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Insight & Opinion

It’s not all monthly ROI: What to look for beyond short-term profit in your property investments

Author: Staff

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Nearly two million people own rental properties in the UK, having invested over the last few years as a result of the fantastic levels of income they can experience from rent paid by their tenant month-on-month.

Relatively low prices to purchase (average property prices are now coming in at around £210,000) and a steadily increasing rental price (around £900 per month), fuelled by tenant demand, means that landlords are able to secure solid monthly income that mostly always outweighs their spend on the property.

However, it’s not just monthly income and consistent short-term returns on investment that matter when it comes to buying private rented sector properties.

These are some of the other benefits landlords can enjoy over and above their monthly rental income.

Capital gains

Capital gains

As well as having a steady income each month that can help to top up their own professional earnings, one of the main reasons many people invest in property is the capital gains they can enjoy from buying property at relatively low prices and selling it in the future when the market has grown even further.

Now is the perfect time to do so, with property prices predicted to grow for the next five years at least. Knight Frank has previously suggested that prices will climb until 2022, reaching new peaks each year, while it’s likely that the trend will also continue for at least the next decade. It means that anyone who bought in 2017 will be able to sell their property for considerably more in years to come, as well as having enjoyed a steady stream of income in the meantime.

Investing in the future

Investing in the future

When people looked at the north of England in the past, many will have seen it as a secondary market compared to London and the south, and for that reason, it was never really a favourable option. Now, however, if there’s one word to describe the north, it’s potential.

An exodus of companies and professionals away from London, as well as improving numbers of exciting new businesses and student places in the north, means the region has the potential to grow exponentially in years to come for landlords. We all know the benefits of being an early adopter, and even if landlords in certain areas are not seeing the same monthly income as they might enjoy in parts of the south at present, the satisfaction that can come in the future when a hunch is proven right can be worth the wait!

Stable pension pot

Stable pension alternative

The value of a pension is hardly a hidden factor in life these days, but the property market is rather a niche way to approach the future. It’s no longer just enough to rely on your state pension and steady investments like stocks and shares. You need that little extra cushion when you have finished working so you can have a more comfortable retirement and enjoy the finer things in life when you’ve truly earned them.

Investing in rental property now might not be something you think about with your days as a pensioner in mind, but it is a real reason to consider rental homes over other asset classes. The plus-six per cent yields you can enjoy are favourable now, but these may improve further still in the future, and in decades to come, having a monthly income to top up your own pension will be a fantastic way to give you the quality of life that you may have thought you could only dream of.

Read our exclusive 3-part pension reform series written by Money Marketing’s Head of News, Thomas Selby.

Pension reform

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