Lucy Symons & Adrian Sutherland of Buy to Let Hunter explain how to get more from your money without taking big risks...
It’s a tricky conundrum.
You want to put your hard-earned money to work, but where? There are a million articles advising you to invest in some amazing scheme in say, Liverpool, promising, “by this time next year you’ll be a millionaire, Rodney”. But you don’t know Liverpool.
In fact, going north of Crouch End seems scary! So you ask yourself, is it possible for your money to be as well invested in the south as in the north?
Well, we think the answer is: Yes. (You just have to be a little clever.)
To invest in the south and enjoy higher returns than you would receive up north, usually means finding a great place in a spot perfect for commuters, close to amenities and public transport (with parking), and creating this into a serviced apartment: setting up the place completely, to a high spec, with all utilities included and everything that a guest could need. Bridging the space between a traditional hotel and an unfurnished flat and marketing it craftily may well be the sweet spot for an investment right now.
The current trend appears to be that people are moving out of cities, and the mid-market in serviced accommodation is currently under-served, even in the south.
This might not be exciting enough for some investors, but by being smart on rental yield, combined with the perfect investment property in the right area, you may find that you can make higher returns without taking higher risks.
Regionally, the south is performing better this year for total agreed sales, up by 72% in the east of England and up by 69% in the south-east.
Sellers may be pricing their properties more realistically to have a better chance of agreeing on a sale in time to benefit from the stamp duty savings on their onward purchase.
This slightly more achievable pricing also means that their property is less likely to languish on the books, which is great news for investors.
There is an unprecedented change in lifestyle in response to Corona: people now value a quieter neighbourhood, a balcony or access to outdoor space and are looking for a study or spare bedroom to use as they become accustomed to working from home. More tenants are ditching city living in favour of living in commuter towns and villages.
Between May and August 2020, 34% of tenants wanted at least one more room (sharply up from the 25% who did so in the first three months of the year, as found by a survey conducted by Hamptons International).
This upsizing costs on average £149 more per month; a Lonres survey also found that space and gardens are in demand among buyers.
Furthermore, the distance considered commutable now is increasing – with people only travelling to an office once or twice a week, if at all; there is a dash for the commuter belt.
Areas that offer a better lifestyle, that cannot be overdeveloped and seem to be not only holding their value but also becoming more desirable with each new restriction on our lifestyles, are in high demand.
There are opportunities all over the UK, so please do have a look and explore all your options, but the general feeling at Buy To Let Hunter is that the south should be your focus at the moment as it offers a lower risk for your investment.
Taking a long view, areas in the south-east (where there are reasonable levels of capital growth) carry a lower risk because of growing unemployment in the north where there has also been a huge amount of concentrated development. If the current race for space continues, making the leafy suburbs attractive to tenants, the mid-term flexible rentals will increase returns, making a lower-risk investment actually generate equal to or greater than the returns you can find in the north.
If you invest cleverly by purchasing in the commuter belt of the south-east, the future projected increased employment rates and a desire for more space as the Work from Homers flee the city in search of more space, should mean greater returns for you.
If you’d like to chat with one of the team get in touch below.
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