After a successful quarter one and quarter two on track to be excellent too, is property still a good investment in the UK in 2021? Buy to let growth in the UK is going from strength to strength and it’s an exciting time to invest.
Whether it’s the funds saved from hospitality venues being shut or planes being grounded in the pandemic, individuals seemed to rethink their savings situation in 2020.
In the first quarter of 2021, applications for larger loans increased by 58% when compared to December 2020.
Since the start of the year, the UK housing market has continued to rise. With the biggest yearly rise in property since August 2014, property is booming, and it doesn’t seem to be slowing down.
The National Office for Statistics showed that house prices rose at an annual rate of 8.6% in February. This is considerably higher than the recorded inflation rate of 1.21%.
As well as this, experts expect property prices to grow 17% by 2025. Therefore, investing in 2021 will help you to reap these rewards to their fullest.
The number of people renting property also continues to increase year-on-year. According to property experts, it is expected that a third of the UK’s millennials will rent into their retirement years. This projection predicts renters will account for 55% of the housing market by 2045.
In recent years, statistics have also showed a large increase in first-time buy-to-let landlords. With the introduction of buy-to-let mortgages and low mortgage rates over the last 20 years, the market is becoming more and more competitive.
What does this mean for property investors?
In essence, this means if you purchase a buy-to-let property, it’s highly likely you will find someone to occupy your property quickly. Especially if the property is situated in a sought-after area.
We know that without rental income, a buy-to-let property investment isn’t worth it. MPP Invest is passionate about finding exciting areas which are thriving, to almost guarantee high rental yields.
What are the key things to look at when thinking about investment?
- Rental yields
- Transport links
- House prices in the area
- Capital growth
What are the advantages of a buy-to-let property?
- Long-term investment. The long-term investment property offers often means your funds are safer than they are with other investments such as shares. Having a physical asset often feels as though you have invested in something real with potential for growth.
- The personal touch. When investing in a residential property, you can make changes and amendments to the property you invest in. Whether it’s a new kitchen, general home improvements or just more modern décor, you can make changes and invest further to improve your capital growth.
- Consistent income. With a buy-to-let property, your tenant makes regular monthly payments to you, meaning your investment gives you a steady stream of income. This isn’t necessarily the case with other investments. To get the most out of this, ensure the property you’re investing in has a high rental yield.
Is buy-to-let still a good investment in 2021?
As investors ourselves, the forecast for house price growth is exciting to say the least. At MPP Invest, we’re seeing a huge rise in the amount of people looking to invest in the North West, Midlands, and Yorkshire areas.
When you look at the below house price growth forecasts, it’s no surprise:
- London = 12.7%
- South East = 17.3%
- East of England = 17.3%
- South West = 17.3%
- East Midlands = 22.6%
- West Midlands = 21.7%
- North East = 21.7%
- North West = 27.3%
- Yorkshire & The Humber = 24.1%
- Wales = 22.3%
- Scotland = 25.4%
- UK = 20.4%
In terms of rental yield, high levels of rental growth are all expected in Manchester, Liverpool and Leeds. Experts predict this is due to the Northern Powerhouses growth.
Manchester is set to be the highest achiever, as rental yields are set to grow by over 16%, with Liverpool and Leeds following respectively at 14%.
Outside of these areas, average rental prices in the UK are forecast to appreciate by a minimum of 12%.
These investment hotspots are areas we have focused on getting our clients the most exciting opportunities in.
In Manchester, we have an exciting opportunity at The Blade. Situated in Manchester’s skyscraper district, this is a renter’s paradise and is sure to give you excellent ROI.
In Liverpool, our development at No.1 Hatton Garden has been hugely popular, with prices starting at just £99k.
What does investing look like in a post-pandemic world?
A recent Private Landlords Survey by the government recently revealed some surprising stats about the average UK landlord.
The standout stats for us were:
- 94% of landlords are private individuals
- 4% of landlords are using buy-to-let as their main source of income
- 60% of landlords are aged 55 or over
- One third of landlords are retired
Many landlords are now investing in property to benefit them in later life. With the property market growing year-on-year, it’s a highly effective option for a retirement income. You may not be thinking that far into the future, but some of us are!
Even when there has just been a global pandemic, we recommend thinking about your investment in decades, not years. Property is always going to be a mid to long-term investment. Within these decades, a dip may occur, but in the long run, a decade on, it’s highly unlikely that you haven’t made capital gains.
We’re hugely passionate about property investment and making our client’s portfolios as affluent as possible. When you have a property consultant on hand, it can take away a lot of the hassle that comes into play.
If you’re looking for help with where tenant demand is strong, where property prices are due to peak or what opportunities are coming to market, don’t hesitate to give us a call.