The last couple of years have been event-packed, to put it mildly. Fortunately, the major shocks over these years now seem to be moving into their closing stages. In particular, there are now multiple vaccines for COVID19. This gives investors an opportunity to draw breath, take stock, and decide where to go next. With regards to the last point, Mark Burns, Director of Pure Investor shares his thoughts on why UK property is definitely worth considering.
The benefits of property
The benefits of property investment are much the same now as they have always been. You get the benefit of growth while still enjoying yield. Property is generally a solid hedge against inflation. It can also be a very tax-efficient investment.
In the UK, taxation depends on whether it is classed as residential or commercial. Either way, however, investors can expect a tax-friendly environment. What’s more, Stamp Duty will be discounted until the end of September. This means that buyers who move quickly could still benefit from it.
The specific benefits of UK property
The UK property market has long been renowned for its reliable stability. Apart from the odd correction here and there, it consistently marches steadily onwards and upwards. What’s more, corrections only tend to happen as a result of extreme events, for example, 2008. They also tend to correct themselves quickly. For example, the UK housing market has barely blinked in the face of Brexit and COVID19.
It’s easy to assign this performance to the fact that the UK has long had a chronic undersupply of housing. There’s actually a fair degree of truth in this. What’s more, realistically, this issue is unlikely to be addressed in the short term. While home-builders will try their best, they’re going to need time to readjust to the longer-term implications of Brexit and COVID19.
There are, however, other factors involved. Of these, possibly the most important, is the change in attitudes towards property ownership. Young adults and empty-nesters are increasingly likely to choose renting as a lifestyle option. For empty-nesters, selling the family home can also help with estate planning.
If current trends continue, it is entirely possible that home-ownership will become linked with “nesting”. This is already the case in other countries, such as Germany. In fact, in other countries, even people with, or planning to have, families still prefer renting. The parents focus on their children and the landlord takes care of the home.
The UK’s numerous micro-markets
As in many other countries, the UK’s property market is essentially a patchwork of numerous micro-markets. In fact, if you really drill down, you can often find micro-markets within micro-markets. For example, cities can be divided into local-authority areas and even by neighbourhoods within them. This has two implications.
Firstly, whatever investment niche you’re interested in, the UK almost certainly has a suitable location for you. Secondly, it very much pays to do your research. Thankfully, the internet has made it a whole lot easier for investors to research new areas. That said, it’s still well worth making a personal trip to a location if you possibly can.
If you’re interested in HMOs or commercial property, it’s also advisable to check local rules thoroughly at an early stage. Local authorities tend to be pragmatic about HMOs. They understand that people need affordable places to live. They do, however, tend to need assurances that your HMO will be properly run and essentially not create problems in the neighbourhood.
Commercial property includes short-let “staycation” property. Attitudes towards this now vary widely between areas. Before COVID19, local authorities in urban areas were very much starting to clamp down on them. Those in rural areas tended to be tolerant, even welcoming of them. Post-COVID19 however, it may be that urban local authorities start to take a more relaxed attitude towards them.