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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 recent 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.2020 has seen US investors and other foreigners flocking to the United Kingdom in their droves to add UK property to their portfolios, as well as continued high levels of investment from Asia

So, what are the pros and cons of UK property investment for our investors who reside in the UK? Below are the pros and the cons of investing in the UK.

Benefits of an Investment Property

1. 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.

The cities found in the North such as: 

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.


property investment

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.  

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.

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 & Demand

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

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. It would be a good time for individuals to take advantage of the prevailing economic conditions and invest in property.

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. 

By 2033 all the cities will have their own city centre 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.

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 2022.

calculating tax on properties  

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.

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 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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