The UK property market is constantly changing and there are many things to consider when you are looking for your next property investment. Whether you are considering investing in rental property for the first time, or you already have a substantial portfolio, there are a number of things to look out for in your next rental property.
Like any investment, one of the most important things to look out for is the potential growth available from the price you paid for the asset, to the price you sell it for. Property is one of the best assets for capital appreciation out there, with house prices in the UK increasing incredibly over the past decades. In the 1950s, the average UK house price was just £1,891, in the 1970s it was £4975 and by 1990 it was £60,000 – now it is around £211,00. In just four decades, since the 1970s, the average UK house price has gone up in value by an incredible 11058.12%. Though there have been times in UK history when property prices have fallen dramatically, the general trend is upwards and upwards. American financier Russell Sage said “Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.” And it remains true to this day.
The other vital aspect of any property investment is rental yields. Rental yields are a way of measuring the amount you receive in rental income compared with the amount you paid for the property. To calculate a rental yield, you have to take the annual rental income you receive and divide it by the purchase price of the property. The higher the rental yield, the quicker your investment will pay for itself. This allows you to compare properties, and it is important to make sure you know the rental yields of your intended property. Some property investments, like those offered by RW Invest give potential investors assured rental yields for a certain period, for example 7% net rental return for two years. This means that investors have a certain source of income from their investment, without having to try and find tenants or market the property.
It is also important to consider what demand there is for your potential property. Look at what other properties are available on the market and how long they are vacant for. In some areas, you will see a huge demand for rental properties for students and in other areas you will find a demand for rental homes for families. Look for a property which has the features your ideal tenant will be looking for, like a location close to schools or a concierge service. Make sure your rental property has a steady demand and look for areas where properties to rent are in short supply. As property really gains in value over a longer period of time, make sure your property is up to date and will continue to appeal to a variety of tenants.