As Demand Continues to Outstrip Supply, Rental Prices Could Skyrocket

Increased Rental Demand Could Mean Rent Will Rise

According to the latest report from the Royal Institution of Chartered Surveyors (RICS), the number of active renters searching for properties continues to outstrip supply. With a predicted 15% increase in rental prices by 2023, RICS detail that rental supply has seen a consistent fall for nearly two years, even with the increase in demand for rental properties.

Last year saw changes to mortgage tax reliefs for landlords which, by 2020 will be restricted massively, impacting small-scale landlords heavily.  

RICS Policy Manager, Abdul Choudhry casts his opinion:

“Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home stamp duty, and failing to stimulate the corporate build-to-rent market, has understandably had an impact on supply. 

“Ultimately, the government must consider the impact of its policies, and if the wish is to move away from the private rented sector, it must provide a suitable alternative.” 

As Demand Continues to Outstrip Supply, Rental Prices Could Skyrocket Aspen Woolf

The survey goes on to mention that the South West of England, especially in areas such as Exeter, will see the highest increase in rents. Other regions experiencing ‘mini-booms’ are Edinburgh, Birmingham and commuter belt towns. 

Birmingham is a particularly interesting example; rental supply is down and there are presently 5% fewer homes to let than there were two years previously, according to the Countrywide rental index.

The change began in April 2016 when a stamp duty surcharge for additional properties was introduced. Although rental supply has continued to be strong in the North of England, the South has seen a decrease in supply, with the North seeing 19% more properties available to rent than 3 years ago, whereas the South saw a 16% decrease in available rental properties.

This decrease in available properties to rent in the South may, in part be due to the result of longer tenancies as more and more tenants decide to settle down and take advantage of their locality.  

Manchester and Birmingham are still seeing rental under supply as demand escalates rapidly.

Birmingham is to expect a population rise of 171,000 to a total 1.3 million people by 2039 while experts predict that the city will need a further 100,000 homes over the next two decades.

As cities such as Birmingham see their infrastructure improve and large commercial investment in the city, this equates to a large number of tenants scoping out rental opportunities to take advantage of. 

As Demand Continues to Outstrip Supply, Rental Prices Could Skyrocket Aspen Woolf

Another factor that is increasing tenant demand in the area is the arrival of HS2, the high-speed railway connecting areas such as the West Midlands to the capital in a fraction of previous journey times. What is now a one hour and 21-minute journey, once the HS2 is introduced, will be slashed to 49 minutes, making it a viable commute. This gives tenants the attractive option of the high salaries enjoyed in the South, coupled with the affordable rent of the Midlands.

The number of empty homes in the UK is also contributing to rental increase. Standing at an estimated property value of £50bn, empty properties make up a large proportion of the UK’s property market, with the number rising for the first time in 10 years.

The number of empty homes in the UK now stands at around 205,293, an increase of 2.6% compared to the previous year, according to a report by HouseSimple.

Locations include London with 20,237 empty properties, Birmingham with 4,280, Bradford comes in at 3,931 and Liverpool has 3,889 vacant homes.

There may be no particular reason for this trend, although the aptly named ‘buy-to-leave’ landlords are considered to be an influential element. It goes like this: a landlord buys a property, leaving it vacant while waiting for the value to go up before selling. Local councils are taking steps to curb these cases by levying higher rates of council tax on properties that sit empty for extended periods of time. 

Government plans to ease rules of making use of existing land that already has property on it, for example converting empty shops into flats should help relieve the issue with an aim of making better use of brownfield sites and building upwards instead of outwards. New planning rules are making this easier to happen, affording minimum densities around transport hubs and city centres so that a greater number of properties can be developed in places with the highest demand.

Kent Reliance, the private banking company, forecast that the rental market will carry on to professionalise as it connects the supply gap, developing the service between landlords and tenants as less experienced landlords exit the market. 

To date, 31% of landlords now make a full-time living from investing in properties, compared to three years ago when the figure was 26%. 

With a greater number of landlords now functioning as a business, purchasing properties as a limited company, there is greater opportunity for them to offset their mortgage interest costs against tax. 

The data from Kent Reliance demonstrates that 72% of mortgage applications came from a limited company, more than twice the rate seen a couple of years ago.

Andy Golding, CEO of Kent Reliance states:

“A housing market with dwindling supply of rental accommodation yet growing demand would, without a significant rise in affordable housing, provide the worst of all worlds for tenants: higher rents, with less choice and security, hampering their ability to save to buy a home.”

A 15% rise in rents for tenants is pushing forward essential economic growth in areas across the UK plus a boost in regeneration to establish more desirable locations. With rising rental yields and steady capital growth, the market is in a strong position.

Aspen Woolf is an award-winning property investment company established in 2005 with offices in the UK and the UAE. Experts in wealth building opportunities for investors of all levels, we believe that through integrity, experience and quality of service we stand out from the crowd. Be it for buy-to-let investments, cash buying of property or rentals, we are here to guide you every step of the way.

 

House and Rental Prices on the Rise

As the latest figures from HM Land Registry reveal, the average UK house price now stands at £230,292 while the average monthly rent is £959. Let’s take a look at the history of the UK property buying and rental market, the areas with the highest increase and the reason why house and rental prices continue to be on the rise.

A brief history of house price fluctuation:

  • 2007 saw an increase of 11%
  • 2009 saw a decrease of 17.4%
  • 2011 showed prices dropping by 0.8%
  • 2015 showed a steady increase up to 8%
  • As of July 2019, property prices are showing an average increase of 2.3%

So, why do house prices go up?

When it comes to inflation of house prices, there are a few factors to consider:

Supply and demand

In simple terms, when demand for houses increase, prices follow suit. When demand falls, so do house prices. Several factors can influence supply and demand, these include a lack of available land, lower government investment or regulations against building on green belt areas.

Economic growth

An increase in employment and in turn, a growth in salary will enable more people to invest in housing and therefore increase the demand.

Demographics

Levels of migration to certain areas in the UK and an increase in population as more people flee the capital’s soaring and unattainable housing prices increase demand in lower-cost areas, forcing house prices up.

Location, location, location

Homes that are situated in a city with a solid infrastructure, including transport links and convenient geographical location within the UK play a strong part in pushing housing prices up.

Financialisation

Demand for housing is only limited by a bank’s decision on offering a mortgage. As long banks are still lending, demand will continue to rise, as will prices. This is what we call ‘Financialisation’ of the housing market.

The Midlands: A Case Study

The East Midlands – home to cities such as Nottingham, Leicester, Lincoln, Derby, Northampton, Mansfield and Chesterfield has seen the highest growth, with house prices increasing on average by 3.2% in 2019. Closely followed by the West Midlands, with cities including Birmingham, Coventry, Wolverhampton and Stoke-on-Trent has seen an overall increase of 2.6% up until July 2019. Due to an employment boom in the Midlands, the area has seen a trend of more home buyers and an increase in average salary which have contributed to the increase in housing prices in the area. The growing population is seen as a key indicator for house price increase in the area. Birmingham is regarded as one of the youngest cities in Europe with 40% of the population being under 25. The five universities in Birmingham are also a contributing factor, having a high level of retention of graduates which is likely to further increase demand of the city’s housing market.

Rentals: Going, going…. going up

A 1% increase in rental prices across the UK was slightly below the prediction from the Royal Institution of Chartered Surveyors (Rics) who, in July 2018 anticipated a 2% increase. Rental prices are generally more stable than house prices, due to a few contributing factors; tenants taking out longer contracts, rent not being affected by interest rates plus more people are buying houses for investment. 

Rental Prices – a retrospective:

  • 2014 saw an increase of 1.5%
  • 2015 saw a further increase of 2.5%
  • 2016 saw a slight decrease of 2.2%
  • 2017 saw a decrease of 1.5%
  • 2018 rent prices stayed steady at 1.5%
  • As of July 2019, rental prices are showing an average increase of 1%

Factors Influencing Rental Increase:

Supply and demand

As with housing prices, when demand increases as does rent.

Local wage levels

Local wage levels determine the feasible maximum the average person can afford to pay in rent and still be able to cover household outgoings such as bills. An example: if the average salary in a city is £1,500 per month, you’re far less likely to be able to find someone willing to fork out £1,200 for a one bedroom flat. On the flipside, if the average wage is around £3,000 per month, the option is more viable.

Location

Geographic factors such as how close you are to a major town, restaurants, parks, schools and shopping malls can all influence the price of your rent.

Economic growth

Investment, employment opportunities and physical capital in an area you may be considering to rent in could also push up the price.

Upgrades

Kitchens and bathrooms are the key factors in elevating rental price, as if these are not up to standard for potential renters, this could be a real deal breaker. On the other hand, if these rooms are of a high standard, this will raise the rental price of the property.

House and Rental Prices on the Rise Aspen Woolf

Preston: A Case Study

Preston – a city that can boast that its people built the first ever motorway, the Preston bypass which opened in 1958, is also home to the highest rental increase in the UK. In Preston, Lancashire rents have risen by 8%, raising the average rent to £378 per month, closely followed by York and Stockport which showed an increase of 7%. Preston has seen quite a turn around with it’s government grant slashed from £30m to £18m in 2013 but with Preston being an ideal commuter option for working in either Liverpool or Manchester, this also determines the inflation seen in the Preston rental market.

Most housing associations cite that rental prices that eat up more than 30% of an individual’s income as unaffordable. For example, an annual gross income of £24,800 would be required for the rental of an average one bedroom flat in England. In Scotland £20,700 is required and in Wales the figure stands at £17,600.  With rental prices being unaffordable in two-thirds of the UK for most young people, this has seen house shares becoming a more practical option.

Aspen Woolf is an award-winning property investment company established in 2005 with offices in the UK and the UAE. Experts in wealth building opportunities for investors of all levels, we believe that through integrity, experience and quality of service we stand out from the crowd. Be it for buy-to-let investments, cash buying of property or rentals, we are here to guide you every step of the way.

 

Selective Licensing

Selective licensing buy to let property investment

There is no doubt that landlords have had to put up with a good few changes in the buy to let market over the last few years. There are plenty of anecdotes on the internet citing the problems this is causing.

Landlords may complain about not making good returns but the truth is that BTL is still a profitable and highly efficient way to invest in property. It delivers profits from rising house prices as well as from rental income despite increases in stamp duty and new fee regulations coming into effect.

One increasing issue that you’ll find discussed in buy to let forums is the number of councils that are now introducing selective licensing, with 1 out of 4 boroughs currently running schemes.

Here’s our take on selective licensing and what it means for your buy to let property investments. It doesn’t have to mean you are left out of pocket, especially if you choose your investment areas wisely.

What is Selective Licensing?

Essentially, it means you need to apply to the local council for a licence to be a landlord. To do this, you need to prove that you are a suitable person and show that the property you have to rent is actually fit to be lived in.

Identifying the areas that have introduced selective licensing can be a little confusing and it’s easy to get caught out if you don’t have the right information or advice. Even within different councils or boroughs, it’s not utilised universally. The reasons for bringing in selective licensing in a particular areas can depend on a couple of factors including that there is a low demand for housing or because there have been instances of anti-social behaviour which councils feel landlords contribute to.

Selective licensing doesn’t apply to all landlords either. If you own a house, you are a private landlord and are in a designated area you will need to apply. If you are a housing association, own a holiday let, are a university with its own accommodation or have business premises that are occupied by members of your family, you don’t need to apply.

You may, of course, find that your property is suddenly in an area that the local council has designated with selective licensing, even after operating as a reputable business for a number of years. In this case, you will still need to apply for a license.

The upshot is that the rules can vary for different areas so it’s worth checking whether you fall under the conditions that mean you need to get a license.

The Benefits of Selective Licensing

While it all seems a little confusing, the idea of selective licensing is to help improve standards. It’s not there to punish landlords, although it can appear to be just that. If you already run a HMO where licensing is required, you won’t be particularly phased by this change.

Councils cannot introduce selective licensing for just any reason. The primary one is that the area is suffering from persistent anti-social activity and the local landlords are failing to take action to control it. The benefit here is that it is designed to improve the level of rental properties in the local area which can also benefit landlords.

Selective Licensing Aspen Woolf

For councils, it can be about ensuring that landlords provide adequate facilities for their tenants. There are plenty of horror stories in the media where disreputable landlords have not only left their properties in states of disrepair but put the health of residents at risk as well. If you’re a reputable landlord too, ensuring these bad eggs are weeded out of the system can be beneficial for both you and potential tenants. Applying for a license means that you need to have things like your gas safety certificate, smoke alarms and electrical equipment and wiring that is in good order.

If you are in an area where selective licensing is present, your application lasts for 5 years before you need to think about renewing it.

The Disadvantages of Selective Licensing

Most landlords will tell you that the big disadvantage of selective licensing is the cost. This can vary from region to region as can the areas that are using the licensing. In regions like London, you may be paying well over £1,000 per property while in Liverpool you could be looking at £400. If you are in a selective licensing area and fail to apply and register your property with the local council, you could also be liable to a fine of up to £30,000.

Head onto social media and you’ll find a lot of landlords who are unhappy that their profit margins are being further squeezed by the cost of applying for selective licensing. Councils have been accused of employing money making schemes and that they are making landlords directly responsible for areas where anti-social behaviour exists.  

How to Avoid Selective Licensing

While these are all valid arguments, it’s unlikely that selective licensing is going to disappear anytime soon and may well increase. Because of its nature, however, it doesn’t have to be the drain on resources that some landlords have found. Choose the right locations and make your investments wisely and it’s likely you won’t have to worry about selective licensing at all, at least not for the immediate future.

It pays to work with a property agent that knows what they are talking about when it comes to selective licensing. At Aspen Woolf, we handle a wide range of properties from London and Manchester to Luton and Leeds and understand the licensing requirements in each city.

The truth is that property investment, especially in the buy to let market, is still highly profitable. First of all, levels of rentals and tenancies are at an all-time high and people are always looking for great accommodation in decent areas. If you make good choices on which property you invest in and attract the right tenants, combined with the rising value of your home, there is still plenty of profit to be made.

If you’d like to find out how Aspen Woolf can help with your future BTL property purchase, contact our expert team today.

Property Downsizing: Opportunities for Investors

Property downsizing over 65s moving to smaller home

The housing market, over the last decade has been through a huge number of changes. From the financial crisis that put property prices at rock bottom to prices clawing their way back up to where they are now. Along with this, there is a shortage of properties and the demand cannot be met and that has caused investors to shift their focus onto buy-to-let properties.

In amongst all of this, there are those who are looking to downsize. Gone are the days when homeowners would own the same property for their whole life because the over 65s are now taking a financially-driven approach to housing and where they choose to spend the later stages of their life. Simply put, the over 65s are now actively planning for the future and their finances and so, more and more are looking to downsize.

Why are the over 65s downsizing?

As people get older, they become less mobile and less able to maintain a large property while there could be access problems in the future and so, downsizing means that they look to sell their current property and move into a smaller property. The whole idea makes perfect sense. Homeowners over the age of 65, sell their property, they move into a smaller property that is suitable for them as they grow old while releasing equity at the same time.

However, it is not as simple as this because there are now more over-65s looking to downsize than ever before. At one end of the market, you have first-time buyers who cannot get onto the property ladder because of prices and a lack of supply while at the other end of the market you have those looking to downsize yet facing a similar problem – a lack of options.

Property Downsizing: Opportunities for Investors Aspen Woolf

What does this mean for those who are downsizing?

A lack of options and sought after accommodation has meant that the market is saturated, effectively meaning that the supply does not meet the demand of those who want to purchase a property that they can call their home throughout the latter years of their life. As the market has adjusted to this increase in demand, it has meant that property that would be considered desirable to those over 65 has increased in value. Therefore, for those who are releasing equity from their current property, they are reluctant to invest it back into property that has been priced in a way that takes advantage of the demand and lack of supply. So, for those who are looking to downsize, it has meant that they need to consider looking at alternative options which includes rental property and this is where buy to let investment opportunities become a possibility for investors.

When people over the age of 65 make the decision to downsize, they perhaps might feel as though time is not on their side when it comes to waiting for the right property to come along. As time passes by, it could result in them becoming unable to move home with them effectively missing their chance and so, ideally they want to move as soon as possible. In this case, they then find that they have no other option other than to consider rental properties as a serious option.

Opportunities for Investors

There are many properties out there that are suitable for those who are downsizing but make great opportunities for investors who are looking to take advantage of the lack of supply in property on the open market. These buy to let investment opportunities come in the form of purpose-built or converted residential properties, that make it possible for investors to offer rental properties to those looking to downsize. As a result, investors offer a feasible solution while also being able to take advantage of excellent returns at the same time.

Due to the high occupancy rates, it has meant that rental yields of as much as 10% can be achieved in some areas. Investors should focus on those specific areas where there are increased numbers of people who are aged 65 and over. There should also be a focus on areas such as the South as well as many of the popular areas in the North such as Liverpool, Bradford, Leeds and Manchester.

Property Downsizing: Opportunities for Investors Aspen Woolf

Investors have to consider that many of those who are looking to downsize still want to remain close to those areas that they are familiar with, while family will also play a role in the decision that they make. Despite this, this is a growing rental market that is enabling investors to capitalise on an area of the market that specifically appeals to those who are over 65.

Properties that are specifically designed with special features such as lifts, parking, wider doorways and are also located near to main roads and public transport should be a serious consideration for investors. Along with this, the over 65s are even considering facilities such as an on-site chef, spa facilities and social events held on-site because this is something that can provide them with all that they require as they grow older.

When investors find the correct buy-to-let investment that appeals to those who are downsizing, it means that they can expect to see returns that are significantly higher than other areas of the buy-to-let market. These buy to let investment opportunities offer excellent rental yields but also the chance of an increase in equity as the property increases in value. With rental yields of anything between 6-10% as well as yields that are assured for anything up to 3-5 years, it seems as though investors have a clear opportunity to invest in a thriving and growing market that is almost guaranteed to offer them a return, regardless of whether that is in the form of rental yields or equity.

As the number of people choosing to downsize increases, it means that more opportunities will present themselves to investors. This will enable them to take advantage of the residential properties that are currently available that not only cater to the needs of the over 65s but also offer an exceptional return on investment.

 

Is Manchester Buy To Let Property A Good Investment?

Manchester city buildings skyline

Manchester is a key economic area and one of the most high-profile cities in Europe. The city is home to the UK’s second-largest city and regional economy and is also a key area of the Northern Powerhouse. The city has benefitted from the devolution of power and is able to choose some of its own budgets and spending. This has made it free to develop policies designed to attract investment from overseas.

Constant large-scale investment

The city is also known for its thriving media scene, musical history and footballing heritage. Investment continues to transform the city for the better, with new facilities springing up all the time and its skyline constantly evolving. The European Structural Funds programme delivered approximately £366 million to the city, enabling it to create jobs, invest in businesses and fund education. The city is also regarded as one of Europe’s most impressive tech hubs and is noted for its exceptional transport links, leisure facilities and affordable properties, with growing numbers of people relocating from south-east England and overseas to take advantage of its many benefits.

Key growth generators

One of the main generators of recent growth is the Greater Manchester City Deal. This fund is largely centred upon what’s known as an ‘earn back’ scheme. This has enabled the region to recoup extra tax revenue from gross value added (GVA) increases from infrastructure development. The deal has created an apprenticeship and skills hub, raised the number of opportunities offered by the Business Growth Hub and enabled the city to attract further inward investment. It has also established a housing fund enabling further property developments and made billions available for investment. The impact of the scheme is predicted to deliver £1 billion each year to the city by 2025. Money from the Regional Growth Fund (RGF) has helped create almost 6,000 jobs, despite the original target being just 3,700. The Manchester Enterprise Zone, The Corridor, One St. Peter’s Square and Manchester Central also provide further clear evidence of the region’s continued extraordinary growth.

Is Manchester Buy To Let Property A Good Investment? Aspen Woolf

Career and leisure opportunities

The City of Manchester is generally regarded as the heart of the North West. It offers outstanding career opportunities in areas like law and finance, public service and the media. It is also home to 100,000 students and frequently plays host to some of the biggest and most prestigious names in entertainment. Amazon is currently setting up a base in the city, whilst a new GCHQ office is also set to open soon.

Other key attractions

The city’s colleges and universities have produced 25 Nobel Prize winners, with the Manchester Arena being the largest indoor concert venue in Europe. The city is also home to a huge range of cinemas, art galleries, boutiques and independent shops and is within a short drive of some of the UK’s most picturesque scenery, including the Peak District, Lake District and Yorkshire Dales. Manchester Airport was named the UK’s best at the 2015 Globe Travel Awards, with the city producing 3.5% of the nation’s GVA. Its ever-evolving economy has enabled the city to weather the storm even during some of the most troubled economic times.

Greater rental yields

Rents are also on the rise due to the growing demand for accommodation across the city. In fact, rental costs had soared by 30% over a four-year period, according to research carried out by the Manchester Evening News. The Manchester City Council area was the joint-most expensive area to rent a Greater Manchester home in between Oct 2017-Sept 2018, with figures standing at £775 per month on average, with Trafford sharing first place.

Residential and commercial property expansion

More and more property investors priced out of areas like London are now looking to Manchester to help them achieve their targets. New facilities including bars, restaurants, shops and leisure venues are constantly appearing on the streets of Manchester, which is also eclipsing many of its big-name rivals when it comes to house price growth. Research undertaken by Hometrack found that prices had grown by 6.6% on average year-on-year. The average price for a Manchester property stood at £168,900.

Is Manchester Buy To Let Property A Good Investment? Aspen Woolf

Growth outside the city

Growth is also being seen in other areas of Greater Manchester miles away from the city. Bury was showing the second quickest level of growth at 20%, with Salford rents increasing by 18%. Bolton has a rise of 17%, whilst Stockport experienced a 13% rise. Investors drawn to the area don’t have to miss out if they are unable to take advantage of opportunities in the Manchester City Council area. Greater Manchester is home to some 2.5 million residents, with a large number of these seeing substantial house price growth. Many of these areas offer quick and easy access to the city centre, making them ideal for commuters in rented properties. Each of the ten Greater Manchester boroughs have their own decision-making powers and is part of the Greater Manchester Combined Authority led by mayor Andy Burnham.

More buy-to-let options

Investors seeking buy-to-let property opportunities in the M1 postal area can expect to enjoy yields of around 5%. Suburbs just a few miles outside of the city centre like Levenshulme are home to a large number of affordable buy-to-let properties offering yields of around 5-6%. Yields of approximately 4% are on offer when you buy in the more sought-after, leafy locations of Chorlton and Didsbury. Castlefield and New Islington are a short walk away from the city centre and play host to state-of-the-art luxury accommodation. Student-friendly areas including Fallowfield and Rusholme offer quick links to the big Oxford Road universities. Conventional M14 homes can deliver yields of more than 7%, but you could see a return of at least 12% by investing in a house of multiple occupancy (HMO). Ensure you do your research, and your buy-to-let portfolio could bring you fantastic rewards; check out our tips for investing in the buy to let market whether you’re an old hand or just starting out.

If you are looking for new areas to invest in property and are seeking exciting locations that are well and truly on the rise, Manchester and its surrounding towns and cities may well deliver the generous yields that you desire. For our top picks for investment in Manchester, visit this page.

Property Investment Strategies

buy to let buy to sell property investment strategies

Effectively, there are two simple forms of property investment strategy and these are to purchase a property with the sole aim of selling it on to make a profit, or to purchase a property to rent it out and make an income that way.

However, as simple as that sounds, there is more to it because there are a number of sub-strategies that can be used depending on the investor and their goals. So, what strategies are available?

Buy-to-Let

When purchasing a property to rent, there are two ways to make money and they are to charge rent that covers more than the cost of expenses, or to allow the property to increase in value over time, covering costs and expenses.

Single Lets

This is what many would consider to be your standard buy-to-let as it involves renting out a property to an individual or a family. It is an easy option, and one that requires you to calculate the costs in relation to the rent, ensuring that the rent is in excess of the costs.

House in Multiple Occupation (HMO)

This involves the rooms within a property being rented out individually. This can often generate a large income than if the property was rented out as a single property. It is worth remembering that there are higher costs associated with an HMO such as wear and tear as well as the management aspect, which is also more labour intensive with HMOs.

Student Lets

Student lets are a form of HMO although the student market is very different from that of other markets. It is a more predictable market as students are only there for a certain time of year and the contract will be taken out jointly. If a student leaves, the costs get spread out among the rest of the residents in the home. Knight Frank also predict that 2019 will be a big year for the Purpose Built Student Accommodation sector.

Housing Benefit Tenants

This involves renting a property out to those who have their rent paid for by a local authority. What this means for investors is that they know what to charge and it can sometimes be more than the private rental market. There is the potential for difficult tenants and as the rent is passed to the tenant, it can often not be paid to the landlord.

Property Investment Strategies Aspen Woolf

Holiday Property Lets

This involves renting out a property on a short term basis to people on holiday.  This is a strategy that can return significant yields and profits, especially if you have a property in a sought after, prime location such as a cottage by the sea. This takes an active management approach and there are things such as cleaning the property and maintenance that have to be taken care of.

To learn more, why not have a look at our Buy-To-Let Tips? Or, get in touch with our property investment specialists at Aspen Woolf to discuss adding to or creating your portfolio!

Buy-to-sell

Also known as flipping, this is the purchase of a property where there is no income but instead the property is sold on at a higher price than it was purchased for. This can be a strategy that can yield good returns in a short space of time and they can often be higher than the returns seen with a buy-to-let property. However, one thing to consider is that the property will not generate an income while you own it. Therefore, you are only making money once you sell the property on. The key here is to purchase the property at the right price, and try to ensure that all work remains in budget and doesn’t eat into your margins.

Commercial Property

This is a lot different to residential property as it is a market that behaves independently and is very much reliant on the economy and the success of tenants. While residential property relies on and thrives on demand from people needing somewhere to live, commercial property is different.

A commercial property will only be suitable for certain businesses and that means that once a property becomes vacant, it can remain vacant for some time. Despite this, once you have a tenant, the leases can be put in place for years and they will also be liable for repairing and insuring the property. So, if you have a reliable tenant, then it can mean that you can take a hands-off approach for some time.

Property Investment Strategies Aspen Woolf

Rent-to-Rent

This essentially involves renting a property from a landlord before renting it out to a tenant. It is a form of sub-letting but the aim is to charge a higher rent to the sub-tenant than you are paying your landlord. This is often something that is seen with an HMO strategy. So, you could rent an entire property from a landlord and then rent out each room in the same way as you would in an HMO. This will enable you to generate rent per room which will more than likely bring you in more income than what you are paying to rent the entire property.

You can find landlords who are open to renting properties at a discount, particularly if you can offer some form of guarantee that they will receive an income and no hassle. So, you could then choose to pay the landlord a lower rent as agreed. It is then possible to re-rent the property at the going rate of the market.

Lease Options

In a similar way to rent-to-rent, lease option provides the investor with the chance to purchase the property at a price for a fixed amount of time.

So, an investor would agree to take an option where they can buy the property at a fixed price at any time during the next three years. However, they can then take over the owner’s commitments as well as expenses and rent the property out. So, investors can then earn a rental income on the property while having the option to purchase it at some point in the future for a slightly higher price.

This is one strategy that has been seen in the past where properties were in negative equity and the owners could not sell their property at a value that would cover the remaining mortgage. So, by agreeing a future price, it enables them to forget about the property in the short term. However, this is an option that is very much market dependent.