All property investors will be aware that the buy-to-let landscape has suffered considerably over the last few years, thanks to a so-called Government attack on the sector. But property is still one of the most profitable investment options available today, so which property types are the most lucrative for investors in 2017?
Last year, landlords rushed to acquire additional properties ahead of the higher Stamp Duty rate for buy-to-let purchases. Property sales plummeted after the rush in March, and investors have continued taking tentative steps following further announcements from the Government.
Although the forthcoming reduction in tax relief on finance costs for buy-to-let landlords is set to push many investors into the red, it is still possible to benefit from a property investment, providing you buy the right property types.
While location used to be everything, it’s now equally important to select certain types of property. So which property types should you be considering in 2017?
It’s a well-known fact amongst those in the lettings industry that HMOs, or Houses in Multiple Occupation, can command higher rent prices. HMOs are typically large houses that have been divided into separate rooms and are rented out by individual, unrelated tenants. For this reason, landlords can set individual rents for each room, rather than charging a standard price for the whole property.
If a tenant is looking to rent alone, their options are either expensive one-bedroom apartments or rooms in an HMO. Considering the fact that the independent flats they’ll be viewing will be substantially more than a room in an HMO, they’ll be willing to spend more than you might think on an HMO room because they think they’re getting a great deal.
New build homes
It’s usual for landlords to have a long-term plan when they buy a new rental property, so now is a great time to purchase a new build home. Those hoping to own their investment property for a long period should go for something modern and energy efficient – new regulations will make it illegal for landlords to let properties with an Energy Performance Certificate (EPC) rating below E from 1st April 2018.
Many investors will have to spend thousands of pounds bringing their traditional buy-to-let properties, such as Victorian terraces, up to a minimum EPC rating of E. Buyers of new build homes can rest assured that their investments will be as energy efficient as possible.
The student lettings market isn’t slowing down and demand is sky-high in the sector. Investors can rest assured that their properties will be filled at the same time each year, and there are clear areas of high demand. Purpose-built student accommodation is also usually high quality, modern and therefore easy to maintain and let.
Students are also some of the most reliable tenants when it comes to paying the rent, points out specialist Landlord Insurance provider Just Landlords, as they have guarantors and a steady student loan income.
At a time when private renting is the second greatest tenure in the UK, it’s no surprise that many families are living in rental housing. Not only can property investors help to provide homes to those who need it most, purchasing family houses can be incredibly lucrative.
Family houses with three bedrooms or more will typically command a much higher price, and parent tenants will be looking for higher quality homes to provide a comfortable environment for their children, meaning that you can invest some time and money into the property to bring it up to a high standard, which will bring you in a greater rental income.
Multi-unit blocks of flats
If you are just starting out on your property investment journey, or are looking to significantly expand your portfolio, then a multi-unit block of flats purchase could be the best option for you.
As traditional buy-to-let is now much less lucrative than it used to be, opting for a more contemporary approach may be the best way to widen your pocket. Multi-unit blocks of flats will bring you in a healthy income, as any void periods will be covered by the cash flow provided by the other flats. They are often usually purpose-built or converted, so have good energy efficiency and modern fixtures.
Property investment can still be a lucrative business in 2017, but it really does depend on the type of property you buy – Choose wisely for a rewarding purchase!