Why now is the best time to invest in the UK property market

With the uncertainty that currently surrounds the economy, many property investors are scratching their heads about whether now is the right time to invest, or if it’s better to wait it out.

Contrary to popular belief, for first time buyers or seasoned investors, now might just be the perfect time to invest in property – here are 6 reasons why:

1. Stamp duty has been suspended

A number of stamp duty tax changes have come into play, which mean that until April 2021, a property investor who is purchasing a £500,000 house could stand to save up to £15,000 in stamp duty!

While buy-to-let (BTL) investors still face a 3% surcharge on the first £500,000 spent, the stamp duty changes mean they will no longer have to pay 5% on properties between £125,001 and £250,000 or 8% on properties between £250,001 and £500,000, making this the perfect time to expand your portfolio.

The stamp duty cut also encourages more home buyers, increasing the demand for houses and increasing prices over the long term.

2. House prices are rising

UK house prices rose at the fastest pace in four years in September 2020, as the market defied the ongoing coronavirus pandemic, according to new research by Halifax.

Properties were worth 7.3 per cent more on average than they were this time last year, the biggest year-on-year rise since June 2016. Buy a place now and sit back and enjoy the growth in value for years to come.

3. Interest rates are incredibly low

With the Bank of England holding UK interest rates at just 0.1 per cent, people with traditional savings are getting minimal returns, so why not plough them into property.

Low mortgage interest rates mean it’s really cheap to borrow, which is enticing property investors – especially as tenant demand is high.

The Bank of England has also not rules out the possibility for negative interest rates. This would encourage people to spend and invest as anyone with money in the bank would have to pay the bank to keep their money there!

4. Rent is going up

The average rent in the UK (excluding London) is now £828 – up 3.9% on last year, according to the latest monthly rental index from insurer HomeLet.

In the last three months, across the whole of the UK there’s been a 4% rise in rent. Between August and September, the North East saw the biggest increases in rental value – at 2.2%. In simple terms, this means you’ll be getting more bang for your buck!

Leeds has seen an increase in rents at about 7% year on year for the last 3 years and doesn’t show any signs of stopping as people scramble to secure the best properties.

5. More people are renting

Lenders are getting fussier about who they lend to, and many people are being forced to rent rather than buy given the uncertainty.

Over the longer term, with rising demand for properties and falling supply, rents across most of the UK look set to increase, according to the RICS UK Residential Market Survey from February.

Increasing demand for homes to rent and falling supply will see average UK rents increase by between 2 and 3% per annum by 2025 if this continues. If more people are renting, you can be more confident that your BTL will be snapped up by tenants in no time.

6. Uncertainty can bring opportunity

While there’s no doubt that the pandemic will affect the economy, it’s got potential to rebound quickly thanks to low interest rates and government stimulus packages.

Throughout history, property has been a resilient investment and as an asset class, has performed well over time.

Core to its performance is its tendency to offer stable, high-yielding returns through rental cash-flow as well as capital growth over time. In these unprecedented times, the ability of buy to let investments to generate an additional income stream for their owner seems to be a winning formula.

With the uncertainty that currently surrounds the economy, many property investors are scratching their heads about whether now is the right time to invest, or if it’s better to wait it out.

Contrary to popular belief, for first time buyers or seasoned investors, now might just be the perfect time to invest in property – here are 6 reasons why:

1. Stamp duty has been suspended

A number of stamp duty tax changes have come into play, which mean that until April 2021, a property investor who is purchasing a £500,000 house could stand to save up to £15,000 in stamp duty!

While buy-to-let (BTL) investors still face a 3% surcharge on the first £500,000 spent, the stamp duty changes mean they will no longer have to pay 5% on properties between £125,001 and £250,000 or 8% on properties between £250,001 and £500,000, making this the perfect time to expand your portfolio.

The stamp duty cut also encourages more home buyers, increasing the demand for houses and increasing prices over the long term.

2. House prices are rising

UK house prices rose at the fastest pace in four years in September 2020, as the market defied the ongoing coronavirus pandemic, according to new research by Halifax.

Properties were worth 7.3 per cent more on average than they were this time last year, the biggest year-on-year rise since June 2016. Buy a place now and sit back and enjoy the growth in value for years to come.

3. Interest rates are incredibly low

With the Bank of England holding UK interest rates at just 0.1 per cent, people with traditional savings are getting minimal returns, so why not plough them into property.

Low mortgage interest rates mean it’s really cheap to borrow, which is enticing property investors – especially as tenant demand is high.

The Bank of England has also not rules out the possibility for negative interest rates. This would encourage people to spend and invest as anyone with money in the bank would have to pay the bank to keep their money there!

4. Rent is going up

The average rent in the UK (excluding London) is now £828 – up 3.9% on last year, according to the latest monthly rental index from insurer HomeLet.

In the last three months, across the whole of the UK there’s been a 4% rise in rent. Between August and September, the North East saw the biggest increases in rental value – at 2.2%. In simple terms, this means you’ll be getting more bang for your buck!

Leeds has seen an increase in rents at about 7% year on year for the last 3 years and doesn’t show any signs of stopping as people scramble to secure the best properties.

5. More people are renting

Lenders are getting fussier about who they lend to, and many people are being forced to rent rather than buy given the uncertainty.

Over the longer term, with rising demand for properties and falling supply, rents across most of the UK look set to increase, according to the RICS UK Residential Market Survey from February.

Increasing demand for homes to rent and falling supply will see average UK rents increase by between 2 and 3% per annum by 2025 if this continues. If more people are renting, you can be more confident that your BTL will be snapped up by tenants in no time.

6. Uncertainty can bring opportunity

While there’s no doubt that the pandemic will affect the economy, it’s got potential to rebound quickly thanks to low interest rates and government stimulus packages.

Throughout history, property has been a resilient investment and as an asset class, has performed well over time.

Core to its performance is its tendency to offer stable, high-yielding returns through rental cash-flow as well as capital growth over time. In these unprecedented times, the ability of buy to let investments to generate an additional income stream for their owner seems to be a winning formula.

Want to start your property investment journey with us in Leeds?

If you’d like to know more about the Leeds property market or need some advice and information about your growing your investment portfolio, call us on 0203 633 9255 or message us by clicking here.

Want to start your property investment journey with us in Leeds?

If you’d like to know more about the Leeds property market or need some advice and information about your growing your investment portfolio, call us on 0203 633 9255 or message us by clicking here.