There are several different types of property available on the market and all provide different benefits to investors. Some of these include student property, HMOs, new build properties, studio apartments and commercial properties. Property remains a solid asset with multiple advantages, especially the monthly rental income and the capital gains over time. Each has its own pros and cons, so we’ve looked at some of the different types of property investment available, so you can work out which is best for you.
Studio apartments are small apartments where everything apart from the bathroom is in one space. The living room, bedroom, dining area and kitchen are all in the same room. The demand for these small studio apartments is increasing in the UK as renters look to cut down rental accommodation costs to save for a deposit for their first house. For property investors, studio apartments offer them the opportunity to purchase property in premium locations without the premium price. The limited space of a studio apartment could curb its appeal for some investors, however there is a growing demand for studios in cities across the UK. They also often provide higher rental yields than comparable one-bedroom properties as the purchase price is so much less.
The student sector of the property market has grown rapidly over the past few years with over £5 billion invested in purpose-built student accommodation in 2016. Student property is usually incredibly affordable, and great for first-time investors or those with a limited budget. Purpose Built Student Accommodation (PBSA) is growing in popularity with students and providing accommodation for the UKs growing student numbers. Student property can only be lived in by students, which can impact reselling. However, PBSA has been increasingly popular with overseas investors who are snapping up UK student accommodation, seeing it as a valuable asset. They are also providing investors with regular tenants every year, minimising void periods meaning student property is great for reliable and stable returns.
HMO stands for House in Multiple Occupation. This means it is any type of property that is occupied by more than one person, with occupants that aren’t related to each other. In a HMO, the multiple occupants all pay separate rent fees which amount to the full monthly cost of living in the property. For property investors, generally more tenants equal more money, also having rental income split between a number of sources reduces the impact of void periods or inability to make rent. One downside is that there is a limited appeal to HMOs and some tenants would prefer not to be sharing a bathroom with another occupant. However, there is a clear demand for HMOs and they can provide investors with considerable rental income.
Off-plan property is property that hasn’t been built yet, investors put down a deposit and pay in full on completion. Off-plan properties allow investors to have first pick of the units and they can also often get the property at below market value. Modern new build properties are easy to tenant, with brand new appliances, design and fixtures and fittings and demand for this kind of high-end property remains high. Obviously, there is an element of risk to buying off-plan property as developments can be delayed and investors must wait for returns. However, the benefits outweigh the negatives, and elements like CGIs, detailed plans and show apartments can allow investors to get a clear picture of their future property.
Original Author: Jess Sweet of Make Life Sweeter.