Why Invest Property

Investing in to property has many benefits and is generally thought of as a good idea. It is essential that you prepare yourself with a clear understanding of how it all works before investing in to any property. This guide is to give you a better understanding on housing demand in the UK, some of the potential rewards of property investment, and the due diligence you should undertake before investing.

Housing Demand

The House of Lords Economic Affairs Committee has estimated that the UK needs to be building at least 300,000 new houses a year in order to keep up with demand. Unless demand is met the prices of houses will continue to rise and one issue which will be ongoing is that fact that an average price of a house is ten times more than the average salary so will be hard for young people to get on to the property ladder, which means more rented properties.

In order to fight against the house shortages in the UK, independent house builders or developers can play a vital role. This is because they know their own markets and can make good decisions on the balance between supply and demand. They can also make a judgement on what kind of housing is needed and in what area. Not only this but independent developers tend to build developments with better designs, materials, and quality. The Government supports this theory and are supporting the smaller developers by providing a £525m Builders Finance Fund which will be used to tackle the demand for housing.

Looking to the future there will be more house building activity in the UK but even if the targets are met, this is unlikely to do little more than put a slight hold on the rate of house price increases. As the demand is so high for residential property it will continue to be a good investment with good returns. In the past London house prices were climbing extremely quickly when compared to the rest of the UK where houses were affordable. Savils the property experts believe that the North will outperform London and the rest of the country, meaning this is where to invest your money.

The Rewards

Property has always been a popular form of investment because it is easy to understand, and anyone can be a property investor expert. If you do your research, have a method of controlling cash flow, and a strong strategy you can do it. Unlike other investments with complicated terminology, it is easy to get your head around. The strategies are quite straight forward with the most important things to understand are capital growth, cash flow, and yields.

You are in control when investing in to property, but others do the work for you. You can choose where to buy, how to buy, and when to sell. Unlike other investments, property gives you many options in terms of growing the value and income on your property.

When you look at income, rental income pays better dividends. Generally, you can make around 5-7% gross rental yield, of course you can decide on the rent you want to charge but always be in line with the market. Remember that tenants are paying your mortgage while you watch your investment grow in value.

Property is always in demand, people will always need a place to live even during difficult times. Even when the market declines it usually bounces back quickly. When looking at capital growth, property prices have grown 5-6% each year on average. Even with the credit crunch and Brexit it is predicted that houses prices will still grow at 3-5% year on year.

Due Diligence

When investing in to property it is extremely important to find the right developer. They must have a good track record of building similar developments to successful completion. They must be able to identify and acquire suitable sites by choosing locations where demand is likely to be high. They also must be familiar with and are able to negotiate the complications and demands of the planning process.

As an investor you should ask yourself with questions such as; is the developer proposing the right mix of homes? Does the project meet with demand? What is the completion? Does the development have a USP making is easier to sell and rent out? Is there enough room for growth in the market? These questions should be answered before investing with any developer.

You should not invest in to any property or product unless you fully understand the pros and cons of your investment. If you are in any doubt, you should seek professional advice and get the help of solicitors and brokers before making these investment decisions.

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