Various Types Of Property, Which Can Be Beneficial For The UK Investors

More people in the UK get interested in real estate investment due to the high chances to earn great money. There exist various types of property to invest in, which is why it’s sometimes difficult to decide, which one is worth your time and cash. In our article, we’ll tell you about different kinds of property investments and give useful tips concerning varieties of property investment and their benefits to help you make the right decision.

Real estate investments

Real estate investment (REI) is a competitive business, which can bring an impressive profit. However, it’s necessary to understand that in order to succeed, considerable money is required upfront because the ongoing prices in this market are high and keep growing.

All the existing property investments are divided into 2 categories:

1. Physical REI
2. Other types of investment.

The first group includes land, residential real estate, and commercial properties. The second group refers to the property, which doesn’t obligatory require having any physical property. Such property investments include crowdfunding and other platforms.

When we speak about the physical REI, it requires great money. The second type of investment is much easier to start. It allows investing in several types of property, while the total price will be much less compared to the investment in just one physical property. Besides, there’s no need to search for enormous sums of money or to sell your own house to gain initial capital.

When looking for a suitable property to invest in (independently of the selected type of real estate), it’s vital to consider a few essential things:

• Type of real estate
• Location
• Size
• Additional amenities.

Various property investment types

There’re multiple kinds of real estate to make investments. Each of them has its own peculiarities, which every investor should know and take into consideration. Let’s look at the existing types of REI:

• Buy-to-let. This is a traditional way to invest in real estate. First, an investor buys a certain property with the purpose to find renters to live in it. An investor should think about the revenue, which should cover mortgage borrowing and other costs. The earnings are obtained from the rental income. In addition, you can sell your property in the future and obtain more money. Such a strategy is considered to be long-term. When you deal with this sort of REI, it’s additionally required to think about extra expenses, for example, stamp duty costs, running costs, and management fees (in the case you don’t want to manage your real estate communicate with renters personally). Almost all residential properties might be used for such type of investment. However, it’s important to make sure the property meets all the required standards.
• Houses in multiple occupations (HMO). It refers to the properties, which presuppose 2 or more renters (more than one household under one roof or in one property object). Such renters being members of different families might share some conveniences, such as a toilet, kitchen, bathroom, etc., or have their own if a property is physically separated. There’re big properties of such a type, which can include many families. Remember: if you consider property types UK, this kind of REI will require mandatory licensing. It’s recommended to consult the local authorities beforehand. HMO is a popular choice for investments due to the higher annual earnings and income diversification. At the same time, more money is required at the start & more management is necessary as well.
• Freehold/leasehold. When we speak about the property types UK, it’s important to know that many houses are freehold. It means that an owner has not only the house itself but also the land nearby. An owner is only accountable for property maintenance. It’s a frequent case when several renters share one property and decide to buy it together to take full control over it. At the same time, many purchasers still decide to buy a house on leasehold to have control over the property during the period indicated in a lease agreement. When it’s over, the property returns to a freeholder. It’s vital to take the indicated time period under consideration. Thus, if it’s less than 70 years, it might be difficult to get a mortgage. In addition, selling real estate with a lease of a smaller period than 80 years will be quite hard.
• Build-to-rent. This property type UK is built especially for renters (not purchasers). Such type of REI has a special emphasis on various services (for example, on-site management, shared spaces of fitness centers/work zones /kindergartens, and various amenities). This is a nice type of REI, which is suitable for both individual and institutional investors. It can bring a pleasant annual income and be managed by a management firm.
• Off-plan. It presupposes the investment in a property before it’s actually built. It is suitable for various kinds of investors and guarantees great earnings in the long run. The price of such property will greatly increase compared to the sum paid at the starting point. For early investors, there might be discounts, which make an investment even more advantageous. What’s more, many developers offer investors to make a property more personalized with the furniture and amenities. As a result, by the end, the property will be completely ready for sale.
• Furnished holiday lets (FHL). It’s a wonderful alternative for those, who aren’t ready to wait for the returns from long-term investments. With this REI, it’s possible to get higher earnings for a week or even the weekend. The key thing here is to choose the right location. Besides, it’s advisable to target not just the UK residents but also potential customers from various parts of the world. The main idea is that the daily/weekly charges are quite high. Besides, this type of property gives extra tax advantages, which you can claim for your business. To be qualified as FHL, the property is to be available 210 days a year (or more) and be commercially rented for at least 105 days a year.

These are key types of REI, which are accessible for modern investments. Each of them has its own benefits and drawbacks, which should be taken into account.

The best types of property to invest in the UK

With diverse types of property, which can be found in the modern real estate market, it’s difficult to choose the right one. We offer several kinds of property, which are worth investing in the UK:

1. Residential. People are always looking for a place to live. And the costs keep growing every year. Investors can put their money in this kind of property and then decide what to do. For instance, it’s possible to choose a single-family house, duplex, multifamily/shared house, vacation home for the FHL investment, or an apartment. Another positive moment about this type of property is that certain tax benefits are provided.

2. Commercial (CRE). It’s developed for business-related aims. You can offer it to potential customers as an office, warehouse, hotel, healthcare facility, industrial, or any other building. Due to the higher prices, the rents are also greater. In addition, it’s less competitive compared to residential real estate. It means that this kind of property is a good choice to invest in.

3. Land. It’s a good choice for the development of commercial/residential property. It’s a perfect choice if an investor has lots of money. However, it’s recommended to make profound research. Note that deep knowledge is required to deal with such a type of property.

4. REITs (trusts). There’re trusts owning commercial property. Using a stock exchange, you can invest in any of their real estate offers. The risks here are very low, and in most cases, the returns to shareholders are at least 90% of their taxable profit annually.

5. Crowdfunding platforms. These are special resources offering various properties with high returns to investors. Be careful with such platforms as they can be created for individual investors. In addition, many platforms provide a short-term record, while the potential of the offers greatly depends on the economic situation.

Property investment can become a profitable business. However, it’s important to pay attention to many factors including the type of real estate (depending on your preferences, aims, and available budget), neighborhood, schools/kindergartens (if you invest in residential property), criminal background in the neighborhood, average rents (note that your rent should cover a mortgage payment, taxes, and other possible expenses), natural disasters (to take care about insurance), job market, level of amenities, and perspectives for future development.

To diversify your portfolio, it’s always recommended to use different property investment types. It shall make your investments more competitive in the UK real estate market.