What you need to know before investing in UK property

If you’re wanting to make the most of your money, you should be aware that a balanced and diverse investment portfolio can help. Some of these investments, such as the stock market, cryptocurrencies or venture capital, can be high-risk. However, investing in UK property remains a stable way to enjoy healthy returns, even in 2021.

In this article, we’re going to focus on the best places to invest in property in the UK, understanding rental yields, learning how to identify up and coming property areas and when to invest in UK property hotspots. This will help you to find worthwhile investments and allow you to make your money go further.

Is property still a good investment 2021 UK?

While Brexit and the coronavirus pandemic have caused a double-whammy of uncertainty over the past year, the property market has managed to buck the trend and continue to grow. In 2020 - when the pandemic was at its most virulent - property prices grew by almost 7%.

In addition to this, 2021 has brought with it an increased demand for larger, premium-quality rental homes. Increasing numbers of young professionals are seeing the “work from home” model as no longer a necessity during the pandemic, but as an alternative to office-based working. This has brought with it an increase in demand for properties with additional space for a home office or ample garden space for relaxation time away from computer screens and telephones.

What if property prices drop?

Falling house prices aren’t necessarily a bad thing for investors. Times of recession can be great for bolstering your property portfolio, as the dip in prices allows you to access more properties with your existing funds.

Where can I invest in property UK 2021?

If you’re thinking about investing in property, we cannot stress the importance of location enough. Currently, some of the UK property hotspots for investment are situated in the North of England. Many Northern cities are experiencing population growth, which means demand for rental properties is going to be on the increase. In addition to this, there are lots of Northern cities with fantastic transport links, including busy airports and national rail connectivity, including the forthcoming HS2 line.

However, your ideal property investment area will likely depend on your investment type. If you’re the sort of investor who wants to be hands-on with everything from administrative work to maintenance, it’s probable that you’ll want to invest in a location close to home. If you’re willing to allow a lettings agency to do the work for you, you might be happy to invest in up and coming property areas further afield.

Where is best rental yield in UK?

Rental yield percentage is traditionally the most desirable metric when considering a buy-to-let property. To work out the rental yield of a property, simply divide your annual rental income by the value of the property. From here, multiply the resulting figure by 100 to get your rental yield percentage. Alternatively, you can use our rental yield calculator to work this out automatically for you.

Remember, though: don’t forget to exclude expenses from your annual rental income, such as property maintenance costs or letting agency fees. This will help you to gain a more accurate rental yield assessment.

According to recent research, the North of England - and Yorkshire in particular - has some of the highest rental yields in the country. Properties in Hull, for example, have a rental yield of 9.2%, whereas Doncaster and Barnsley both offer rental yields of 7.9%.

These figures are well above the national average rental yield of 3.5%. Anything above this figure can be considered a good rental yield, although this will depend on your own circumstances and how much you expect to make out of your investment. Some property investors are happy with lower rental yields and less stress, whereas more hands-on investors are happy searching out the UK property hotspots or up and coming property areas to make speculative investments.

Which city is best for property investment?

If you’re wondering where to invest in property in the UK, there’s no definitive answer, as the circumstances of every investor are different. There are, however, steps you can take to identify areas that will offer the best potential returns based on your criteria.

When identifying the best UK city for property investment, you’ll want to consider the following:

• Your proximity to the city, if you intend on being hands-on as a landlord.
• Rental yields.
• Average rental prices in the area.
• Potential regeneration in the area (either now or in the short-term future).
• Employment prospects in the area.
• Educational establishments in the area.
• Transport links.

You don’t necessarily have to live where you invest, as with a good team of property managers, estate agents, letting agents and maintenance contractors, it’s possible to invest in property largely remotely. However we recommend only investing somewhere you would be willing to travel two at least twice a year.

The best buy-to-let areas in 2021

Over the past few years, the North of England has been trending as the best place to invest in property. Manchester, for example, ranks as the UK’s best city to purchase a buy-to-let house, while Newcastle and Liverpool also rank highly on account of recent regeneration and increasing population figures.

However, the South of England isn’t exactly overlooked - while London might not offer the highest rental yields, it certainly offers the highest average rents. Cambridge has also seen an increase in buy-to-let investors in the past twelve months, with Oxford and Brighton also ranking highly in several buy-to-let league tables.

Regardless of where you are situated, you’re likely to find somewhere to make a profit if you do a little research. Why not check out PropertyData’s tutorials to help you start your property investment journey in just a few simple clicks.