Subscribe to our monthly newsletter

Get the knowledge and inspiration you need to help you build
a profitable portfolio - straight to your inbox!

Insight & Opinion

Key financial factors to consider in a property investment

Author: Riccardo





Committing to a property investment is a big decision, so you need to be fully informed and aware of the various financial considerations and obligations involved before going ahead.

Here are some of the key factors to take into account when planning your investment:

Price and budget

It goes without saying that the price of the property you’re buying should be a top priority, partly because your entry level is linked to the amount of capital growth you can expect to receive over the term of the investment.

You might want to consider options that could help you secure a lower-than-average entry price, such as off-plan investment.

It’s also worth thinking about your budget and the property types that fall within your price range. A rough breakdown might look like this:

  • Up to £100,000 – student accommodation
  • £100,000-£125,000 – hotel suites
  • £125,000 and over – private rented and build-to-rent property

Regular mortgages aren’t available in sectors like purpose-built student accommodation, so you have to be prepared to make a cash investment.

Capital growth and rental yields

Capital growth is a key incentive for many investors, who want to have confidence that their investment will increase in value over time.

The UK property market has established a strong track record for delivering healthy, consistent growth for investors, even during times of economic and political uncertainty. However, it’s important not to take anything for granted and to study the various factors that could influence your investment’s growth potential in the coming years.

Another vital consideration, particularly where buy-to-let property is concerned, is possible rental yields. Prospects for regular rental returns will be particularly strong in popular living destinations where demand for housing exceeds supply, such as commuter towns close to London.

Taxes and costs

It’s important to be aware of the tax implications involved in property investment. For buy-to-let investors in England, for example, there will be an extra 3% payable on top of each stamp duty band if you’re buying an additional home or residential buy-to-let property.

Some asset classes offer attractive tax benefits, such as student accommodation, which charges 0% stamp duty.

Investors should make sure they keep up with changes in tax regulations and how they relate to property investment.

It’s also wise to prepare for the other costs you might encounter, such as management company fees and ground rent.

For more in-depth guidance on the various financial considerations involved in UK property investment, contact Experience Invest or book a one-on-one consultation.

Guide to off plan property investment

Click the image below to access your guide to off plan property investment guide which has more detailed information about the pros and cons of buying off plan property.

You may also like: