All property investors are keen to see what 2020 holds. But before we look to the year ahead, we need to take time to reflect on the current market. 2019 has revolved heavily around Brexit. Britain’s planned withdrawal from the EU has dominated the media for months and has had a major impact on the property market.
If there’s one thing the property market dislikes, it’s uncertainty.
However, as we look ahead to 2020, the UK remains a good choice as a property investment location. It has been a hotspot for many overseas buyers for a number of years and looks set to remain high on investors’ wish lists (both overseas and domestic) in the New Year.
Traditionally, the UK property investment market has centered on London. However, in 2020 and beyond, we will see other cities and regions drawing in investors hoping to get a good return on their money.
Best places to invest for buy to let
If you’re looking at the best rental yields in the UK, the rule of thumb tends to be the further north you go, the better the yield. However, landlords in the north of the country also experience the highest void periods. According to SimplyBusiness
, up to 53% of northern landlords had void periods in 2018 and tenant demand can be a challenge.
However, there are plenty of great locations for buy-to-let investment in the UK. Data from UK property development and investment firm SevenCapital identifies the top
Top of the list for overall property investment is Birmingham. In 2018, the city attracted the highest number of foreign direct investments outside London and the South East. After London, Birmingham’s growth has outpaced all other cities, meaning homes are highly sought after.
The city attracts young professionals and families aplenty and is one of the most exciting places to live and work in the UK. Manchester has also attracted much investment, transforming its skyline and keeping rental yields strong.
Liverpool has among the highest rental yields for buy-to-let in the UK, with L7 and L1 postcodes regularly achieving yields of 8.2% and 8% over the past five years. With new developments, great career opportunities and rising tenant demand, the city remains a top investment destination.
Housing in Sheffield is at the lower end of the scale compared to other UK cities and it offers great opportunities for first-time investors. Rental yields average 7.3% and the revamp of the city’s shopping district has greatly improved amenities and, in turn, its appeal.
The population of Leeds is growing seven times faster than that of London, meaning there’s a real undersupply of homes. A key destination within the Northern Powerhouse and nearly £7 billion of development in the pipeline, Leeds’ city center is set to double in size. Definitely one to watch.
With growth of 250% since 2000, Leicester is a buy-to-let property hotspot. House prices are cheaper than other regional cities and there are more tenants than homes. As a result, there’s huge scope for growth.
Centrally located in the UK, Nottingham offers direct access to many key destinations and is a popular choice with investors. Prices have increased nearly 20% since 2014 and as the city continues to develop, so too will this growth.
Oxford is an appealing option for investors for many reasons – its history, world-famous educational institutes and strong economy, to name a few. Property price growth may have slowed in the past three years, but it still ranks third for overall growth in the UK over the past decade.
One of the UK’s fastest-growing cities, recent regeneration and infrastructure improvements mean better connectivity and job growth. Average rental yields are between 4-6% and a rapidly growing population means demand for housing will continue to rise in the year ahead.
When it comes to investment opportunities, it’s hard to ignore the capital. Over the last decade, prices have soared and the city has seen the fastest growth in the UK in most areas. It’s ever-growing population means there will be no shortage of demand in 2020. However, it also has some of the highest property prices in the UK – making high net worth home insurance
all the more important.
Landlord legislation changes
As well as choosing the right location for property investment, landlords also need to keep an eye on legislation and the changes within it. Landlords are bracing themselves for the latest updates to capital gains tax rules due to come into play in April 2020. The changes include:· Tighter payment deadline:
From April next year, sellers will need to pay the full amount of capital gains tax within 30 days of the completion of the sale (currently it doesn’t have to be paid until the next tax year).· PRR relief changes:
Private residence relief (PRR) means homeowners selling their primary residence (or landlords who used to live in the property) don’t pay capital gains tax on profits. From April 2020, landlords will be exempt from paying tax for the final nine months of owning the property (currently it’s 18 months).· Changes to letting relief:
If you qualify for PRR, you may also be able to claim letting relief. This can bring down the capital gains tax owed on a property by up to £40,000 of tax-free gains (or £80,000 for a couple). You can currently claim letting relief if you used to live in the property you are selling. However, when the rules change in April, you will only be able to claim this relief if you live in the property when it is being sold.
Property in the UK has always been seen as a solid investment. Even with the ongoing political uncertainty, the UK property market is an attractive option for many investors. Wherever in the UK you decide to invest, one investment will be the same: getting the right high net worth home insurance for the property.
At Insurance Choice, we can help you protect your high value investment property. We ensure all high net worth home insurance
policies we arrange are individually tailored to your needs.
Contact our team of experts today to get a quote