So now that you know why capital appreciation for property in the UK is so important, let’s look at how you can boost your investment income with capital growth.
Here are some of the things you should do to ensure you’re getting the best possible level of capital appreciation from your buy-to-let venture.
Research High Growth Areas
One of the best ways to improve your chances of capital growth with a property investment venture is by researching the best places to invest in property.
While UK capital growth rates are predicted to be high over the coming years, with an average house price increase of 17.9% by 2028, certain cities and regions are outperforming others.
Out of all the regions in the UK, the North West region is experiencing the highest rate of property price growth. In the Savills house price predictions, the North West is expected to see house prices grow by 20.2% by 2028.
Recent data has found that the average rate of property price growth in Liverpool is outpacing growth in London by almost five times. Zoopla data shows that in the last 10 years, Liverpool properties have experienced growth of around £120,093 since 2003, with October 2023 seeing values of around £287,782.
Those who invest in Manchester and Liverpool are more likely to see significant North West capital appreciation returns from their investment property purchases. These cities also boast high rental yields, which is an added benefit if you want to maximise rental income.
Choose Your Investment Wisely
Once you know which location you’re going to invest in, you should think about the property itself if you want to maximise your potential capital appreciation through property investment.
Some property types may be more likely to grow in value than others. For instance, many people believe that residential properties can experience higher capital growth rates than student properties.
Student properties do, however, often offer more affordable prices, high demand, and lucrative returns in the form of rental income, so they remain a great option if you want to build an investment portfolio.
You’ll also want to research the specific area that your property will be based in rather than just looking at the entire city as a whole. Just because a property is based in Manchester, for instance, doesn’t mean you’ll always see the best capital appreciation.
North West capital appreciation may be high, but to really benefit from the best capital growth returns possible, you should explore investment property opportunities in areas that are close to local attractions, amenities, transport links, and workplaces.
Check out our property market reports for detailed information on house price growth in major UK cities.
Look For Ways to Add Value
Another option when it comes to increasing capital growth potential within your investment portfolio is to add value to the property directly. This means refurbishing the property, adding loft or basement conversions to increase space, or simply redecorating.
This strategy is most commonly used by those who purchase a property through an auction for a below-market value price, with the aim of adding value through renovation work.
Due to the nature of this strategy, it’s often easier to add value to properties such as terraced houses or detached and semi-detached homes rather than apartments. That’s not to say, however, that there aren’t still ways you can boost the value of an apartment.
If you’re thinking of investing in a new build investment property, the property will likely already be very modern and decorated to a high standard.
While you may not need to do any major renovation work like updating the kitchen and bathroom, knocking down walls, or installing new flooring, there are some simple things you could do to improve long-term capital appreciation.
This may mean repainting the property, adding stylish furniture to make it look high quality and modern, or giving the balcony or yard a makeover to make it look more appealing.
