Is Now A Good Time To Invest In UK Property?
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Is Property Investment a Good Idea Right Now?
There’s been a lot of talk about how the UK buy-to-let market is evolving in 2024, especially since the recently changed stamp duty rate.
Given the various adjustments the market has been through, you may be wondering ‘is now the right time to invest in property?’
Let’s find out the answers to all these questions and more in this simple beginner’s guide.
Here, you’ll learn:
- What happened to the UK property market in 2024?
- Reasons why now is and isn’t a good time to invest in property.
- How to maximise return potential on your property.
So, whether you’re making a first-time investment in the UK or are already a seasoned investor, the following guide is perfect for you.
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What Happened to the UK Property Market in 2024?
UK Property Prices
Looking at historic house price trends, the UK has been famously stable and experienced high growth in the long-term. Turning to recent short-term trends:
- 2023 was characterised as a challenging year for the market as growth plateaued with marginal price dips in the South of England, and the North of England saw some small price rises.
- However, 2024 trends have shown promising signs of recovery in price growth and market activity, leading forecasters such as Savills to project healthy price growth in the coming years of 23.4% by 2029.
- Overall, affordability is constrained in the UK property market. As of August 2024, the average house price in the UK is £292,924 according to HM Land Registry. Property prices are at record highs and southern regions such as London are particularly unaffordable, leading many investors to look to the North of England for better deals.
UK Rental Market 2024
There have also been ongoing trends in the rental market that have had a massive effect on the buy-to-let market in recent years. This includes:
- Data shows that more people are renting than ever. According to the 2023 FRS, 19% of households in the UK rent in the private sector. This is a substantial change compared to historic housing trends in this country, as the number of people renting has more than doubled since 2001. As lifestyles change, this trend looks set to continue with the tenant demographic continuing to grow.
- This has led to more rental demand than ever in this country. In recent years, we have seen unprecedented levels of tenant demand due to the growing renter population and low supply of available rental properties.
- The supply-demand imbalance has also led to record rental growth and rental prices. The average UK rent is £1331 (HomeLet Rental Index) and is forecasted to grow by 4.5% nationally in 2024, with a growth of 18.8% between 2024 and 2028 (JLL).
- The government has revealed that they plan to change the minimum EPC rating required to rent out a property from the current E to C or above by 2030. This has led to a trend towards energy efficiency in the property sector.
Recent Changes to Stamp Duty in 2024
We have recently had the Autumn Budget announcement which revealed the following information which is likely to have an effect on property investment:
- The stamp duty surcharge for second properties and investment properties has increased from 3% to 5% – this means that when buying a property investors will pay a bit more tax.
- Capital gains tax remained the same which means there will be no change in the amount of tax paid when selling an investment property.
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Is It a Good Time to Invest in Property?
Now that we’ve looked at what happened to the UK housing market this year, it’s time to assess if now is a good time to invest in property and if you should invest in property now or wait.
Taken together, these trends paint a promising picture for the current UK buy-to-let market. Despite the rise in stamp duty for investors, there are still opportunities for high-yielding property investments worth pursuing. Investors can still benefit from many of the most appealing aspects of property investments in the UK in the current market:
Stable Property Market and Capital Growth
As mentioned, 2023 was characterised as a challenging year for the property market with marginal price dips in some regions and plateaued growth in others. However, this trend has mostly reversed with much more promising signs in the 2024 market, demonstrating resilience.
According to the Halifax House Price Index (September 2024), UK house prices are up 4.7% compared to the year before, and this is the tenth consecutive increase showing a return to stability.
High Rental Demand and Rising Rental Prices
When it comes to the rental market, unprecedented demand has led to higher potential rental income and investors are likely to encounter less voidages (the periods when the property is unoccupied).
Annual rental inflation currently stands at 5.4% according to Zoopla’s latest Rental Market Report, with some areas experiencing even higher annual rental growth such as 8% in Liverpool.
Nationally, each rental property attracts an average of 19 enquiries from potential renters and this is even higher in some areas such as Liverpool and Manchester where there’s an average of over 40 enquiries per property as per Rightmove.
At RWinvest, we target these high rental demand areas to maximise potential profitability. Our latest launch, West One, is situated adjacent to the Salford Quays area which is in proximity to the exciting MediaCityUK which is currently undergoing phase two of its development. This will offer an incredible boost in the surrounding properties for a potentially high rental return and strong forecasted capital growth.
Strong Capital Growth Forecasts in 2024 and Beyond
The 2024 market is showing a promising performance leading to property experts and forecasters to give strong capital growth predictions for the coming years. Savills have projected 4% growth in 2025 and 23.4% over the next five years for the overall UK market, and even higher predictions for some regions.
The region with the highest 5-year capital growth forecast is the North West which has a projected property price increase of 29.4% by 2029, and 5% in 2025.
Affordable Property Can Be Found in Northern Regions
Recent changes to stamp duty have made it even more important to find a good deal when buying property. Finding a good value property can:
Minimise funds swallowed up by tax as it is taken as a percentage of the property value.
Maximise rental yields and profits from capital appreciation which will help absorb the increased tax through your investment.
Despite affordability constraints, some areas, such as the North West, are still relatively inexpensive. For comparison, the national average property price is £292,924, but the average in Liverpool is £179,382 – over £100,000 cheaper.
This change to stamp duty has also underpinned the importance of finding a high-yielding property. The good news for investors is that the average UK rental yield has been increasing, suggesting growing rental income.
Reasons Why It May Not Be a Good Time to Invest in Property
The UK’s stock of available property has been gradually decreasing throughout the years, leaving a huge supply and demand imbalance. As such, the government has been doing more to clamp down on investors by increasing taxes and minimising the amount of tax relief available.
For example, following the Autumn Budget, investors now pay a 5% additional charge on base stamp duty rates when buying real estate – up from 3%.
This means it is now more expensive to invest in property, and this 5% surcharge should be taken into account when making an investment strategy.
While rising property prices are good news for those who already own property, they can be prohibitive for new buyers.
The latest UK House Price Index (August 2024) shows that the average property price is £292,924. Although you can find property far cheaper than that, it can still be difficult to afford.
There are some ways to find a more affordable deal on property, such as considering areas with lower property prices such as the North of England, and exploring off-plan property investment options.
While you will still be earning regular rental income, the bulk of profit from a buy to let investment is usually the capital growth you earn over 10 or more years.
This makes property perfect for those planning ahead for reasons such as retirement, but is less suited to those looking for faster returns.
How to Maximise Returns on Property?
There are a few ways you can maximise the return potential of your real estate investment.
1. Target desirable locations for your target tenant – You’ll need to pick the right location that targets your ideal tenant. For example, if you are trying to attract young professionals, choosing a city centre apartment that has easy access to popular amenities and good transport links is a good idea.
2. Research the right city – There are huge regional variations in the UK, so you will need to research the right city that is offering a competitive rental market. Focus on long term capital growth predictions, rental yields, affordable house prices, urban regeneration, and strong rental demand to maximise your investment potential.
3. Equip your property with needed features – Covid-19 has changed what tenants want in a property, so be sure to buy property that meets these goals. Research from Benham and Reeves found that access to green space and fast broadband are now the two most popular features in a rental property.
4. Keep your investment for an extended time – To maximise your capital growth rates, you should keep your property for as long as possible before selling. The potential for capital growth can depend on your property type, too, with student accommodation offering less capital growth than a residential home.
5. Buy new-builds – This way you can reduce expenditure and maximise your profits if you don’t want to do renovation work or carry out energy-efficient retrofitting. If you buy a new-build home, it should be ready for tenants as soon as you buy it and will help you stay ahead of changing EPC legislation.
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Is Property a Good Investment?
If you’re interested in maximising your income through investment, property investments are one of the most popular ways to do this.
However, the effectiveness of your property investment can depend on the type of property acquired and the area it is located in.
Investors that search for the perfect property can make some significant rental returns if their property has high rental yields. They can also make long-term investment returns through capital appreciation if their property grows in value by the time they sell it.
A good investment property is an investment that brings in rental yields of over 5% and is based in an area that has a lot of potential for capital growth.
On the other hand, a great investment property offers rental yields of 7% or over. It is located in an area that boasts strong property price growth predictions and shows evidence of past housing market growth.
Looking at short and long-term trends, property can be a profitable investment strategy. However, whether or not investing in property is the best option for you depends on your own goals as an investor.
Get the Best Investment Deals UK With RWinvest
At RWinvest, we are committed to matching investors with the best buy-to-let opportunities in the UK market, and we focus on high-yielding areas such as Manchester and Liverpool to help you get the most out of your investment in the current climate.
Our recently completed development, Merchant’s Wharf, is located in Manchester and prices for these luxury apartments, ideal for appealing to the fast-growing working professional tenant demographic, start at just £159,950.
Click the link below to enquire about Merchant’s Wharf.
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It will be my third investment apartment with RW Invest and I cannot recommend them highly enough. Sean Orrett and Chloe Walker really do go the extra mile. Chloe in particular helped me through a particularly hard time with solicitors and all the paperwork that was involved. Living in a different country and negotiating all the nuances that come with investing, she negotiated with ease and gusto. A big thanks to you both.
Daniel Stewart, has assisted me every step of the way. This is my first property purchase and so took Daniel up on his offer to guide me through every step no matter how small. I felt comforted to have his assistance in documents I needed to both understand and sign. Couldn't be happier with the help and customer care I have received so far.
We highly recommend RW Invest to anyone looking for an experienced, reliable and knowledgeable professional company.
We are more than delighted with their services throughout the entire process. They provided us with extremely helpful advice and guidance every step of the way and ensured that we understood all aspects involved in securing a property through them.
Chloe is very helpful. She has been a great help and solved all the difficulties I had with the purchase. I am happy she was there to help with the process. Very approachable and responsible.
This was my second unit purchase with RWinvest, and I found the team to be very helpful in finding the best deal which suited my needs and budget. Arjun Surana, Adam Burns were really processional in answering all questions, Excellent follow up and ensures your property purchase are smooth from the start to end and supporting throughout the purchase/exchange of contract process.
I highly recommend anyone to purchase their property with RWinvest.
- Is Property Investment a Good Idea Right Now?
- What Happened to the UK Property Market in 2024?
- Is It a Good Time to Invest in Property?
- Reasons Why It May Not Be a Good Time to Invest in Property
- How to Maximise Returns on Property?
- Is Property a Good Investment?
- Get the Best Investment Deals UK With RWinvest