Since 1988 house prices in the UK have gone up by a staggering 333%. This represents an average rise of 12.3% per year. Historically, property prices have been on a strong upward trend since the 1970’s. UK property investment is now seen by many as the best way to provide long term financial security. There are many ways that property can be used to generate additional income. If you own a property, you will have access to the potential of making money. No wonder property investment is seen as the best way of providing long term security.
Despite being among the most expensive countries in the world when it comes to real estate, the UK continues to attract a lot of investors. Below are the reasons why:
- The demand for housing in the UK continues to rise.
The UK is still experiencing a serious housing shortage. Unlike other European countries, the population here is expanding significantly and is predicted to reach 70 million by 2020, compared to 63.7 million today. All this means that demand for housing will continue to increase and drive up the price of property in the future.
In the UK, there will be an annual shortfall of 100,000 properties each year for the next decade, which could mean a 1 million shortfall by 2025. The Office of National Statistics predicts that this trend will continue unless something is done to fix it.
- High demand means high rental returns.
Several factors have led to rising rental demand, including an increase in immigration and more people living alone. The result? Landlords are finding it difficult to keep up with the increase in demand for their Buy-to-let properties, which have been rented out quickly, while rental income continues to rise.
The UK population is expected to reach 74 million in the next 20 years, and with that, demand for rental properties is growing. While some argue that this will be difficult to maintain due to an aging population, there’s still an opportunity for property investment as 1.13 million over-50s turn to renting.
- Enjoy low interest rates.
For the past six years, interest rates for UK property are at an all-time low, making borrowing cheaper than ever. Mortgage payments are currently the lowest they have been in six years and monthly rent is increasing. With landlords earning a lot more, it’s never been a better time to invest in the property market in the UK.
- Reductions in Stamp Duty Land Tax (SDLT).
The UK government has announced a reduction in Stamp Duty Land Tax (SDLT) on all property purchases made until October 1st 2021. This is phase two of the holiday, which means SDLT is now payable on all properties up to £250,000.
With the extension of this tax break, landlords have an incredible opportunity to invest in their properties. This is even more true for foreign investors, who can currently find value through the reduction of their taxes and can also benefit from the value of foreign exchange.
- Current living trends direct to renting – for the long-term.
In a report released by The Resolution Foundation, it states that four out of ten millennials still live in privately rented accommodation by the time they reach the age of 30, while almost a third will be renting for most, if not all of their life.
Because of the increased demand for renting space, and the uncertainty in the market, it is expected that similar ‘continental-style’ (long-term renting) rules will be introduced since they offer more flexibility and security for both landlord and tenant alike.
References:
https://www.theempirepropertygroup.co.uk/why-invest-in-property-in-the-uk/
https://sevencapital.com/uk-property-investment/why-invest-in-uk-property/