Residential Property Investing in the UK
Investing in residential property in the UK has, time after time, proven to be a smart move.
Of course, there are always going to be periods when prices are not going up, or when the economic situation is a not as good as it could be. Or we have once in a lifetime pandemic or other major world event to contend with.
But the bottom line is that over the long-term prices have continued to increase. If you have relatives or friends in the UK, you only have to ask them what they paid for their home 10 or 20 years ago to see what they invested at the time, and what the current market value is now.
You’ll soon appreciate that few investments have created as much wealth as investing in real estate. Indeed, real estate investment in one of UK’s first or second tier cities such as, London, Birmingham, Manchester, Liverpool, Newcastle or Preston have typically provided long-term capital appreciation and been an excellent hedge against inflation.
So, let’s have a look at some more of the reasons why investment in residential property in UK is a good move.
Key factors why people invest in UK residential real estate
- Stability: generally, the UK offers a stable political and economic environment.Despite all of the noise about the country’s departure from Brexit, the transition to be outside of the European block will likely be orderly. New trade deals will be forged with existing or new partners and the UK may even greatly benefit from quasi- independence is its trade and decision making arrangements.The UK economy, like many others, is currently suffering from the global pandemic but the prognosis is that recovery will be well under way by mid-2021. If you are reader of some of our other articles, you will know that many economists forecast that any impact on the UK property market is expected to be short-term;
- Legal system: the UK legal system is renowned the world over for being equitable and fair. It also protects property owners in terms of recognising and registering title on an inalienable basis.Most landed properties such as houses are owned on a freehold basis, whereas apartments often have the benefit of a 99- or 999-year lease in place;
- Transparency: according to JLL, one of the world’s leading real estate companies, the UK residential market describes is one of the world’s top markets for transparency. This key factor demonstrates the steps the UK government is taking to ensure a robust and secure market for those ready to invest in UK property;
- No ownership restrictions: unlike in many other countries across the globe, there are no restrictions on owning property in the UK. Both locals and foreign residents are able to acquire and own residential property for the long-term.Such properties can be freely sold when required. Or further properties purchased if there is the wish;
- Demand/supply imbalance: fundamentally there is a demand-supply imbalance for UK property. With a growing population, longer life expectancy and changing demographics amongst the younger generations (ie leave home earlier, less likely to get married, more likely to live independently etc), supply cannot keep up with domestic demand.Owing to fairly rigid planning rules and building approval regulations, the timeframe for new developments to materialise often takes longer than anticipated and, so, supply is always going to be relatively limited, On the flip side, such a lengthy process does make sure that all approvals are in place and legitimate;
- Ongoing demand from overseas buyers: and it’s not only domestic demand which drives the residential market. In fact, the UK continues to be a top choice for overseas investors into its property market. London is listed as the second-best city in the world to invest in property, and remains as the top destination in Europe according to the Global Cities 30 Index.
This continued success has had a ripple effect on the wider UK market, driving new investment into key areas across the country with strong investment from European, US and Asian money.
Indeed, foreign direct investment (FDI) into the UK property market has steadily increased over the last few years, hitting a high of GBP 1.5 trillion in 2018.
On balance, the UK residential market retains a healthy outlook
There are clearly a number of other reasons why its attractive to invest in the UK residential property market, and the only real decision is whether you favour houses or apartments.
Demand outside of London is expected to remain solid, especially in 2nd tier cities and their surrounding areas, with more such developments being marketed to overseas buyers as familiarity with investment in certain northern cities increases.