Here are the top 5 things that you must avoid if you want to successfully invest in the UK based on our experience with over 3000 investors since 2002.
The UK property market is still considered one of the most attractive investment destinations globally due to its long-term stability, growth, and relatively high rental yields. But like any other investment, it also comes with its share of challenges and pitfalls. If you want to successfully invest in UK property, it is essential to avoid some common mistakes that can lead to losses, whether financial or opportunity-cost.
- Avoid Buying Cheap, Cheap Property in Areas with No or Decaying Fundamentals
Fundamentals refer to the underlying factors that drive the demand for property, we say shops, schools, transport links, major employment, and major investment.
Investing in places that have decaying fundamentals, which we’ve seen in many areas across the UK since the 2008 Global Financial Crisis, you run the risk of the property's value not increasing or, in fact, decreasing, making it difficult to sell or make any worthwhile money from the property. Decaying fundamentals should be avoided at all costs even with the false attraction of a higher rental yield.
So, instead of buying cheap properties based on their rental return, it is better to focus on investing in properties in areas with strong fundamentals and capital growth.
- Avoid Chasing Cash Flow When You Need Capital Growth
An area with limited or diminished fundamentals leads onto another mistake that property investors make; chasing cash flow when they need capital growth. This is about strategy as much as it’s about short-term versus long-term return.
If you are looking for long-term growth in the UK, it’s essential that you consider capital growth. So instead of buying properties that generate high cash flow but have no or low capital growth potential, it is often better to invest in properties in areas with strong growth and regeneration potential.
- Avoid Using High-Risk Strategies When You Aren't Living Here
Investing in property is surprisingly easy these days. However, this applies to normal buy-to-let investment properties not other higher-risk strategies, such as serviced apartments, HMO, students lets, rent-to-rent. These types of investments can seem easy but it’s often when the issues arise that you realise you might as well be 10,841kms away.
So, if you live away from your property and can't keep an eye on your investments often, you should avoid high-risk strategies and focus on low-risk investments, like buying New Build Off Plan or established properties in growing areas.
- Avoid Not Independently Researching The Claims Made By Salespeople (This Includes Me)
It is essential to be wary of claims made by salespeople, including me, when investing in UK property.
This doesn’t mean that everyone is out to deceive you, but it does mean that the old adage ‘Caveat Emptor - Let the buyer beware" still applies.
Get the whole story; independently research and verify the information before making a decision.
If you're not sure what this entails, then we’re happy to provide everything you need and get your questions answered.
- Avoid Buying a Property Without Considering the Structure, Tax, Resale and Market Conditions
Like most western economies, the UK will demand it pound of flesh in the form of tax be paid. Before you buy, you need to consider the structure, tax, resale, and market conditions when not only buying but also owning a property.
The ownership structure of the property can be either a company, trust, or personal name.
Tax considerations for investors, such as stamp duty, income, and capital gains tax can also have a significant impact on the returns of your investment. Let's face it, if taxes are not your thing (like they are for most people), then it’s best to get it cleared up before you invest. We can help with that.
Before buying a property, it's also important to think about how easy it will be to sell and how the market is doing. Research and understand the current supply and demand dynamics and their likely impact upon sale.
By avoiding these common mistakes and instead taking a calculated and well-informed approach to property investment, you can increase your chances of being successful.
We’d love you help give you the certainty you should have before you invest but also how to maintain this certainty throughout your ownership and through resale
Live with passion,
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2023 Updated Edition
The UK Property Investors Guide has everything you need. The compilation of questions asked by investors put into a one sitting read for anyone who is new to the UK property investment market.
All is an effortless, set and forget approach that is simple for any investor no matter how much time you have or what country you are buying from.
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