Why the UK is still one of the best places in the world to invest in property

The average home price rose by 1.6% in September from August, and this marked the third consecutive month of gains according to research by Halifax. The annual growth rate is now 7.3% – the fastest since June 2016. Savills has forecast that UK house prices will grow 15% by 2024 – and investors should note that higher growth is predicted in regional cities rather than London. With house prices rising, it makes sense to buy now.

According to research carried out last year by VeriSmart, a letting compliance firm, in 20 years’ time there will be more people renting a home than owning one in the UK as “generation rent” takes over. So by 2045 renting is only expected to rise – not only because of increased immigration and more people living alone, but also because rising house prices can price out first time buyers.

The Covid-19 pandemic is likely to increase rental demand too, as lending restrictions become tighter and jobs more uncertain. Whichever way you look at it, there’s a shift to renting on a longer-term basis with the scramble to own homes taking a back seat. Invest in property now; the demand for it will be there and you can watch the gains continue to come through over the long term.

Strong tenant demand has seen the average UK rent hit £987 according to figures released by HomeLet. Ten of the 12 regions monitored by recorded an increase in rental values between September 2019 and September 2020. Increased rent means rental yields for landlords have the potential to increase.

Until April 2021, stamp duty changes have made it cheaper for landlords to buy new property.

A property investor purchasing a £500,000 house could save up to £15,000 in stamp duty as a result.

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 begin investing or expand an existing portfolio.

A number of initiatives such as the High Speed 2 Rail line, part of the Northern Powerhouse Partnership, are ongoing in the UK. The railway line will link Birmingham, Leeds, London, Manchester and the East Midlands, and as a result, property investments in these areas are likely to directly benefit. In addition, plans for the Northern Powerhouse Rail – a major rail programme designed to enhance the economic potential of the North of England – are still underway. Featuring new and significantly upgraded railway lines, it aims to transform rail services between the region’s towns and cities.

Invest now, while the works are still ongoing, and you’ll reap the rewards later as increased accessibility closes the north-south productivity gap.

With the Bank of England keeping the base rate at 0.1 per cent, now’s a good time to borrow as it’s super cheap! Remortgage your home and pool the equity into a BTL and the returns will be greater than they would be sitting stale in a bank account. Plus, with mortgage payments at their lowest and monthly rental quite high, landlords can enjoy higher income.

According to a Tech Nation report, in 2019 the UK tech sector employed over 2.9 million people and attracted £10.1 billion in investment – truly cementing itself as one of the world’s leading centres of digital innovation.

The UK now ranks third in the world for tech unicorns, falling only behind China and the United States. The sector has created new opportunities for professionals and drawn significant sums. For example, UK health technology has seen year-on-year growth for the last 6 years – it has received the highest proportion of investment in Europe and the number of companies in the sector have increased by a quarter since 2015.

In London, the government Department for Digital, Culture, Media & Sport has funded and launched the cybersecurity programme LORCA, which is now home to some of the most exciting start-ups in the world.

The UK is home to world-leading universities including Oxford and Cambridge, and they continue to attract international students and develop ambitious graduates for local employers. This makes the UK an attractive place to invest as it’s home to talented students, professionals and companies that will invest in them.

The UK continues to attract FDI, thus increasing jobs and prosperity across the nations. In 2019/2020, the UK attracted 4% more investment projects than the previous year. The US is the number one source of direct investment in the UK, followed by India, Germany, France, China and Hong Kong. According to a report by EY, investor intentions towards the UK – compared to other destinations in Europe – remain positive as they feel the UK is likely to outperform the global market in attracting post-pandemic investment. The growing volume of US investments reflects the appeal of the UK’s tech sector to US investors, showing that the UK is the leading European destination for digital tech FDI.

Earlier this year, Chancellor of the Exchequer Rishi Sunak announced £460bn of capital investment in the UK’s roads, railways, schools, hospitals and power networks. The government is predicted to fast forward many of these projects to create employment for those whose jobs might disappear as a result of the predicted economic difficulties. This, and other government measures, will ensure that the economy keeps on moving.

The Office for National Statistics predicts that the UK population will increase from 66.4 million in mid 2018 to 69.4 million in 2028 – so the demand for housing is set to increase over the long term.