UK property investment: buy-to-let, short-term let or build-to-rent?

 

Property investment comes in many forms, and it’s important to find what works best for you. There are many options open to property investors, and here’s an overview of a few of the best types of property investment for 2021.

Despite economic and political uncertainty, property investment has continued to be popular in the UK. The property market has remained remarkably resilient even throughout the COVID-19 pandemic. Many investors have turned to property as stocks and shares have been particularly volatile.

Property investment in the UK is considered a safe haven for some as the sector has strong long-term prospects. Here is an overview of a few of the best types of property investment and what it means investing throughout 2021.

Buy-to-let

Traditional buy-to-let is the most common type of property investment. It can be a safe bet if you invest wisely. Buy-to-let involves purchasing a property with the intention of finding tenants to live in it. Ideally, the rental income should cover any costs associated with running of the rental property, including mortgage borrowing.

For most investors, the strategy is to earn returns through the rental income as well as the future sale of the property. This is typically a medium to long-term investment. Recently, there has been a high number of first-time buy-to-let landlords entering the market as the sector has remained strong despite recent tax and legislative changes.

With attractive market conditions, the number of landlords has reached an all-time high of 2.7m. During the past 20 years, the proportion of renters to homeowners has doubled. And this figure will likely grow even more in the coming years, further increasing demand for buy-to-lets.

The high demand in the private rented sector means if landlords invest in the right property in a location where tenants are likely to want to live, investors can see huge success. Rental yields have been particularly strong in areas like Liverpool, Birmingham and Manchester and in more up-and-coming areas, such as Preston and Bolton. Many of these areas are also forecast to see strong house price growth over the coming years.

Short-term holiday let

In recent years, there has been a rise in holiday-makers choosing private accommodation. Searches and bookings for holiday lets have been on the rise as there is a substantial amount of pend-up demand due to the COVID-19 pandemic and successive lockdowns. Self-contained accommodation is set to reopen on 12 April 2021 during the second phase of the roadmap out of lockdown.

Holiday rentals have the potential to earn higher returns than traditional buy-to-lets, especially in the right location. The daily or weekly charge for furnished holiday lets is much higher than traditional buy-to-lets. Because of this, holiday lets can provide high yields and provide an attractive way to diversify property investment portfolios.

There are also potential tax advantages too. Short-term furnished properties are classed as a business. This means investors can often claim certain expenses. However, short-term holiday lets come with added maintenance and running processes because of the higher turnaround of customers, so it’s important for investors take this into consideration when investing.

Holiday operators can help run the property for a more hands-off investment. And with more room for growth, the short-term rental sector can provide investors with high yields if done well, especially with the UK staycation boom looming.

Build-to-rent

In recent years, the build-to-rent sector has seen strong growth in the UK. Build-to-rent homes are purpose-built rental accommodation. As renting is a lifestyle decision for some, it can be a preferred way of living for many. The sector is also providing a solution to the rising demand for high-quality rental properties that reflect the needs of modern renters.

Build-to-rent has become particularly alluring for both tenants and landlords. Providing high-end accommodation with attractive amenities, such as gyms and cinemas, build-to-rents can offer more to tenants than traditional buy-to-lets. Some tenants will be happy to pay a premium for modern properties with high-end amenities and communal facilities in prime locations.

Within these developments, there is more of a focus on shared spaces, including communal gardens and event spaces. Many build-to-rent developments also offer coworking spaces and high-speed internet. This will be particularly enticing for tenants who continue to work from home even after COVID-19.

The key to build-to-rent is giving tenants the feeling of living within a community in higher quality properties. This encourages longer tenancies and creates a feeling of belonging without the commitment of ownership. And as many people have rethought their housing situations in the past year, build-to-rent can provide a good opportunity for investors looking to adapt to the changing tenant trends.

For any property investment, whether buy-to-let, short-term let or build-to-rent, finding the right property in an appealing location is key. And it’s important to consider all of the costs and obligations involved before investing.

Alongside our traditional buy-to-let investment opportunities, we also offer a number of build-to-rents and short-term holiday lets. Take a look at our investment page, and sign up as a member for more information.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

housing supply

UK property investment: buy-to-let, short-term let or build-to-rent?

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.