As a beginner property investor in the UK, it can be difficult to find your niche and determine what kind of property investor you want to become.
What kind of properties can you invest in in the UK, anyway? Let’s find out.
Property Types to Invest In
There are several different types of properties for you to invest in. To find out which one is the right for you, you need to answer a few questions:
- What kind of returns do you want?
- How much can you spend?
- The benefits of the property you are investing in.
Let’s take a look at some of the properties you can invest in:
Buy-to-let properties involve purchasing residential properties to rent out as homes, flats, or rooms. This is a low-priced, long-term option for beginner investors to generate income on a monthly basis and ensure good capital growth.
Buy-to-let properties are the most popular property investment option in the UK, as many people find it more convenient to rent rather than buy homes.
Off-plan buy-to-let properties are those that can be purchased before their construction has been completed. Investors can buy off-plan buy-to-let properties at a reduced market price, which can result in huge savings.
If you are ready to wait a while for your property to be completed, you will be able to benefit from monthly rental income returns and capital appreciation. Moreover, the capital growth can be quite impressive since the property can increase in value before the development has been completed.
Buy to Sell – Property Flipping
If you see yourself as a short-term investor, you can consider property flipping. In this type of investment, you can buy a property, upgrade or renovate it, and then sell it again at a higher price.
Investors can look for older, below-market properties for this scheme. In addition, buying bigger homes that have a garden or outdoor space has a higher demand in the UK these days and can result in greater returns for you.
This property only offers returns in capital growth since investors have to miss out on rental income. You also need to be experienced in the property market to ensure this investment succeeds.
Houses of multiple occupancy (HMOs) investment involves buying a house with multiple rooms and renting out each room to a different tenant. Since the rent is paid by multiple tenants, the overall return is higher than if you were being paid by a single tenant.
This can be a cost-effective option; however, you might need to buy the property with your own cash since it can be challenging to get a buy-to-let mortgage. You will get rental income from your tenants and capital appreciation when you decide to sell a property. However, keep in mind that it may be a bit difficult to sell a house that is turned into an HMO, so it is a good idea to do some refurbishments before you decide to sell it.
In addition, HMOs also come with more complex regulations like tax rules and property legislation. Talk to our property accountants at We Save Property Tax and find out about the ins and outs of investing in HMO.
Investment in holiday lets involves buying properties that can be rented out to people in the short-term by offering them a place to stay during a holiday. Depending on the location, holiday let property can offer you profitable returns. In addition, you may also be able to avail yourself of some tax benefits with this type of investment.
Returns include income paid by the short-term tenant and capital appreciation. However, rental income through the year can be very uncertain and variable, depending on the location and time.
Commercial property investment involves renting out your property to people running a business. This type of investment can benefit from long-term residents and can result in regular rental income.
In general, commercial property rent can result in higher returns than residential buy-to-let. They also result in capital appreciation if you decide to sell your property and it has increased in value.
Keep in mind, though, that it can be harder to sell a commercial property.
Benefitting From Tax Breaks
Buying a property can be beneficial for investors who are looking for tax incentives. With an increasing demand for residential and commercial buy-to-let properties, as well as extended tax breaks, investors can explore the best housing investment locations in the UK and offer affordable housing to renters of all ages.
Start Investing Today
Are you ready to become a property investor? At We Save Property Tax, we are a team of property landlords and accountants who can assist you invest in the right property that has the most potential of yielding high returns.
Talk to our property chartered accountants and estate agents to find out how we can meet your investment goals. Reach out to us at We save property Tax