Is Property a Good Investment in the UK?

BoE Base Rates, Historically Low

Although interest rates are increasing, they are still at the lowest levels in history, meaning it will cost you less to borrow money in the long run. The lower sums of money you pour into repaying debts means you have additional money to spend elsewhere. The Bank of England (BoE) base rate is the official borrowing rate in the UK. During the pandemic, a time of heightened insecurity, the BoE dropped base rates to 0.1% – a record low. Subsequently, these low-interest rates attracted an influx of buyers to the market. However, over the past couple of months, interest rates have gradually crept to 1.25%. The BoE rates fluctuate following the property market. Despite the minor increase, current rates are appealing as opposed to the highest rate in history at 17% in 1979.

The figures below show the change in the BoE base rates from February to June.

What About Inflation?!

Despite several dynamics climbing the upward trajectory, the property investment market is still hot! Although the cost of living, the interest base rates, and house prices are inflating, investing in the market now is still a wise choice, but only if you research before investing. If you wish to secure a buy-to-let investment, you need to act fast to secure a property at a reasonable price.

Researching into available buy-to-let opportunities means you can predict if an investment will prove to be profitable. Firstly, you will need to list your property goals and define whether your objectives are short-term or long-term. Once you explore the opportunities available, you can weigh your options using the investment calculators available. The calculators illustrate your projected rental returns, stamp duty charges and mortgage repayments.

What is Happening in the Market?

Market activity remains robust. According to TwentyCi, in April, the number of sales agreed was 18% above pre-pandemic levels. Furthermore, completions were 13% higher than pre-covid levels in April.

• The primary cause of this strengthened market activity and the growing number of loans approved is the chain-free position of landlords and first-time buyers.
• The number of loans approved for first-time buyers in March was 16% higher than the average for 2017-19 (UK Finance).
• On the other hand, 50% more buy-to-let loans were granted in March compared to the average before covid.

Being in this position as a landlord or first-time buyer is beneficial because the client does not have to wait for anything to sell. Also, many first-time buyers and landlords are not precious about moving to a larger space, so they are happy to purchase the smaller properties available on the market.