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How Better is 2021 for Property Investments in the UK?

uk property investment in 2021

Property investment in the UK, especially from overseas will be seemingly trickier this year ahead of 2021. The year 2020 and the pandemic have brought about a turmoil that will require a year or so to sort out. With several key factors playing in, you might want to study the market in greater depths before you plunge into the investments. 

The experienced investors might see this year as a ray of hope and sunlight but newbies into the market must be very careful before taking any unattended step. Having a bag of cash with you will not be the only option to flourish in 2021 and some experts even consider this as not the year you proceed with investing. There might be chances that you become cripple financially and need to work pretty hard to get yourself out of that situation. So to not let uncertainties grasp you over your future, detailed and well-researched knowledge is going to be your lone help in this tough market scenario.

But in this context, you must understand that the entire timeline of property investment is a process and not an event. So gauging the time just by seeing a handful of factors is not going to lead you to reach any conclusion. You must check if all the ducks in a row align into a straight line. That is when you would know if the time is perfect for your particular investment. These ducks in a row include:

  • A property plan to let you know about how you are going to proceed in the future and what you need to do for your investment to achieve and align with the financial goals you set for yourself.
  • A right ownership structure that you need to set up to fabricate and protect the assets you are owning and acquiring and minimise your tax payments through legal ways.
  • A robust financial strategy that is going to form both your backup and your buffer in cases of your finances drowning in the unstable market.

With these plans, you also need to equip your portfolio with the knowledge that will determine the performance and the price of the property you are eyeing for and what is the trajectory for that asset’s growth in the coming years. Many of this information might have absolutely nothing to do with the property itself but that is how you know a property’s worth in the first place.

Economy

This is a macro factor determining and driving people’s abilities and wishes to spend more or to save more. Understanding the economy will make it clear if people are willing to invest and acquire properties or want to sell off their existing holdings.

Consumer Confidence

It is when the consumers have comfortability in their financial situations that they will find confidence in investing. Impending financial pressure on their shoulders will not give them enough flexibility to dive into newer investments or move into new properties. This entirely controls the curves of the demands and the supplies and prior knowledge of this will help you churn out your finances.

Employment Rate

When the level of unemployment is quite high throughout the nation, individuals will be reluctant to risk everything into heavy property investment. More so, most of the population might not be in a position to afford to pay mortgages and that severely lowers down the property demands. But that might be a scope of opportunity for foreign investors. They can pick up assets at much lower prices as compared to the market price and acquire them quickly. Prices will rise in a few years.

Governmental Policies

The government has a huge role to play in controlling the property market. The aspects of taxes, depreciation, homeownership grants, and other benefits in loans and mortgages are under the sole control of the government. They can directly control or boost the demand for acquiring newer properties with a simple amendment in their legislature.

Population

The demand of the locals also impacts the overall property decision of you as an investor. Demanding demographics will be leading to an increase in demand for the properties sooner or later. By gauging these requirements, you can acquire properties that will lead you to earn fortunes in later times.

Demographics

Demographical aspects lay a major role in driving the demand for a location to go up or down dramatically. These aspects include the average income of the population group, their average age, employment opportunities, household structure, and the crime rates prevalent in that region.

Supply

This point suffices the demand for the properties in the region. Does the supply gets accommodated according to the demand or is there an excess or dearth of supply? In any of the cases, the consequences can be alarming if you are unaware of them.

Credit Availability

flexible interest rate

Property investment is arguably the game of credit and finances and even if you are not a pro in it, you must ensure having a team who is pro at it. The demand for properties among the investors is very well driven according to the credit availability or the flexible interest rates. When the financial terrain suffices your ultimate investment goals, you must think about diving into the investment pool.

But with 2020 changing almost everything, what do you think the UK property investments have in stored for you? The political scenarios to the governmental policies will all affect your investment in a way or so; in coming years if not immediately now. With the economy hitting hard and the countries suffering to keep pace with the global scenarios, the UK has two common issues to address right now.

  • The Brexit Talks
  • The Furlough Scheme
  • The Mortgage Holiday

Each one of them will drive you towards the decision of investment or no investment. A well-educated property investor will look into each of these aspects carefully before reaching out to any decision. Because scenarios may turn out where an unfavourable investment situation for some individuals might be very well favourable for you. And here is where you need to be flexible enough to grab the opportunity quickly. Let’s understand each of them individually.

The Brexit Talks

The pandemic started in March of 2020 and the UK called in several lockdowns to curb the spread. Till then the Brexit discussions were going on in full swing but they came to a sudden halt since then. Without reaching any conclusion, the market remained to be volatile, especially for heavy investments like that in a property. No decision was being able to get reached upon. But with 2021 kicking in and the virus still existing in the country, we see programmes of mass vaccination coming in. With time, we are seeing the Brexit issues getting resolved and this might be the correct time to invest if you’ve checked the other factors. If haven’t checked, keep an eye to know more.

The Furlough Scheme

The beginning of 2020 was hit by a few major predictions by the experts. Houses like JLL, Knight Frank, and the Bank of England predicted a 7-16% crash in the housing market in the UK. But this is something that did not happen but, were the experts so wrong? Or the prediction has just delayed? The Furlough Scheme by the government, according to many, has pushed behind and delayed this market crash. This scheme resulted in the UK house prices astronomically rising to about 6.5% in some places while 340,000 people spike in redundancy is reported in other areas. This spike is reported bigger than the 2008 crisis, and maybe the worst hit is yet to be faced; once the government withdraws the schemes.

The Mortgage Holiday​

This is a policy brought in by the government of the UK where the payments can be deferred owing to the current situation. The government is allowing the borrowers to delay their payments to a later stage and clear off their debts once their financial conditions stabilise. But here the question arises as to what is going to happen if this heavily extended mortgage holiday ends? Will the population be in a state to pay off their debts again without any deferral? With the finances getting quite tight in the hands of the individuals, how well will they be able to pull off an asset investment or move into new places where prices are soaring?

But as great investors do, they carefully look through the crisis to find underlying greater opportunities. Preparation is the key to avoid the market crunch that might happen soon. Preparing your share of cash to go hunting for great deals of properties will be wise for you now. The situation will be forcing the properties to be sold at below-market prices and acquiring them will lead you to sell them off at higher prices in the later stage when the demands rise again. Increasing your portfolio in these times of crisis will help you increase your net-worth only to appreciate your capital later.

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Fabrizio Cravero

Fabrizio Cravero

UK Property investor

Fabrizio is sharing his knowledge about investing in UK properties from overseas. He is based in Hong Kong and provides weekly guidance to his followers.

Fabrizio Cravero

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