The UK property market is looking bright and confidence is high. Property has been a good investment option for a long time now and many people are turning to it as a reliable source of income. However, entering the UK property market is not quite so straightforward and it pays to do your research before you take the plunge. Some simple planning can make all the difference between an average return on your investment – and a veritable gold mine.
Before you get carried away looking at properties online and dreaming about interior design, ask yourself a few key questions. What type of property are you looking for, and what kind of tenants would be attracted to it, or are you intending to live there yourself?
Are you hoping to achieve rental income from it or capital growth – or both? Where in the UK are you wishing to invest? Do you know which areas are lucrative, ‘up-and-coming’ or on the wane in popularity terms? What is your budget and how much time do you want to invest personally in running your property portfolio?
Location, location, location
As above, choosing the right location is vital to the success of your property investment. Even within a single UK town, postcodes can vary wildly in their character, desirability and access to essential amenities. This is especially true of London, with its diverse communities and distinctly different districts. Think with your heard, not your heart and make sure you have chosen an area that will offer the best returns.
If you choose wisely, you can get in ahead of the crowds in some pretty lucrative locations. To get an idea of your chosen locations ahead of purchase, try to visit the area at different times of the day and night, or even book a night or two in a local hotel to allow you to properly explore.
Watch the money
While UK property investment can provide landlords and property owners with a pleasing income, it is always worthwhile maintaining a realistic outlook. Have ‘back-up plans’ to help you whether such eventualities as periods of time without tenants, mortgage rate increases or needing to pay for repairs or upgrades to your property.
Seek expert tax advice too to minimise your tax burden while remaining confident that you are correctly adhering to your legal responsibilities. Make a budget well in advance and stick to it, even if your heart is telling you to ‘go for it’. Property investments can go down in value as well as up. You should look at the longer-term prospects, rather than an impulsive purchase that you could come to regret.
Think about whether you want to be ‘hands-on’ or ‘hands-off’ in your management of your UK property portfolio. There are advantages and disadvantages to both approaches. You can save money on management fees if you take a proactive approach, but you will be responsible for finding tenants, conducting viewings, sorting out all the paperwork and maintaining the property. If you would rather entrust an expert to do it on your behalf, engaging a management company will save you a great deal of time and travel – useful if your main residence is not in the UK. A ‘hands-off’ approach also leaves you free to pursue other investment opportunities. It does, however, distance you from the daily running of your portfolio which, for many investors, is the most rewarding aspect.