Should you invest in UK property in 2019?

For Sale & sold home

Owning your own property is a goal that the majority of people share, albeit for different reasons.

Some simply feel comfortable in homes they can call their own, others see it as an investment opportunity. If you belong in the latter category, there are some things you need to know.

There is no doubt that buy-to-let property investments have been on the rise in the UK for the past 20 years. In fact, Britain has the mentality of needing to own their own property engraved in their minds. However, the term “buy-to-let” has recently been making headlines, and not in a good way. What caused this seemingly sudden shift and what does this mean for someone who wants to invest in property in 2019?

Buy-To-Let in 2019

As previously mentioned, buy-to-let has recently experienced a lot of bad press.  The most common complaint the media has is that this type of investment contributes to the inflation of house prices.

As a result, the Government has taken major steps to reduce the attractiveness of buy-to-let. Specifically, in the Budgets and Autumn Statement of 2015. The act introduced some tax changes and reduced the overall freedom the landlords previously had.

Another important event that changed the way the UK looks at investing in property in 2019 is, unsurprisingly, the withdrawal of the UK from the European Union (Brexit). Brexit is, without a doubt, the most important event in the United Kingdom’s recent history. Since the impact of Brexit on the housing market remains a topic of debate, most landlords are waiting for the storm to blow over before making any financial decisions regarding their property.

What Does This Mean For Investors?

Residential property is bound to have its ups and downs in the short term. However, buy to let is still an achievable investment in the UK in the 2019 long term.

For example, HandyRubbish, a leading rubbish removal company in London, reveals that the amount of work in their sector is noticeably larger. On the same note, the company observes that the owners of property in London are frequently changing. This implies that the building rate in the UK is on the rise, meaning there is a high demand for property. 

In addition, the population of the UK is growing, and the average number of people per household is decreasing. There are a lot of explanations for this trend, including the fact that there is an increase in divorce rates among couples.

Simply put, there are not enough homes in the UK to support the growing population. Another piece of data that supports this claim is the fact that the average price of a house in the UK in 2019 has risen by 1.4% compared to 2018. Generally speaking, this is great news for someone looking to invest. 

How Did This Trend Start?

Up until the 1980s, buy-to-let was reserved for people who were rich enough to pay cash for a property or had a deposit big enough for a commercial mortgage. In other words, purchasing property as a financial investment was not feasible for the common folk.

The pivotal change came in 1988 when the Housing Act introduced the concept of assured shorthold tenancy.  This meant that potential landlords could be confident that tenants would only live in the property for a fixed period.

Buy-to-let has been on the rise ever since. In 1996, the UK started offering buy-to-let mortgages, which aided in solidifying the belief that buying property to rent out for a profit is a great financial decision.

Buy-To-Leave

Another, albeit far less popular, trend that investors may look into is buy-to-leave. The phenomenon refers to investors buying a property but not renting it, instead opting to leave it empty and wait for the house prices to rise. Buy-to-leave is usually associated with London, as it is prevalent in London’s housing market. For instance, some sources mention that One Hyde Park, a prestigious residential complex in London, is only 30% occupied at any given moment.

The practice itself has often been criticized, with experts saying that it creates “ghost towns of the super-rich”.

Criticism aside, buy-to-leave might be a viable financial investment if you want to avoid dealing with tenants.

Final Thoughts

Overall, it seems as though property prices in the UK will continue to increase. However, it is unknown how the current political climate in the UK will affect the housing market. As a result, the smartest thing might be to just wait until Brexit is sorted out before making a financial decision of this magnitude.

In conclusion, there is no simple answer to the question “Should you invest in UK property in 2019?” As it usually goes with most investment opportunities, the most important thing is to do your research on current events and trends, and act accordingly.