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UK Property Investment Pros & Cons

UK property investment has long been seen as a lucrative one, with many investors choosing to put their money in bricks and mortar as a long term retirement plan rather than traditional, riskier investments such as shares. 

Even with changes to tax laws in the UK, there are still good yields to be gained from investing in buy to let property. Overseas property investment is also another option for your investment portfolio, and with the effects of Brexit (whether that’s a soft-boiled/hard-boiled or a no-deal scrambled mess), choosing a location outside of the UK could be a good decision.  

In this article we’ll take a good look at the pros & cons property investment holds, so you can decide for yourself whether investing in property is for you, or not.

What are the UK Property Investment Pros & Cons?

The UK for most people is the ideal place for investments. It is a stable economy, with strong legal and financial systems. Property investment in the UK can be a great way to build wealth and create a steady income stream. The UK has a relatively strong and stable economy, which means that there is a low risk of losing your money. Property values tend to increase over time, so you can expect to see your investment grow. On the other hand, there are some drawbacks to investing in the UK property market that you should also be aware of.

So, what are the pros and cons of UK property investment for our investors who reside in the UK? Read on to find out.

Benefits of an Investment Property In the UK

benefits of an investment property in the uk1. Property Capital Appreciation

London normally takes the limelight when it comes to the United Kingdom. In fact, 90% of Asian investors choose a property in London. This international appeal has seen prices continue to rise in the capital and beyond. 

In the next couple of years, properties are expected to rise by about 56%. London is expected to bring that average down. Over the past year, prices of houses in the Midlands have risen by an all-time high. The properties that are in the North East, according to the latest housing price forecasts, are set to rise by 21.5% by 2024.

This is particularly true for the cities that are considered to be economic hubs such as Manchester, Liverpool and Leeds.

Find out more about the cities found in the North: 

These have been producing very high yields in the recent past. Other lucrative cities to consider are Salford where the yield inclusive of rental and capital appreciation has been at a record high of 32.3%, and Leeds

In the UK, the property market is gaining some form of balance because investors are now looking for the best yields all over the country. Other factors that investors are looking into are the market entry points as well as house price growth and this has led to the spreading of investment to other cities. However, Oxford and London still remain the most expensive cities in the UK to live in.

For a more cost-effective investment, Manchester is becoming increasingly popular. The city has seen a steady house price rise over the past few years and the rental yields are also on the rise.

As a result, Manchester is becoming an attractive option for those looking to invest in the UK property market. Birmingham is another city that has seen a steady rise in house prices and rental yields. It is also one of the most populous cities in the UK, creating an ideal opportunity for investors to benefit from both capital appreciation and rental income.

2. Passive Income from Property Investment

The demand for housing in the UK is becoming higher than the supply at an alarming rate. Housing listings within the country are at an all-time low. This housing crisis is also contributing to growing house prices.  

This has made property investment an attractive option for investors looking to obtain a passive income. Property investments are considered to be a relatively safe and secure source of revenue, with the potential for high returns.

Would-be first-time buyers are being priced out of the market, with many 18 to 34-year-olds viewing renting as their only realistic option. Due to the pressure mounted on the government by different organizations, the government has vowed to build 1 million homes within the next two years. Opening up to foreign investment by the local governments will help meet the high demand. This is therefore an opportune time to invest and secure assets within the UK for both UK residents and foreign investors alike.

With the right advice and guidance, property investors can create a steady stream of income from their investments.

If you’re interested in adding a buy-to-let property to your portfolio, these are the Buy-to-Let Hotspots to look out for.

3. Major UK Regeneration Projects Affecting Price Growth & Demanduk regeneration projects and property prices

Managing director of StripeHomes, James Forrester, says: “Any level of regeneration will always have a positive impact on the surrounding property market and on average, house prices tend to climb by around 3.6%.”

Areas said to benefit the most from the UK Regeneration scheme are:

  • East Midlands
  • North West
  • West Midlands

Most prominent regeneration projects you should keep an eye on:

Northern Powerhouse

The Northern Powerhouse Partnership, set up in 2016 with the objective of increasing the impact and contribution of the North of England to the UK economy, have already pushed ahead with a number of initiatives such as the High Speed 2 rail line and Square Kilometer Array. 

The undertaking of these projects will result in the creation of jobs as well as the spurring of economic growth. With the improving infrastructure, there is an increase in demand for housing and business spaces. It would be a good time for individuals to take advantage of the prevailing economic conditions and invest in property. With the Northern Powerhouse Partnership’s initiatives, property investments can be expected to bring great returns. 

High Speed 2 Rail

The railway line is in the UK and it links Birmingham, East Midlands and London as well as Leeds and Manchester. This will be the second railway line of its kind in the country and will cost a whopping £55.7bn. The concept of the rail line is to connect all the major cities and served by one city center station. 

The network will enhance the travel between different major cities by reducing the time required to move from one place to the other. The railway line will bring continued growth as well as open new opportunities in the country. There is an anticipated growth of £3m for each region making it an essential project to the growth of the country as a whole. Many businesses are already looking to take themselves out of London (for example, HSBC announced they would move 1000 jobs to Birmingham from London). The completion date for HS2 is still not set in stone but you can take advantage of this knowledge now to make a sound investment in the North that will certainly see growth once the line is in operation.

And if you’d like to learn more about these projects, this article is for you.

4. Property Investment Helps Fight Inflation

Property investment has often been considered a good option as it provides a hedge against inflation. Unlike most other forms of investment that are affected by inflation, property tends to appreciate at a faster rate than the inflation rate. This is because investors view real estate as a safe investment during times of uncertainty.

Property investments are generally less volatile than other investments and tend to remain more stable i

n times of economic uncertainty. This makes it easier for investors to stay invested for the long-term and not worry about short-term fluctuations in price. Additionally, there are many different types of property investments available that cater to different risk levels. So there is something for everyone.

Disadvantages of Property Investment

disadvantages of property investment

1. Buy To Let Tax

It is essential that you take proper financial advice from whomever deals with your taxes to ensure your investments are efficient.

Having said that, here are a few things you should keep in mind about buy-to-let tax in 2022:

  1. Buy-to-let income tax rates have changed. The income tax personal allowance has increased by £70, so if you earn between £12,571 – £50,270 you will have to pay 20% tax on buy-to-let income. If your income is £50,271 or over, you’ll be paying 40% and 45% on £150,000 or more in earnings.
  2. Capital Gains Tax for property investors has been extended. Compared to the 30 days landlords had previously, now they’ll have 60 days to report and pay CGT after a sale of a property.
  3. VAT-registered landlords with a  VAT threshold below £85,000 will need digital records and an accounting software to file tax returns

Mortgage interest is no longer tax deductible for buy-to-let landlords in 2023.

The rules surrounding the taxation of buy-to-let properties are constantly changing. It is important to keep up to date with the latest government regulations and ensure that you are compliant. Additionally, it is a good idea to speak to a professional who can provide you with tailored advice based on your individual circumstances. 

2. Ongoing Risk and Personal  Investment

Investing in property can be an ongoing financial liability. As a buy to let landlord, for example, there are issues such as property maintenance, administration and advertising between each tenant. As well as the risk of having a vacant property. These issues can be combated by taking appropriate advice and using an agent to assist you.

However, it is important to remember that even with the right advice and assistance, there is always a risk of not being able to get a tenant or having to reduce rent. It is therefore vital that you consider the overall financial aspects of the investment before committing.

This includes understanding the amount of capital you will need to invest. As well as assessing the potential rental yield and considering other costs such as repairs, taxes and insurance.

3. Property Requires Maintenance

When it comes to property, it’s crucial to keep up with maintenance. Sometimes, you may encounter unexpected problems such as a malfunctioning water heater or a leaking roof that require expensive repairs or replacements. These costs can be significant and may deplete your available funds.

To avoid such issues, it’s important to be proactive and address potential problems before they become serious. Regularly inspect your property for any signs of damage

4. Property is Not Liquid

Property is not a liquid asset, which means it can be challenging to sell it quickly. This can become a problem when there is an urgent need for a large sum of money. In such situations, an investor may step in and offer immediate cash at a considerably lower price. That is lower than the market value of the property, leading to a significant loss in the sale.

However, these drawbacks can be reduced by holding onto property investments for a prolonged period. As well as maintaining a reserve of cash to manage negative cash flows. And reinvesting profits from property sales in new properties. In summary, while real estate investment has its downsides, there are ways to manage them and not let them overpower your returns.


At the end, when we talk about UK property investment Pros & Cons we need to say that all investments carry some level of risk. However, choosing a UK property investment in today’s economic climate is, on balance, a smart financial move. Especially when given that many of the cons can be mitigated with the appropriate planning. Speak to one of our team who can advise you further.

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