Should I Invest in Property? Your Essential Guide to Real Estate

By Scott McNeil

  • 26 February 2024

Is property investment a wise choice? Tackling this question has become increasingly complex in the dynamic market of 2024. This piece cuts through to the core of the debate on investing in real estate, eschewing unnecessary frills for direct analysis that weighs both its solid advantages and possible drawbacks. Prepare for an unembellished assessment that foregoes promotional spiels, aiming instead to equip you with candid information for informed decision-making about putting your money into property.

Key Takeaways

  • The UK property market in 2024 shows minor decreases in house prices, with a period of stabilization expected around 2025 and growth predicted by 2029, driven by positive economic conditions and wage growth.
  • Investing in property can offer stable returns through rental income, long-term growth and capital appreciation, and tax benefits, making it an appealing option for financial diversification.
  • Property investment comes with risks including market fluctuations, the need for effective property management, and less liquidity compared to other asset classes like stocks and bonds.

Understanding Property Investment in 2024

Prepare yourself as we explore the intriguing world of property investment in 2024. The property market is a vibrant, ever-changing landscape shaped by a myriad of factors, from regional variations to macroeconomic trends. The UK housing market in 2024 is showing significant differences based on locality. It’s all about being in the right place at the right time.

Focusing on specific regions like the North West and Yorkshire reveals that property values are anticipated to increase steadily. The regions where prices are forecasted to decrease or remain stable are areas such as the capital city and surrounding regions. But don’t fret – this is a temporary hiccup. Even in the Capital, housing market is expected to start stabilizing near 2025, with a cumulative growth prediction of nearly 18% by 2029.

Amid the short-term declines, there’s a silver lining. Positive economic conditions, highlighted by a projection of wage growth outstripping inflation, are anticipated to strengthen the housing market in the long term. It is also worth noting that mortgage rates, which directly impact mortgage interest, have been modestly decreasing and are expected to fall further into 2025.

Market Trends

Before getting into the intricacies of property investment, it’s paramount to be in tune with the current market trends. After all, understanding these trends can help us make informed decisions.

The UK property market has been displaying unexpected monthly price gains recently, indicating a phase commonly referred to as ‘past peak pain’. It’s a rollercoaster ride, but one with promising highs. House prices in the UK rose substantially over the past decade, from £167,716 in January 2013 to £290,000 at the end of January 2023 – a gain of 73%. Despite a slight decline in 2023, the downward trend in UK house prices is seen as a temporary market correction.

Influential Factors

Comprehending the elements that sway the property market can enhance our understanding of its workings. These factors are like the wind that steers the ship of the property market, affecting property values and market activity.

Economic changes, for example, significantly influence real estate markets, with prospects tied to household income growth, economic performance, and policy developments. Mortgage rates, influenced by economic forces and central bank policies, affect housing market activity, with recent trends showing a fall in rates leading to increased activity.

Government policy and shifts in demand due to changing working environments are influencing the conversion of commercial properties to residential spaces.

The Benefits of Investing in Property

Stable returns from property investment

Having sketched out the 2024 property market landscape and its influencing elements, it’s time to turn our attention to the potential benefits of embarking on property investment.

One of the prominent advantages of investing in property is the stable returns it offers. By purchasing a property for letting, you can secure a regular source of income that can supplement your overall financial stability. This steady stream of income combined with the potential for long-term financial growth provides a hedge against inflation and offers increased stability compared to merely keeping your money in a savings account.

But that’s not all. Property investments can reap various tax advantages, including stamp duty breaks, enhancing the investment’s financial efficiency. Over time, your property’s value can increase, resulting in capital appreciation – another notable benefit of property investment. When you add all this up, property investment emerges as a balanced investment opportunity combining the advantages of stable returns, tax benefits, and capital appreciation.

Stable Returns

The allure of dependable returns is a primary reason why investors are drawn to property investment. But what does that entail?

Becoming a landlord and investing in residential or commercial properties can offer a reliable income source, enhancing your financial security by supplementing or potentially supplanting your existing earnings. The rental income serves two purposes: it generates consistent passive income and assists with accumulating equity in the property as mortgage payments are made over time. This favorable cash flow each month can be used to invest in more properties, fostering exponential growth within your investment portfolio.

Tax Benefits

Tax benefits in property investment

Being a property investor may qualify you for a range of tax benefits, including capital gains tax advantages, when dealing with an investment property. Understanding these benefits can help you make the most of your investment properties.

Pre-trading expenditure incurred within seven years before the start of a property rental business, letting agent fees, property maintenance, Council Tax, repairs, and maintenance costs, as well as legal and professional fees related to rental profits, are all tax-deductible expenses for landlords.

In case of rental losses, they can be offset against profits on other properties or carried forward against future profits, creating a united UK property business for tax purposes with buy to let mortgages.

Capital Appreciation

Capital growth, the uptick in an investment’s value over time, plays a pivotal role in successful property investment. This is one of the two main types of returns from buy-to-let investments, the other being rental income, and a well-balanced strategy should include prospects for both. When considering a buy to let property, it’s essential to factor in these potential returns and the buy to let mortgage to ensure a profitable investment.

Notable property value increases have been observed in Huddersfield with an 8.7% rise, Liverpool with an 18.1% increase, and Manchester with an appreciable growth over 315% in the last 20 years.

Property Management

Property management is an integral part of property investment, especially when dealing with rental property. It involves navigating challenges like handling difficult tenants, unexpected maintenance and repairs, and managing high tenant turnover, which can impact profitability.

Effective property management includes establishing a comprehensive budget that accounts for possible vacancies, property maintenance, and other expenses. Using property management software can help landlords streamline operations, including rent collection, tenant communication, and scheduling maintenance tasks.

Strategies for Successful Property Investment

Research and due diligence in property investment

Having surveyed the property investment terrain, it’s time to consider some key strategies for success. These strategies include conducting thorough research, performing due diligence, and diversifying your investment portfolio.

Conducting due diligence is vital to determine if a property investment matches an investor’s strategy and financial goals, including the pursuit of cash flow through rental properties or selection of prime locations for long-term value appreciation. Thorough research before investing in property is important for aligning with personal investment strategies and financial objectives.

Research and Due Diligence

Exhaustive research and due diligence are fundamental to successful property investment. This involves understanding the property market, identifying potential investment opportunities, and assessing the risks associated with each potential investment.

Gross yield is a critical metric for determining property profitability. It is calculated by dividing the annual rent by the property market value. During due diligence, it is important to:

  • Identify property defects
  • Identify legal encumbrances
  • Identify environmental concerns
  • Review property titles
  • Review compliance with building regulations

This ensures legal and financial compliance, which can affect the value and profitability of the property.

Diversification

In property investment, diversification is an essential tactic. It means allocating your investments among diverse property categories and geographical areas to achieve steadier and more reliable returns.

By expanding a property portfolio to encompass various kinds of properties like rental units, commercial establishments, and retail outlets across different locations, stability is enhanced. This strategy acts as a protective measure against market volatility by balancing the investment yields so that if one sector performs poorly, others may offset it.

Frequently Asked Questions

Is investing in property still a good idea?

Yes, despite recent tax changes and less profitability for landlords, owning property for the long term remains one of the most reliable forms of investment, as rental demand continues to outpace supply.

Is buy-to-let worth it 2024 UK?

Yes, buy-to-let can be worth it in the UK in 2024, especially if you are strategic and proactive in your approach to investment.

What are some advantages of property investment in 2024?

In 2024, capitalizing on property investments can yield steady earnings, offer tax advantages, and present opportunities for capital appreciation.

Summary

In conclusion, property investment in 2024 presents a multitude of opportunities. While it may come with its own set of challenges and risks, the potential benefits of stable returns, tax advantages, and capital appreciation make it a worthwhile consideration for many investors. Whether you’re considering direct property ownership or exploring other options, it’s crucial to conduct thorough research, understand the market trends, and align your investment decisions with your financial goals and risk tolerance. Happy investing!

Adil Sheikh
Adil Sheikh
9 April 2024
The team at GETS property are wonderful, I can’t recommend them enough. I’ve only worked with Scott and Taryn, but they really know how to look after their clients. They were more than happy to advise and educate me whilst I was new to the world of property investment and helped me secure a deal on a property that I am really excited about. I look forward to working with the team again soon!
Ellie Smith
Ellie Smith
6 October 2023
What an amazing company ! I have today exchanged on my first off-plan apartment in my favourite northern city, and it’s so exciting !! Gerallt and Taryn in particular have each been amazingly helpful and very supportive ALL the way through what is a first time process for me , explaining to me each step in detail from choosing and negotiating through to exchange and beyond. I am truly impressed with these people . I’ll be off soon for a drink to celebrate but just to say everyone needs a G&T in their property journey for sure !….. 🍸
AJ Edwards
AJ Edwards
4 September 2023
We would highly recommend Scott. This would be our first Property Investment, he went over & beyond what was asked. Very knowledgable and provided us with a vast amount of options to choose from. Their office space is cool too.
Raminder
Raminder
24 August 2023
Thank you Geralt for all your advice and understanding our investment requirements. Geralt’s rapport with the developers also made us feel comfortable about the investment . Definitely recommend their firm and look forward to our first investment journey with them.
Rebecca M
Rebecca M
20 June 2023
Extremely knowledgeable and well connected with the clients and communities best interests at heart. I would recommend
Jack Benson
Jack Benson
16 June 2023
Very knowledgable and helpful people. Thank you so much!