Where To Find The Best Place To Invest In UK Property In 2012

Why Become a Property InvestorAre you confused about the UK property market? Finding the best place to invest in UK property at the moment is no easy task, as property investors we need to consider prospects for capital growth, look at the potential for property prices to rise and rents to grow in a particular area.

The areas where you will find the highest yields are not necessarily where you will find rising property values and often it is more like the other way around in the UK.

Yields can be high where property prices are low simply because the cost of purchasing the property and running costs are higher. This reduces the actual profit from rent.

The Latest Rightmove Rental Forecast landed in my mailbox this morning and it was very interesting to see that when it comes to yields, the UK’s famous North/South divide was turned on its head, which proves the point.

Property might be rising faster in cities like London, however we see average yields on property in the North East at 6.5% compared to 5.7% in Greater London and 5.6% in the South East.

We also hear that 60% of tenants according to the survey expect to be paying higher rents in 12 month’s time with most of those who took part saying they expect rents to rise in London and the South East.

So here there are certain contradictions.

Landlords will make more profit on rent in Northern England but they will generally be making less of a profit on the value of an investment property come exit time. On the other hand they are more likely to see the value of the investment property rise by investing in property in London and the South East.

For portfolio investors too, this creates an interesting conundrum – do they go for a small portfolio of properties in London or spread the risk?

There is no right or wrong answer to this, however there are ways for investors to enjoy the best of both worlds when investing in UK property.

The first of these is student property.

According to Knight Frank, average yields on UK student property will increase by 5% this year with rents already increasing by 2.4% this past 12 months.

Combine this with low entry prices on student developments in cities such as Liverpool and investors can enjoy a much better and safer return on investment. Voids on student property are low compared to other buy to let properties.

Hotel rooms, particularly in London are also seen as a low risk way to make a fast return from property. Net yields can be between 7 and 10% in the best locations.

So if you are an investor looking for the best place to invest in the UK, remember it is not just about location, it is also about the type of property investment you will be making.

Where do you think the best place to invest in property is at the moment? Please leave your comments below:

Kind regards

Loxley McKenzie
Managing Director