On 24th December, the UK and EU agreed a Brexit trade deal, sanctioning a higher degree of political direction and economic certainty within the country. As there is a deal in place, many believe Brexit is unlikely to impact the property market in the short-term or effect the market as much as initially expected.
Alongside the positive news surrounding the trade deal, the rollout of the Covid-19 vaccine could shape the UK housing market and build confidence in the sector for the year ahead. The distribution has been successful thus far, with currently over 1.3 million people vaccinated across the UK. With a determined focus on restoring a sense of normality in the near future, the positive outlook provides a real boost in confidence within the sector– and this confidence – is a key component in driving demand in property.
A key component driving the success of the property market in 2020 was the much-welcomed stamp duty holiday. As the deadline is looming, worries about a short-term slowdown in the market have been addressed. However, calls to extend the stamp duty deadline as the nation enters into a third lockdown have been gaining momentum. An extension will likely sustain activity and demand in the market, providing further savings for homebuyers and investors.
In Rightmove’s latest House Price Index, predictions indicated a 4% increase in house prices across this year, irrespective of Brexit, Covid-19 or the Stamp Duty Deadline on 31st March. All-in-all it’s a strong indication that demand for property will remain high and gives insight into how buyers continue to reprioritise their living requirements as a result of the challenges that have faced the UK economy and employment market.
While market confidence remains high, it’s a great opportunity for first-time investors to start their portfolio. In order to gain maximum returns and ensure long-term financial stability, the key goal is to stick to one strategy and think long term.
Firstly, it’s essential to consider what you hope to achieve from your property investment, whether it’s capital growth, rental yields or both. Capital growth refers to the increase in the value of your rental property over time. It is measured by the difference between the market value and it’s purchase price. Rental yields are calculated by dividing your rental income by your total investment, a good yield is around 5-8%. A yield of this figure ensures investors make a significant return on investment.
Secondly, location is key and remains the most important factor in driving profitability for property investors. Key features including transport hubs, green spaces and city culture remain popular amenities for tenants looking to rent. Birmingham, Manchester and Liverpool are forecasted to be the top 3 hotspots for property investment in 2021, generating the highest rental yields and price growth over the next 5 years. These northern cities are significantly growing in appeal and attraction and are key players in the UK regeneration scene.
Thirdly, prepare a review of your finances. As an investor, you’ll need to consider what budget you have available as well as the main source of your funds, whether as a cash buyer or through a buy-to-let mortgage. You’ll also need to consider when payments are due at the beginning of your investment journey to ensure you’re in the best position when the development is completed.
Lastly, in order to thrive in the property market, knowledge of the sector is key. At Alesco, we specialise in purpose-built buy-to-let investment opportunities and continually provide support to both new and seasoned investors.
If you’re interested in investing, contact our team today to find out more about our opportunities available – 0203 819 7366.
Also published on Medium.
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