Property Investment is becoming more popular than ever in the UK, especially since the UK market has seen an average capital growth of between 8.5 – 8.8% across the nation year on year since March 2020 – March 2022. This sudden rise was mainly due to the fact that there was a relaxation on the stamp duty tax liabilities for first-time buyers to help keep the housing market afloat whilst other industries were struggling during the height of the COVID pandemic. These capital growth figures had peaked the interest of many who were previously considering property investment as they saw an opportunity to build wealth.
Property Investment Courses:
When looking at the figures during the pandemic, coupling capital growth figures with rental cashflow made property investing even more desirable for most who had money but did not know where to put it. Many already established property investors saw this as an opportunity to begin flogging property investment courses left right and centre, but a lot of the current investment models became obsolete due to rising house prices, fiercer competition to purchase properties, and rising material costs.
With the current housing market in the UK, house prices are still at an all-time high but many speculate that these prices will fall due to rising interest rates from the Bank of England in an attempt to control the inflation in the market. Investors and economists speculate that demand will fall leading to a fall in price. The first sign of this is that inflation fell slightly by 0.4% in November to 10.7%. However, what is happening currently seems to be quite the opposite. Agents are still selling properties quicker than pre-covid times due to the fact that demand heavily outweighs supply.
As a result of the rise in interest rates, this caused mortgage costs to also rise hence causing a squeeze in the cashflows that landlords received for their rental properties. As a result, many began looking for alternative ways to invest which presented higher cashflows. A great place to view the current market situations is trading economics. Aksum Lets frequently uses their market data to help make informed decisions.
Property Investment Models:
The main bread and butter of residential property investors was the buy, refurbish, rent, refinance model for single-let properties. As profits began to squeeze for these, many began considering property development in order to add value to a property by extending it and renting it by way of a house of multiple occupation or serviced accommodation using platforms such as booking.com or airbnb. In addition to this, agents were listing properties and receiving offers on the next day in some cases which left the average investor a lack of properties to choose from.
Although some investors are waiting for the ‘right time to buy’, due to continuous population growth, demand will nevertheless increase hence causing house prices to rise further. Amongst some of the biggest agents and property portals such as Savills, Rightmove, and Zoopla, the consensus of their predictions is that property will continue to rise at a steady pace of 3% per annum. This therefore means that investors will more than likely have to adapt to the current market situations as opposed to holding on and waiting for the right moment.
The residential property investment market is worth a whopping £87 billion. It will be no surprise if the value of the residential property investment market will continue to rise as there is a clear demand for rental properties. Since the interest rates began rising rapidly over the course of 2022, there was a shift of people wanting to buy to people wanting to rent. This could be viewed as a perfect opportunity for landlords to buy properties that are available, despite the high prices in order to meet supply with demand for the rental market.
Property Investment – How we are adapting at Aksum Lets
Our team at Aksum Lets are adapting like others in considering developing properties and adding value. Our investment criteria now consists of sourcing properties with a development for potential in order to convert what would be a 3 bedroom semi-detached house to a 5/6 bedroom house of multiple occupation. This will allow for a larger gap to be created between our rental income and mortgage costs. Take a look at our joint venture investment options here.