The Rise and Fall of Property Investing

In the past tax changes have ruined the property market but in recent years those laws have been changed in investors favours. During the COVID-19 pandemic stamp duty fees were cut fully or in half to make it easier for investors to continue investing in the property industry. This proved beneficial especially in the North, East, South West and South East of the UK, as properties were making up to double digits in rent growth and went up by a staggering 6.2%. Netting property investors additional gains.

​

Buying and renting a property can be a complicated process however property developers and agents have agreements and processes in place to get the process up and running as soon as possible. Making it easier on investors to purchase property whether it’s a single property or multiple properties.

​

As house prices continue to rise, investors need to be strategic in where they buy property or what type of property they invest in. If an investor had a budget of £50,000 then the city they choose to invest in needs to match what they can afford. However if the investor decides to invest in an off plan development there are options available at the bank to cover the remaining payment after they put a deposit down. As long as banks can see where investors are making a profit they will be more than happy to give out a loan.

​

With off plan properties especially off plan apartments they have the ideal scenario to maximise profits in rent and capital appreciation. For example a development such as Wardour Point nets an average of £1200 plus in rental income. Half of that would be spent on ground rent and stamp duty (depending on if stamp duty deals are still in place). And the rest would be net profit. Now over the next 5-10 years that apartment will grow in value asset wise meaning that due to its ideal location and the size of the apartment and added incentives to living in that development, the investor can then go on to sell the apartment for two to three times the price if they want due to capital appreciation netting them a bigger profit than when the bought the units.

Taking all the above into consideration you can start to see where it is best to invest when it comes to property.

 

The Stock Market

Stocks and shares have many strategic ways of investors being able to invest into companies, whether it’s monitoring stock prices or research into a business to see if there’s potential to invest in them (think start ups or companies that are on the rise). Aside from the two there is always the option to invest in big corporations for example Coca Cola or Apple, which people tend to play safe with. There are many ways to invest.

​

However, with that being said there is more research that goes into stocks as they are constantly changing in value, one day you could be at a loss another at a profit. The trajectory is in constant flux. With that being said there are cases where investors would be better off investing in stocks than property for example investing in companies that have a product that is a necessary human need and its value. If investors stick with companies like this over time when there becomes a need for said product the stocks will rise netting the investors profit (how much profit depends on the price of units).

Both property and stocks have tax attached to them so in addition to any cost the investor puts in there is also tax to be paid on taking any profits out, up to 20%.

 

Which Option is Best?

Based on a summary of this article and scenarios, property investments to net higher returns on investments compared to stocks however, they both take just as much risk and it also depends on the mindset of how the investor wants to invest.

​

As both industries look a gross profit rather than net profit it is always better to assume property is going to do better than stocks if you play your cards right and know what you are doing.

​

They both take just as much time setting up and waiting over time to build up a profit and they both just as equally have their fair share of losses, meaning that anything could happen in stocks (stock prices go down and don’t rise back up, a company could go bankrupt or maybe the value of the company for said stocks gets a ton of bad press and backlash again affecting the stocks). Property has pretty much the same effect, the area where the property is based can cause issues for the value of the property. The area and events that could take place (crime etc.) could lower the values for property meaning prices would have to be lowered in terms of rent etc. in order to make a suitable profit, it can also affect the value of developments as people tend to look for a nice place that has low crime rates to live.

 

If you are interested or considering investing in property and would like to see any available units we have or to get additional information about certain areas feel free to contact us at info@sourcedinvest.com or give us a call at 0800 249 5600