Residential property investment types are numerous. However, it is crucial for investors to understand the pros and cons of each type so they can pick the one that suits their needs best. Here are some popular investment types in UK property:
The first type of UK property investment is new build. This includes luxury high-rise apartment complexes. Many investors are attracted to these developments because of the considerable profit potential, especially if they choose the right type of property. For example, developers have the option of selling apartments in an all-girls’ school or a commercial complex featuring restaurants, pubs, and other amenities. There are also opportunities to buy up privately owned residential units in prime locations. However, this kind of investment is normally slow to realize profit due to the slow market.
The next type of UK property investments is to purchase property in areas with high demand. These areas usually have an economy that is based largely on tourism and business. Areas with high demand for commercial property are typically fast growing ones. These include areas outside London, such as London itself, the south, and the north of the country. The latter has long been a strong market for new development, and is home to major financial centers including Canary Wharf in the UK. Other areas with high demand for residential properties include Birmingham, Manchester, and Edinburgh.
Another popular UK property investment option for foreign investors is property development. This mainly refers to the building of buildings and infrastructure in foreign countries. Developers use a variety of approaches to create property for sale to UK residents. Many companies use the help of foreign investment banks to fund their projects. The major UK investors in this field include SIB Capital, Invicta, and Aviva.
Property consultants can also be used by private investors to identify properties that are suitable for investment. These firms can also help UK investors obtain legal advice regarding the purchase of UK real estate. One of the UK property investment pros for this area is Invicta. Invicta specializes in providing residential and commercial property to UK investors. Some of the other UK property investment pros for this area include First-Rank Realty, and Urban Royal.
An important aspect of any UK property investment strategy is rental returns. A good investment strategy should take into consideration not only the yields on the investment property, but also the amount of rental returns over time. The longer the property is rented out for, the higher the returns. For example, the yield on a three-year old house may be very high, but if it is rented out for twenty years, the rental returns could far exceed the initial capital growth. Good rental returns are another factor that should be considered when planning an investment portfolio.
A crucial part of any UK property investment strategy is to determine the appropriate tenant for the property. A good tenant will cause the property investment return to far outweigh the costs of ownership. A simple tenant rating system is one way of classifying potential tenants. If a property is suitable for a certain type of tenant, the landlord may have to post a condition of tenancy stating that the property will only be rented to occupants meeting particular criteria. For example, a property suitable for students will likely have to post a condition of tenancy restricting students to a minimum number of rooms.
Good returns will usually not happen without tenants. Therefore, rental yields are another important aspect of any UK property investment strategy. Good yields will generally mean that more of the profits from the property will be realized as capital gains rather than paying taxes on the gains. This aspect is important to remember because a good yield should be accompanied by appropriate rental yields and reinvestment yields, otherwise a capital gain is obtained at a lower tax rate than needed. Some investors also choose to exclude dividends from their gross rents to reduce their taxable income.