In recent months, the sluggish economy has kept bank rates low, and consequently, returns on savings have been meager at best. At the same time, political uncertainty has spelled trouble for markets in the wake of the chaotic general election and haphazard Brexit negotiations.
Buy-to-let property investments have also crept on thin ice owing to the nation’s stalled housing market and higher stamp duties. However, shifts in the market signal that buy-to-let properties may be close to reclaiming their crown as a coveted investment vehicle.
First and foremost, home prices in parts of the country have been surging upward. Although prices remain muted in some areas, Rightmove, the UK’s largest property website, reported property prices have been booming, especially in central England. In fact, in the “three hottest markets” Rightmove points out—Northamptonshire, Derbyshire, and Norfolk—home prices jumped by 9.1%, 7.9%, and 7.4%, respectively, or more than double the annual average.
“A combination of traditional summertime price blues and the chill of uncertainty in the air has cooled price growth in some parts of the country, and affordability also remains very stretched,” Miles Shipside, director of Rightmove, told Express. “But despite these factors, high demand and limited supply are still driving momentum, especially in the counties in the middle of the country.”
For property investors, these astronomical increases in home prices indicate that home prices may continue to climb, so a property they buy now could continue to increase in value. Experts even predict that the average UK home price will grow by 13% by 2021, suggesting the returns to be reaped for buy-to-let investors.
Mortgage rates, currently at record lows, also reveal the potential of buy-to-let investments since landlords will have lower costs and can thus add more to their bottom line.
Furthermore, as Shipside mentions, the UK is in the midst of a housing crisis spurred by a lack of supply and heightened demand. With more and more people unable to afford homeownership in the face of sky-high prices and few available homes, the demand for rentals will increase and lead these tenants-to-be toward properties owned and managed by buy-to-let investors, who will then be able to fill their units and their coffers.
Having said this, the availability of buy-to-let mortgages is going to get a whole lot more difficult with new affordability rules coming into play in September, and the continually increasing administrative load of owning B-T-L property just keeps getting heavier.
At Avantis Wealth, we realise that property investment can offer good security, but that there are other investment models that suit clients who want fixed returns and a known exit date, with absolutely no management involvement.
To participate in property-backed investments that generate fixed annual returns of typically 7-15%, take a close look at the F.R.E.S.H. Investment Strategy. Call +44 1273 447 299, email invest@avantiswealth.com, or visit our website to request your complimentary special report. You’ll be pleased you did.