The average UK house price increased by 5.6% in the year to April 2017. This is good news for buy-to-let investors, protecting your initial outlay whilst also driving usual first-time buyers into rented accommodation.
It also provides more options for an exit strategy. Knowing your investment will make capital gains year-on-year provides peace of mind and a healthy resale value should you decide to move on.
Despite the political and economic uncertainty surrounding Brexit, UK house prices still rose around £15,000 last year on average. What this shows is a resilience in the market not seen elsewhere.
This makes acquiring property Britain’s number one investment. For example, it far outstrips what you’d receive from a savings account, especially with interest rates at historically low levels.
This has been backed up by Rachel Springall of comparison website Moneyfacts, who says:
“To earn £15,000 in a year, a saver would need to have £300,000 and find an interest rate of 5%. No standard savings accounts offer anywhere near that.”
Even if house prices start to decline, you’ll still have an underlying asset at your disposal. This will help you obtain finance for mortgage applications or other investments, using the property as collateral.
These property gains are showing no sign of slowing down either. Research from Barclays suggests that house prices will rise by a further 6% over the next five years, meaning the average UK property value will be nearly £300,000 in 2021.
Their report claims that a buy-to-let surge will play its part in the growth, especially in upcoming property ‘hotspots’ outside of London. Relatively cheap house prices and thriving local economies will lead to increased demand and higher rental yields in these areas.
Likewise, according to Aviva, forecasts for UK rental income remain positive over the short and medium term. They predict average yields to remain at around 6.5% until 2020 at least, with some other areas in the Midlands and North offering up to 10%.
With a housing shortage and expanding population, the rise in UK property prices means many Brits are increasingly reliant on rental homes. For buy-to-let investors, this is promising news and means tenant enquiries are almost guaranteed once your property is listed.
The latest research backs this up. Nearly 75% of those currently renting expect to be in the same position three years from now and by 2021, it’s predicted one in four households (5.8 million) will be privately renting as home ownership becomes less achievable.
Rental income is also expected to increase with the Royal Institution of Chartered Surveyors (RICS) predicting a 25% rise in rents over the next five years. Property prices themselves are expected to increase by around 20%, placing buy-to-let investors in a win-win situation.
For all types of investor or those planning retirement, property is your best bet in the current climate. However, because house prices are still on the up and look set to rise even further by 2021, now is the time to act.
The options we have at Aspen Woolf span all areas of the UK and cater to investors with varying budgets.
For more information on the predicted property market rise, check out Optimistic Outlook for Property Market in Next Five Years.