand in this sector
The UK has a high immigration rate, which means that a lot of people will want to find a property to rent for a good number of years. Besides this, the high property prices, like the case of London apartments, are making property purchasing challenging for first-time buyers, even if they are UK residents, which means that they will also be looking for rent.
Thus, landlords in the UK are renting their properties very easy and quickly, enjoying an income from property rentals that grows consistently.
- The UK property prices will continue to increase
The constant increase in the number of residents in the UK triggers a shortage of houses as very many of them are looking for a place to stay, which makes the prices go up. In 2020, predictions show that the population will reach 70 million, compared with today’s numbers that indicate 63.7 million. Thus, buying a property in the UK today will allow you to enjoy a steady income for years to come.
In fact, if the current trend remains the same, there will be a serious shortage of houses in the near future, of about 100,000 properties every year. As a property investor, you can diminish this shortage by choosing to invest in the development of new properties in the UK.
- The interest rates are still very low
Don’t you have sufficient funds to purchase property in the UK? Well, then it is worth knowing that interest rates are very low, currently reaching the lowest threshold in the past years. Thus, if you apply for a mortgage to buy a London house or apartment, for example, the low rates and the rent that continues to increase, will not make the mortgage a burden and will also allow you to make a profit.
So, you can easily rent an apartment in London or property anywhere in the UK, pay your monthly rate and still enjoy some money left from the rent you obtain.
REASONS TO INVEST IN THE UK
To start with, we should consider the estimates made by the government, which stated that the UK needs about 232,000 new properties to be developed every year, just to make sure that the property market managed to meet the current demand. Numbers show that there is a significant house shortage in the country, the lowest ever recorded since the 1920s.
The times are also great for investors that are looking to purchase properties and rent them, due to the fact that the demand for rental properties doubled since 2002. Also, of all the houses available in the UK, 11% of them are rented properties, which is a great number to consider if you want to make this kind of investments.
Here are other reasons that make investing in UK property market a smart move:
- Both the economy and politics are stable
The UK’s economy is the reason so many people wish to live and work here, the country acting like a real magnet for people coming from all over the world in search of a better life. Also, the political bustle created by the Brexit settled now and the country came back to its usual political balance. As history shows us, very little things tend to change in the political background of this country, as Brits love consistency and stability, which both characterize the political stage of the UK.
- The UK is the country with the biggest population increase in Europe
As mentioned before, the population of the UK exceeds any other country in Europe, being 4 times larger than the population of France and will reach the double of Germany’s population in the coming 20 years. This certainly means that the real estate market will develop at an incredible rate in this country, fueled by the constant demand for new houses and apartments.
Regardless if residential units are for sale or for rent, there are sufficient clients to take the offer, so a property investment in the UK is indeed an excellent choice. Even if the London house prices may scare you or turn out to be out of reach, there are other great cities in the UK to invest in, such as Manchester.
- The housing supply is the lowest in the last 100 years
The housing supply is extremely low in present days because the UK property market did not manage to develop at the same rate with the growth of the population. And things are not going to stop now as the demand will continue to grow in the coming decades as well.
The risks of investing in UK’s property market are very low because, with such a high demand on the market, it is impossible not to obtain a great return on investment in a relatively short period. There are very many people out there looking for the ideal home at the moment, so you could easily tap into this opportunity.
- Approximately 20% of the people living in the UK will want to rent a property in the coming 5 years
The demand for rental units is also very high, the increasing prices of properties, especially London property prices, making it hard for first-time buyers to actually purchase a place of their own. Also, the high immigration rates also mean that there will be many people looking to rent a place in the UK, so they can start the new life they’ve been dreaming about.
Thus, if you don’t have sufficient capital to buy land in the UK and develop the new residential unit, you can still invest in the real estate market by buying properties and renting them, as this will offer a constant and steady income.
- The rental yields continue to grow
High demand will always generate greater prices and this is what is happening in the case of properties for rent. Landlords are enjoying this increase in demand that makes rents go up, as they enjoy bigger rental yields than they did a few years ago.
HOW MUCH ARE PROPERTY TAXES IN THE UK?
When looking to purchase property in the UK, you need to be aware of the property taxes in this country, as they are not the same for residents and foreign investors alike.
To start with, an investor will have to pay the Stamp Duty Land Tax when buying a property, which will differ according to the price of the property, representing a percentage of the property’s value. The differences in the stamp duty are determined by certain thresholds applied to the purchase price of a certain property.
So, for individuals, the SDLT will range anywhere between 0% to 7%, for properties with a selling price ranging between values of under £125,000 and up to £2,000,000 or more. In the case of companies, organizations, and so on, if the property is valued at £2,000,000 or above, the SDLT will be 15%.
Also, companies and other non-natural entities, have to pay the Annual Tax on Enveloped Dwellings, which is applied in the case of properties that exceed the value of £2 million and will be calculated on a sliding scale. But, there are cases in which there’s no need to pay this tax, like renting the property to a third party for commercial purposes and other situations.
You will also have to take into consideration the VAT or Value Added Tax, although it is worth knowing that if you need to unroll any words on a certain property, you can benefit from reduced rates or even zero VAT in some cases.
If you rent a property, you will have to pay an income tax of up to 45% if you are a UK resident or non-UK resident. But, in case of non-UK residents, this tax can be of 20% only if the property is owned by an offshore company.
If you buy a property, improve it, and then sell it, you will have to pay the Capital Gains Tax, which can go up to 28%, although there are cases in which it is just 10%. As a non-UK resident, you can avoid this tax by performing a careful tax planning that involves an offshore trust.
WHY INVEST IN THE UK NOW?
There are quite a few reasons that should make you see that now is the moment to invest in UK property market.
- A weaker pound will make property prices slightly decrease
While the tensions around Brexit disappeared, the pound is still trying to get back to its former glory. This means that prices also dropped, including the house prices in the UK. Thus, if an average house had the price tag of $297,250 before Brexit, after Brexit the same house is out for sale at just £206,000, so you may want to take advantage of this.
- Rare investment opportunities are emerging due to an unforeseen price decrease of properties
Starting with 2009, the prices of homes in the UK increased continuously, triggered by the large demand on the market. But, due to the Brexit, they have dropped unexpectedly, creating opportunities that investors may not be able to enjoy again.
Thus, the houses for sale in London dropped their prices by approximately 6%, a fact that lingered throughout the entire year. So grab this chance to make the investments you want will lower resources than before.
- The rental rates are going up
The shortage of homes and unaffordable prices for the ones that are available are two aspects that are making people look for rent, as it is a more accessible and affordable solution. So having a property for rent these days in the UK means great income you’ll enjoy every month for many years to come.
- Mortgage rates have never been lower
If you need more buying power from the bank, you need to know that the mortgage rates have just hit a record these days, being the lowest rates ever seen in the UK. Thus, the 2-year fixed mortgage is around 1.66% only, while the 5-year fixed mortgage ranges around 2.42%.
PROJECTS TO INVEST IN UK
CITU NQ MANCHESTER
Located in the absolute heart of the UK’s most dynamic city, Citu NQ Manchester is a new, high-quality residential development designed by IDP, one of Manchester’s leading architects and developed by Factory Estates, one of Manchester’s most active developers.
The development comprises of 183 units over 8 storey with ground floor commercial units, communal facilities and a rooftop garden.
Just one minute walk from Market Street, Manchester’s main shopping street yet located within Manchester’s hip Northen Quarter, the development is in an unrivaled location within the city – rental demand is expected to be potentially high.
Situated in the absolute heart of the UK’s most dynamic city, Citu NQ is a new, top quality residential development designed by IDP, one of Manchester’s leading architects and developed by Factory Estates Limited, one of Manchester’s leading developers. The development includes 183 units over 8 oors with ground oor commercial units, communal facilities and a rooftop garden. Citu NQ layout is combined with the careful selection of modern xtures and ttings that are both appealing to residents and hard-wearing to ensure low maintenance costs over the long term.
Citu NQ is located in the heart of the City near the Northern Quarter which is Manchester’s creative district, right next to popular shopping area on Market Street and the Piccadilly Garden. Next door to Arndale Shopping Centre, 1 Minute walk to the Piccadilly Garden station where the future high speed 2 station will be located.
The site, currently used for parking for nearly 100 cars, is bounded by Tib Street, Church Street, Joiner Street and Bridgewater Place and is within the Smithfield conservation area. It is surrounded by Black Dog Ballroom, the Britannia Sachas Hotel and the Grade II-listed Debenhams building.
Why Choose Citu NQ Manchester UK?
✅ 24 Hour concierge / security
✅ Contemporary styled reception area
✅ Full height windows to every room Juliette balconies to living spaces
✅ Roof top amenity gardens
✅ Mains smoke detectors
✅ Low voltage LED lighting throughout Secure video door entry system
✅ Mins walk to Manchester Piccadilly Station and Piccadilly Gardens
✅ Mins walk to future High Speed Rail 2 (HS 2) linking London and the city of Manchester
✅ Surrounded by great amenities like shopping mall, eateries, CBD, Park, Chinatown
✅ Great connectivity via tram, bus, or walking to Manchester attraction
✅ Mixed development concept with shops at the ground floor
✅ High quality finishing with fully furnish package (Great for foreign investors)
✅ Full one stop service, letting and management company has been appointed to help in resale and rental
Click Here To View More Details On Citu NQ Manchester