Follow the FJP Investment guide for sound, informed, and professional guidance on property investing in the UK in 2023. Once you have read this guide, get in touch with us for a chat about finding the right lucrative investment options for your investing goals.

Because of our extensive experience and expertise as property investment advisors, we are in a position to provide sound advice and direction to the investors in our network. First-time homebuyers, landlords with several properties, and even overseas investors are just some of the clients we’ve helped at FJP. No two clients are the same, and neither are the paths they take or the difficulties they confront. Because of this, we have the knowledge and resources to assist a large number of investors, no matter how complicated the circumstances may be. We’re here to assist you in getting started on your personal investing path.

What are investment properties?

Owning real estate that you then rent out to tenants under a buy-to-let arrangement is basically what an investment property is. Acquiring a property for investment purposes may include buying an already-existing building or financing the construction of a brand-new one, known as off-plan.

The return on investment (ROI) that investors receive comes from a few major sources:

• Rent paid by tenants.
• The rise in the value of the property (often called capital appreciation).
• A mixture of the two above. The type of property and location will have a major effect on these variables. For example, HMO properties don’t tend to yield much in capital appreciation but can bring in lucrative monthly rental returns.

FJP Investment is a leading real estate investment firm that offers access to some of the UK’s most desirable and stylish homes. To help our investor clients reach their financial goals, we work hard to make sure that their property investments give them the best return possible.

Why invest in the UK property market?

After seeing the value of your own home rise over time, you might be interested in learning more about the other ways in which real estate can provide you with passive income or capital appreciation. Compared to other forms of investing and asset classes, the UK real estate industry is one of the easiest and most straightforward areas in which to invest.

Professional consultants, financial advisers, and lenders are excellent resources for anyone just entering the real estate market who wants to learn the ins and outs of investing and constructing a portfolio of rental properties. Still, it’s important to be careful, pay attention, and have an expert watch over the process to avoid making mistakes that cost a lot of money.

Any and all of your real estate objectives, no matter how large or small, may be accomplished with the help of the professionals at FJP Investment. Hundreds of clients from all over the world have come to us to help them start or build a portfolio that has brought them success.

Property has always been one of the UK’s most successful investment markets. In light of this, the demand for properties continues to climb year after year, since this type of investment is hailed as one of the finest passive income sources. Consistent population growth, which is correlated with a high demand for homes, is one of the key reasons the property market continues to prosper. Sometimes known as “generation rent,” since 2001, the number of UK households renting has grown by over 100%. As a result, now is the perfect moment to start investing in the UK property market.

What are the main advantages and benefits of investing in the UK property market?

Passive income

Real estate investments that go up in value and provide passive income through rent or capital gains are a great way to build wealth over time.

Security in retirement

The more money you make from real estate investments, the more money you will have to put away for retirement. Many investors decide to sell their homes when they reach retirement age so they can get the most out of capital growth at the best time.

Stable and consistent

The stock market is frequently seen as unstable and high risk owing to the frequent fluctuations in stock prices, but investing in real estate is a far more stable option. Of course, there are inherent risks with all types of investing, but investing in bricks and mortar is often regarded as one of the UK’s steadier and more reliable markets.

Better control over your investment

Value maximisation is within your grasp as a buy-to-let landlord. With real estate investing, you have a lot of leeway to make changes that would increase the value, such as adding new features or updating old ones. Your rental income and the property’s resale value will both rise if you do everything you can to increase their worth.

What factors should you think about while developing your investment strategy?

Investing in real estate is a serious choice that should not be made carelessly. Before diving in and keeping an eye out for investment possibilities, there are innumerable things to think about. Don’t forget that you can always rely on our experts to provide you with the guidance you require; our consultants are always willing to hear out your concerns and provide their assistance in developing a strategy. If you need assistance understanding the fundamentals of investing, our website is a great resource.

When developing your plan, what foundational factors should you keep in mind?

Pick the right approach for you

Individuals can invest in real estate and reap the advantages in a number of different ways. The goal of many investors who buy older properties is to renovate them and then resell them for a profit. This approach has the potential to provide substantial profits, but if you are new to property investing, you will need help with this approach as some expertise is required.

A different route to take with your investment is to purchase off-plan properties. These are unfinished or under-construction properties that investors can buy at an early stage in development. If you choose to invest using this method, you will be purchasing unfinished real estate with the intention of renting it out and realising substantial income and appreciation after it is finished.

If you decide to invest in already established properties, then it’s a good idea to start with just one property and go small. This will give you time to familiarise yourself with how the market works and what’s involved in being a landlord. As you build up your confidence, you will be ready to buy more properties and build a diverse portfolio.

Some property investors decide to outsource the management of their properties to a letting agency. This works well for landlords who are very busy and cannot devote the time to manage and maintain their properties. While it’s a good option to consider, keep in mind that it will come at a cost in management fees, which will eat into your profits.

Whatever path you choose to get started on property investing, as a new investor, it’s risky to use a range of strategies at once.

Decide on your budget

Perhaps the most important first step you can take is to accurately assess the budget you have to work with. Investors in buy-to-let properties may discover that putting together a sizeable down payment reduces their monthly mortgage costs. As a result, you should do the math to be sure you can afford a sizeable down payment. Another advantage of a large deposit is that you are more likely to strike a good deal with the lender.

When considering how to finance your investment, you may pick from a number of different avenues. Whether you do it alone, with a partner, with a buy-to-let mortgage, or through crowdfunding, you should be thorough and plan everything out.

Consult with real estate investment professionals  

Even though it’s possible to establish a sizeable property portfolio without professional help, you’ll greatly increase your long-term return if you work with a reliable property investment consultant. An industry professional will be able to provide you with detailed information on projections, new markets, and development initiatives that fit your needs and investment goals.

If you work with a professional property team, you may be assured that you are on the best path to financial success. With their assistance, you’ll learn where and how to put your money to work most effectively.

In what ways might one invest in real estate?

It’s highly advisable to know the ins and outs of each type of investment and how they may help you before you start your property endeavour. After deciding whether to invest in commercial or residential property, you should learn as much as possible about the market and your options. Planning ahead to ensure you have the necessary resources and expertise before committing to an investment property is essential.

Conventional residential buy-and-rent rental property

The most commonly recognised and popular property investment venture is residential properties, which derive their income from renting them to tenants who live in them as a temporary home. Due to the lower financial output required and the normally lower expenses connected with owning a buy-to-let property, this investment category is generally seen as low risk.

An investor may reap the benefits of a steady stream of income by purchasing a rental property, as long as the rent is sufficient to cover the mortgage, the costs of upkeep, and any profit. In order to amass a substantial financial nest egg, a buy-to-let investment is a great choice. Moreover, when the time comes to sell, landlords may pocket the profit from the increase in the property’s value.

Student buy-to-let accommodation

The business model for student housing is fairly similar to that of a standard residential buy-to-let in that it profits from rental income from tenants. Both sorts of buy-to-let homes have their advantages and disadvantages, but student housing, which should always be located in close proximity to educational institutions in the UK’s premier cities, is a key distinction. Due to the relatively modest entry prices and high average returns, this is an excellent sort of property investment for first-time purchasers.

Since the United Kingdom’s higher education reputation is unmatched, it attracts thousands of students from all over the world each year, driving up the need for student housing. One drawback with student buy-to-let properties is that, even though they can bring in lucrative levels of rental income, they do not typically rise much in value. This is because, in part, there is a smaller pool of investors readily available to buy these properties.

Homes in multiple occupation (HMOs)

Landlords looking to maximise profits and reap the benefits of greater yields are finding that HMOs are a profitable sector to enter. These properties comprise multiple bedroom buildings, and the residents share the common areas, such as the kitchen and bathrooms.

Landlords prefer larger buildings that have been renovated and licensed to house numerous tenants for the multiple streams of income that may be earned at once. If a landlord has more than one tenancy on the same property, he or she can mitigate the impact of vacancy on their bottom line since there are multiple streams of income. There are certain disadvantages to HMOs, such as the fact that, depending on where the property is located, it may be subject to stringent licensing regulations.

Build-to-rent homes

Properties that are “built-to-rent” are constructed with the intention of renting them out rather than selling them to owner-occupants. This investment strategy is meant to provide investors with a steady stream of income from a residential property over the long term.

This area of the UK real estate market has experienced phenomenal growth in recent years as more investors turn their attention to these types of properties. Build-to-rent projects in the UK are intended to suit the needs of renters as the private rental market expands. Both retail and institutional investors choose this investment vehicle because of the security of its annual yield assurances.

What kind of things should I look for in investment properties?

If you want to know where and what kind of real estate would be most profitable to buy, you should start with your target market. Who would you like to rent to?

If you have a firm grasp on the details of your ideal renter, including their way of life, earning potential, and housing requirements, you will be well-equipped to make an informed decision when selecting the right type of property to rent. Starting with modest apartments, HMOs, or student housing may be the most appropriate approach to ensure that your investment creates a return, depending on your financial status and available finances.

Location

“Location, location, location” has become a bit of a cliché. However, when looking for profitable investment prospects, location should be front and centre in your mind. In your search for a site that will attract investors and renters, keep in mind the stability and future growth of the following factors.

Price

You can start by looking at what a typical property will cost in your chosen location. Also, the average property price in a particular location is a reliable indicator of the health of the local real estate market since it reflects the prices individuals are willing to pay and the incomes they can afford. Of course, no two properties are identical, but you should be able to gauge the types of prices you are looking at, the deposit you will need, and the level of rental income you can expect to receive from tenants.

Typical rents

A city’s economic growth, the proximity of the property to the city centre, and the demand for property in that location are all factors that influence typical rental prices. Tenants in the central business districts of several of the UK’s fast-growing cities typically pay a significantly higher average monthly rent than tenants in the surrounding areas. However, stable and long-term tenant demand are more likely with low average rental costs.

Population density

You should be able to identify highly populated regions and forecast population growth by looking at property market estimates for each city or town of interest and comparing the results.

Demand

A property’s demand level as a buy-to-let depends heavily on the volume of interest in renting it out. Your property’s value should remain stable if it is situated in an area that has easy access to public transportation, is close to reputable educational institutions, and boasts thriving economic conditions.

Jobs availability

The United Kingdom is home to a wide variety of industries and economic sectors, and many British towns have become major centres for these fields. If you offer housing in a thriving neighbourhood with ample job and carer prospects, you reduce the likelihood that it will sit vacant and not bring you rental income.

The potential for a rise in property value

Forecasts suggest that property values in prime investment areas will continue to climb rapidly over the next several years.

Income from rents

If you want to know whether or not a given area is a good bet for your money, look at the average rental yields in that area so you can predict your monthly revenue. Look at similar properties and see what rent they are fetching, then consider buying a property that has unique features that can bring in a premium.

Consider the type of property you want to invest in

The type of property you choose to invest in will most likely be determined by a number of factors, including how much you have saved for a deposit and your overall financial situation. It will also include things like what amenities it has and its size and layout, all of which will have a bearing on the type of tenant who may be interested in renting it. For instance, a family with children is more likely to be interested in a roomy suburban house with a huge garden than they would be in a modern, small apartment.

Family houses and high-quality property developments in city centres are attractive investments if high yields and robust rental income are your primary goals.

Pay attention to the property’s condition

Your investment property’s current state is critical in determining the extent of future upkeep and any associated expenditures. The durability and quality of your furnishings matter a lot, as they will influence your occupancy rate as well as reduce the likelihood of having to spend on maintenance and repairs. Many investors opt for off-plan properties because they are constructed to meet all the current legal and environmental standards and requirements and typically incorporate the highest quality in terms of design.

Why are off-plan properties a good investment?

As touched on above, off-plan real estate developments are those that have not yet begun construction or are in the early stages of construction but have not yet been completed. More and more proposals for new construction to alleviate the country’s chronic housing crisis mean more and more chances for investors to make a lucrative return. Many investors choose off-plan property to invest in since it is one of the most rewarding investing strategies.

To maximise your investment’s long-term return, you should try to invest early in the development process. Thanks to technological advancements like augmented reality, virtual reality, and artificial intelligence, developers may now show potential investors highly comprehensive design plans that provide a glimpse into the final product’s appearance. Investors may learn a lot about a company’s potential for profitability by studying its plans and blueprints in detail.

• Discounted prices for early entries
• Potential for capital appreciation
• Built to the highest environmental, health, and safety standards

Discounted prices for early entries

The discounted prices often associated with this sort of investment are a major selling point for off-plan houses. The earlier you invest, the more you might save on the purchase price of a house as well as choose from the best ones available. A rise in property value is a common expectation by the time the construction project has come to completion. In other cases, investors might save even more money by purchasing many properties from a single developer with various ongoing and future projects. 

Potential for capital appreciation

It’s possible that the value of a property you buy early on in its development may increase as the project proceeds. By the time the project has been completed, this will provide investors with instant equity. As seen by annual price increases of roughly 4%, housing costs in the UK are on the rise.

An investing horizon of three to five years is nevertheless advised because of the unpredictability of capital appreciation. Capital growth is significantly influenced by location. When there is high demand for living space, promising economic development, and planned investment, real estate prices in a city tend to increase.

Built to the highest environmental, health, and safety standards

New constructions by quality builders are in compliance with all applicable environmental and safety regulations. Those investment properties that are built to the highest standards stand the best chance of future lucrative returns.

Virtually all newly constructed homes have an energy efficiency rating of A or B, making them more efficient than the vast majority of older dwellings. As of right now, a minimum E rating on the energy performance certificate (EPC) is necessary for rental houses. There has been talk among government officials of instituting mandates for properties to achieve an energy efficiency of C by the end of 2025 for new tenancies and C for existing rental properties by April 2028.

As a result of these impending shifts, purchasing an off-plan house is a more lucrative option for investors. As a result, new builds and off-plan properties are becoming an attractive alternative for buy-to-let investors as renters seek newer, more environmentally friendly homes to live in.