UK property market is on the rise and is expected to be on the rising track for years. If you want to know more about the benefits of investing in UK properties, you can click to view detailed explanation in this article. So, as an investor, no matter you are a local British or a foreigner, there are indeed many different ways for you to make considerable profit of the UK properties. However, it is vital that you can find the suitable way for you to invest without too much hassles and 100% peace of mind. In most case, you will either need to do thorough market research yourself or rely on a trusted partner who understands the market trend and will provide you with honest, unbiased information and advice basing on your specific requirements.
Traditional Way of Buying the Property Yourself
Buying a property that you will live in or rent it out is an investment. You benefit from the appreciation of the property value plus the rental income over time. The “buy-to-let” model is the most common way for such an investment. Its key benefit of owning the actual property by yourself is that you can have the full control over the property. You can decide the interior design and decoration of the property. You also can decide the value of the rent and to whom you will rent it to. You can further decide when and how much you will sell your property.
However, the above said benefit of full control can also become your headache as you need to bear all the responsibilities of the property you have brought and invested in. As the owner, you will have to pay for initial deposit and apply for the mortgage and thus, taking care of the monthly payment of the mortgage. You will need to find the tenant and maintain and repair the property if you don’t hire for an agent too.
Investing in REITs in UK
A Real Estate Investment Trust (REIT) is a collective investment scheme that aims to deliver a source of recurrent income to investors through focused investment in a portfolio of income-generating properties such as shopping malls, offices, hotels and service apartments. REITs can usually be bought via the stock market. They were introduced in the UK in 2007 to provide an easier way for people to invest in property with a rather various profolio and many REITs are listed publicly on the stock exchange.
REITs are strictly regulated in a certain way that at least 75% of its profits must come from property rental, and are required to distribute 90% of their property rental income to investors as dividends. This make REITs an attractive investment for people looking for long-term stable passive income.
The main benefit of buying REITs is that it is a rather safe investment because REITs typically have a rather complex profolio that they are owning diversified commercial properties like shopping malls, hotels and resorts, office buildings, warehouses, service apartments, parking lots. These commercial properties have historically as well as will render the investors a solid return via the rental income and property appreciation. Also, it is a hassle-free investment because the properties are managed by the company.
Its main downside is that REITs are not going to render much flexibility to its investors (shareholders) and you don’t have control over the properties in the profolio. Its return is also relatively flat and stable if it is not too low.
Real Estate Bonds
Real Estate Bonds is very similar to that of investing in REITs. This kind of bond can also be easily bought from most of the brokers’ trading platform. One can invest a minimum amount USD 25,000 for UK property bonds that are offered by UK FCA regulated trustees with a fixed interest rates per annum.
The goods of investing in UK real estate bond is that it is a very safe and secure in which it render investors with a fixed return. However, as it is a bond, one will not be able to enjoy profit from any possible gain of property value.
Private Funds of Properties
Private funds are for those Investors who, for some reason, want to avoid the stock market might look into the possibility of investing in a private property fund. The fund is indeed a pool that gathers together individual investors’ money to buy real estate. The properties brought will be managed by a team of professionals that will handle the full operation of procedures like marketing, renting, maintenance, repair, rental collection . . . of all the properties. The management team will then charges investors a fee in which most of the case basing on a certain percentage of the net income.
However, such kind of property funds are not something fully open like the REITs and are limitedly accessible to the privileged investors and with prerequisite of a considerable large minimum amounts of initial investment. This kind of property funds are usually being accessible by the really wealthy private individual investors.
Tech-Evolved Property Investment Platforms
With the popularity of IT start-up companies that enable investors an easier and lower entry level for property funds working like crowdfunding platforms and peer-to-peer property lending exchange platforms, investors can put their relatively small amount of money into those platforms like a private investors. In return, investors will act like a shareholder of the total properties under the platform. They can make profit when the properties’ values rise over a period of time as well as via the rental income. It is a perfect investment opportunity for those without huge sums of capital to invest in private fund or even pay for down payment for buying a property as it usually requires a very low entry amount.
Yet, the risks with those tech-based property platform will, just like the traditional way of buying and holding the properties and private property fund, include depreciation of the properties, bad debts due to being unable to collect rent and the insolvency of the tech platforms.
We can see that in spite of global instability due to regional unrest and impact of the prevailing epidemic, buyer and seller of UK properties do have strong confidence over the previous years and very possibly it looks set to continue heading into 2023.
This is largely being driven by a high availability of low-rate mortgages, plus the recent low of the GBP have made UK properties one of the best bet during this period of market instability and inflation.
Headquartered in Shielfield, Prop Home Ltd. and its management have the history working in the industry for decades. We specialize in finding real estate opportunities that suit all levels of investors with defined rates of income and growth. The company can offer custom, personal and professional property management service that give you 100% peace of mind. We have the expertise and strong focus in offering our clients the stable portfolio of income investments with continuity, providing hassle-free one-stop.
With Prop Home’s specialist research, expert analytics and experience, we are simply the market’s number one choice for simple, efficient and cost-savings solutions that deliver you with stable income and capital growth even in the most challenging economic conditions.