Property investment in the UK: do you zero in on London or look further afield?
When it comes to property investment, London is a powerful magnet, attracting interest from all around the world. However, is this all that the UK has to offer? As the market gains in strength, other areas are opening up to investors, each with its own distinctive advantages. If you’re looking for somewhere to buy, it’s worth taking your time to look around.
Capital appeal
The attraction of the London markets is easy to see. Constant pressure for places to live means keeping properties occupied is easy. Over the past few years, prices have been going up and up, and even though that rate of increase is slowing now, with many experts agreeing that they can’t go much higher, the city’s significance as a centre of world trade means they’re highly unlikely to fall. The downside for investors, of course, is that you need a lot of money to get started, but there are occasional renovation opportunities out there as well as luxury properties changing hands, so it’s always worth looking.
Property market hotspots
There are now several cities emerging as interesting alternatives to London. These are some of the best:
- Manchester – once famous as an industrial heartland, this city has reinvented itself as the key trading centre for the North of England, so it will come as no surprise that its housing market is booming. Properties are still comparatively cheap to buy but they command high rents, especially in the centre, which is where the likes of Harry Dhaliwal, of Belvoir Lettings, has enjoyed success.
- Birmingham – even before the promise of HS2, Birmingham was enjoying considerable growth as more and more companies chose to move there from London, creating a high demand for quality housing in areas with good transport links. Terraced houses generally offer the best returns as they attract people moving there to have more room for their families without giving up on London-level employment.
- Rotherham – as opportunities in engineering and manufacturing have rebounded since the 2008 crash, Rotherham has been one of the cities to really see the benefit, and more employment opportunities mean more demand for housing. Semi detached properties are actually the cheapest here, on average, although they are also the easiest to rent, creating a great opportunity for investors.
- Woking – buyers interested in a high stakes market outside the capital may well want to look at Woking, in which prices are high but there are still inroads to be made. Ideal for commuters but with the atmosphere of a country town, this is a place where homes regularly change hands for half a million, but the biggest demand is for flats averaging around half that and fitted out to suit single people or working age couples.
- Ipswich – also in the commuter zone but commanding significantly lower prices, this is a place popular with families, and semi-detached properties are the best sellers. There are good investment opportunities to be found in former housing estates and other neglected areas that are now becoming gentrified because of consumer pressure, and the city’s location suggests that prices still have a good bit of room to grow.
Identifying opportunities
To succeed in a market like this, you’ll need to take the time to get to know it first. Reading through letting agency materials and estate agents’ catalogues as well as auction catalogues will help you get a feel for how the market is moving and which local areas are most promising. Pay close attention to transport infrastructure and planned extensions to it, as well as to the scheduled openings of new offices, supermarkets or other major employers that might attract people to particular areas. Local newspapers can be a great source of leads.
Developing at a distance
Investing in property in a city doesn’t mean having to live there, but it does mean that you’ll have to develop relationships with local contractors. There are specialist search indices that can help with this but the best approach is to network or ask local business support services for advice, because nothing beats personal recommendations. It’s also useful to connect with a local surveyor who can do inspections on an occasional basis without adding to your payroll.
The floods that parts of the UK have suffered in recent years provide a good example of why diversifying your property portfolio across different areas is a good idea. As well as helping you avoid calamity, spreading your bets also enables you to get the best of diverse economic opportunities, which is ultimately what investing is all about.
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