Demand for property Outweighs supply
The law of supply and demand has impacted the UK property market for many years. A continuously growing population fuels demand for new homes. This boosts the price of homes and is great news for property investment in the UK.
According to the Office for National Statistics (ONS), the UK population is forecast to grow to:
2 million in 2026
70 million in 2029
9 million in 2041
This is population growth of more than 11%. To put this in to context, the UK would need six cities the size of Birmingham to house it or 13 Manchester, or 12 Liverpool. That’s a huge demand for extra housing.
UK property investment has continually proved itself as a solid investment
The average UK house price has doubled every eight to 10 years. Even during financial crises, property investment in the UK has proved more resilient than other assets. When the stock market almost halved in 2008/9 because of the Global Financial Crisis, the average UK house price fell by just 14%.
Stock markets tend to have crashes every 10 years or so. The Oil Crisis was blamed for the slide in the mid-1970s. Then there was Black Monday in October 1987. The dotcom bubble burst in 2000. Throughout such stock market volatility, UK investment property has remained remarkably resilient and stable.
Inflation-proofed income – great for retirement
When you invest in buy-to-let property in the UK for the long term, you benefit from rental income that you control. Rental prices increase in line with inflation. Sometimes they rise slower, and sometimes faster.
If you are investing for retirement, the inflation of buy-to-let investment property in the UK will be very attractive to you , especially when measured against the cost of an annuity designed to protect your income against inflation.
You make money on other people’s money
In the UK, you can borrow to invest in property. This means you have the potential to make money on other people’s money, thus boosting your comparable return.
As an example:
Let us consider an investment of £200,000, using £50,000 of your own money as a deposit and a £150,000 buy-to-let mortgage to fund your investment. Let’s say that the mortgage interest rate is 4.5%, and you achieve a gross rental yield of 7%.
You will make a gross income of 2.5% on the £150,000 you borrowed, after allowing for the interest payment. Put another way, your gross rental income is £7,250 (7% x £50,000 + 2.5% x £150,000), or 14.5% of the capital you invested.
Whats even better- Should the property value increase by, 30%, it would now be worth £260,000. Before costs and tax, this is a profit of £60,000. That’s 110% on your original £50,000 investment.
These incredible potential returns are all thanks to the benefits of leveraging in property investment.
Perfect passive income
This makes a major difference to life. Who wants to work for their money, when you could be sitting at home or on holiday enjoying the work of someone else’s labour? Hire an investment property company to manage your property, and benefit from perfect passive income that could give you the lifestyle you deserve and want.
For its potential to produce incredible passive income and capital growth over the long term, property investment in the UK is a highly attractive option. Projected population growth should help it to produce the kind of returns it has historically, as you benefit from using other people’s money to maximise the return on your own investment capital.