Purchasing a residential property has long been considered a safe and rewarding way to invest. With demand for rented property running exceptionally high, and stocks limited in most parts of the UK, market conditions have certainly favoured investors for many years. As a result, average rental values have stayed strong, even in challenging economic times.
Buy-to-let investment in the UK’s mainstream residential sector is one of the best-performing options available. With a good buy-to-let investment and a typical Assured Shorthold Tenancy (AST) agreement, you should receive a twofold benefit: a regular and reliable income, plus long-term capital appreciation.
Buy-to-let property investment refers to the business of buying a residential property with the intention of letting it out to tenants. Typical financial goals include producing a regular income stream from the rental returns and benefitting from longer-term capital growth.
This is one reason why so many investors choose buy-to-let investments to protect their financial security and supplement their retirement income. Over many decades, residential property has been an asset that has typically worked much harder than money held in savings accounts, and it has proven steadier and more reliable than many stocks and shares. In recent years, capital appreciation alone has tended to outpace inflation, so many kinds of buy-to-let investment have delivered significant real-terms growth.
Property prices will rise and fall over the years, but history shows that the long-term value of your property should generally increase. This should provide you with a healthy profit if and when you do choose to sell.
When you buy in the right place, there should always be reliable demand for rental properties. As long as you are meeting local market needs and providing a quality place to live, you should have no problems in keeping your income steady.
In addition to the rental income that you’ll receive on a monthly basis, there’s also the bonus of capital growth accumulating in your property. To illustrate the resilience of the market, Land Registry records show that between 2000 and 2022, average UK residential values rose from £84,620 to £294,910. Over 22 years (a period that notably included the global financial crisis and a pandemic) that marked an increase of over 348%
When it comes to choosing the perfect investment opportunity, the old adage of ‘location, location, location’ should always be at the forefront of your mind.
Consider the type of tenant that you want to attract; are you more interested in young families, holidaymakers, professionals or retirees? Would you prefer busy, high-earning professionals or those who have recently graduated from university? Once you’ve managed to pin down your audience, you should be able to narrow down your potential locations.
For those looking for a hands free investment, choosing a rental management service is often the best approach. This is where investors outsource the day-to-day tasks of managing a rental property, including sourcing tenants and collecting rents, to a professional company. The rental management company will typically charge a small percentage of the rental income to provide this service.
It’s a very popular choice for people who are too busy to manage their property portfolio, or those with limited experience in the property market. It also enables investors to focus on the best locations for rental yields and capital growth, rather than being restricted to properties close to where they’re based.
An assured rental agreement is essentially a contract, signed with a rental management agency, through which the investor will receive a fixed monthly income, regardless of whether or not the property remains occupied. For the investor, this removes any financial uncertainty; returns are fixed, regular and predictable. It’s the rental management agency that then bears the risk and the responsibility for ensuring maximum occupancy.
Such agreements also mean that buy-to-let properties can become true ‘armchair investments’ – which is to say investments that pay a regular, dependable income without requiring the investor to get involved in the property’s routine maintenance and management.
When you work with ES1, we take time to understand your goals, then present you with a variety of suitable investment options. We work hard alongside you to find the right property and provide a full-circle service. All the buy-to-let properties we provide are potential ‘armchair investments’ that give you the option of assured rental returns. Your dedicated advisor will provide you with detailed financial forecasts that include all related costs, giving you all the information you need to make a careful, considered decision.
Get in touch with us today to start your property investment journey.
