Prior to the UK’s decision to leave the EU, property investors were looking for possible projects to tick three boxes. So what has changed since June 23? And what has the British property market on offer for its investors?
Pre-Brexit, investors were looking for projects to tick as many of the following three boxes as possible.
1. A project that is in a sector that is high in demand but also low in supply.
2. The project’s location needs to be high in demand but available property should also be low in supply.
3. A project’s yield should be high, with a potential to grow.
So what has changed Post-Brexit? The short answer is: Not a lot.
These three aspects are still the basic ingredients of any good property investment. The only thing that has maybe shifted slightly is where to find a project that ticks all those boxes.
However, this phase of investors re-assessing what they are after and what investment works best for them actually dates back further than June 23. Ever since the new stamp duty surcharges came into effect, on April 1 2016, investors have started considering more niche property investments.
One niche that has become more popular is the young and growing sector of Build-To-Rent investment property.
In an interview with Invezz, Dale Anderson, project manager at Experience Invest, reflected on niche property investment and explained: “In a time where buy-to-let seems less appealing, our off plan properties offer investors an assured return upon completion. This means that our investors will know exactly how their asset will perform regardless of market conditions.”
The British Property Federation named Build-To-Rent as the country’s newest housing sector. Build-To-Rent is designed and built specifically for renting.
Investment properties in this sector can usually be bought below market value price and the market shows great sustainability. Especially considering the growing population in the UK, the changing living circumstances – more people are now living on their own in single occupancy than ever before – and the continuing adjustment of Generation Rent.
On top of that, Build-To-Rent offers its investors one thing that’s desperately lacking in most other areas of the property market: guarantee. This guarantee happens in the form of rental assurance. Investors are usually assured a certain percentage rental yield for a set number of years after completion.
This assurance makes Build-To-Rent a recession proof option most investors should start considering wholeheartedly.
Build-To-Rent is a functional, almost pragmatic, investment option. Especially when considering those located in secondary cities where property is more affordable than in the capital.
Those areas, like England’s North, and the residential market that comes with it, will possibly be the least affected by the change that will follow the EU referendum. With the UK becoming a more independent country, the Government needs to make sure an equilibrium between the North and South will be created.
The Northern Powerhouse is the initiative that can help them to get there. And it need houses to do so, with Greater Manchester alone experiencing a shortfall of appropriate housing of 12,500 homes every year.
All of a sudden, the future of a sector that has been somewhat doomed in the last weeks, becomes one of the most promising and stable asset classes again. All investors need to do is research where they want to invest, make sure their investments tick all the boxes.