It’s difficult to feel secure when investing money during uncertain economic times. Property has long been the go-to investment choice for those seeking a lower-risk option. However, some feel that changes to regulations and the possible impact of Brexit mean the property market is no longer as secure as it once was. While this view isn’t always shared, it’s important to know that your money is as safe as possible before you take the plunge.
We’ve explored some of the top reasons why property is still the best investment for you and your money, whether you’re planning a long-term residential investment or are keen to enter the holiday lettings market.
Taking advantage of capital value
In spite of the ups and downs of the property market, capital value rates still grow faster than money rates. While a savings account or ISA will provide you with interest, this interest is only a small percentage of the original amount, so significant growth is unlikely. When invested in property, your money has the chance to grow with the market and achieve a much larger return.
While the property market isn’t guaranteed, capital value is almost certain to increase over a 10- or even five-year period. In fact, history tells us that money invested in property is capable of surviving recessions, credit crunches and political issues. What’s more, those who have purchased a buy-to-let property also benefit from the regular income on top of the capital growth, making property a significantly more lucrative option than savings.
Boost your investment through improvements
One of the greatest aspects of property investment is the fact that costs do not necessarily equal value; by investing wisely in the improvement of your property, you can increase your value by significantly more than you have spent. It isn’t uncommon, for example, for careful spending on improvements to increase the investment by up to tenfold.
While the benefits vary based on area and type of property, some of the most lucrative investments in home improvements include garage and loft conversions, kitchens, bathrooms, additional bedrooms and central heating. More basic improvement such as decor and rubbish clearance can also have a huge impact if a property is purchased in an unappealing state.
Negotiating the finance market
These days there are many different options when it comes to financing your property investment. Buy-to-let loans, for example, have made it possible for almost anyone with a steady job to invest in property for the purposes of residential letting. Much of the reason for this is the significant reduction in risk thanks to the Housing Act, which makes it possible to guarantee vacant possession and sell the property at full value if it is repossessed.
In addition, lenders now take rental income into account, so those with lower-paid jobs are still able to qualify as borrowers if they purchase within a popular market or area. Contacting property accounting experts is the first step to being approved for a loan; with the help of an accountant, you are more likely to be able to prove your financial position and appeal to potential sources of finance.
As both the residential and holiday buy-to-let markets continue to flourish, property investors are now in the position of being able to reduce their risk and adjust their target audience as the market changes. While this isn’t a short-term option – lenders often require investors to choose between the markets before securing financing – there will be opportunities to renegotiate your position should you feel you’ve chosen the wrong path.
If you choose for buy-to-let, take time to assess your position before making your initial judgement on your target market. Residential buy-to-let properties thrive based on the strength of the economy and the location of your property; if times are hard, lower-priced properties will see the most demand. However, if people are unable or unwilling to travel abroad and the UK holiday market excels, your holiday let could prove to be a significant earner.
Like any market, the property market will fluctuate based on economic and political factors. However, history tells us that property remains one of the most secure and low-risk investment options available. With the recent rise in the number and types of loans available, it’s easier than ever to take advantage of this steady investment path. As a result, you can make more of your money without falling foul of the significant fluctuations that plague so many other investment markets.