Why Property is Still a Strong Long-Term Investment

Safe as houses

With the Bank of England still maintaining its flexible yet cautious approach to interest rates, the UK’s property sector remains a safe bet for property investors as it continues to benefit from support from both public and private sectors. Putting money into bricks and mortar has, over more than five decades, proven to be a steadier and safer alternative to conventional investments. And with the stagnation of low interest rates for savings and Government bonds, it has become the accepted wisdom for those looking for long term growth and income.

Buy to Let

One of the most dynamic components of the London property market has been the buy-to-let sector and although successive governments have tinkered with various laws, it remains a viable and attractive alternative to allowing your cash to erode down to nothing in a static savings account. Relatively low buy-to-let mortgage lending rates over the months leading up to the beginning of 2020 has resulted in favourable conditions for borrowers. Lenders are throwing incentives around left, right and centre, yet canny investors looking to expand their portfolios would do well to look at the long-term costs of refinancing or rental guarantee products. Cash back schemes and initial discount offers are all well and good, but they can soon be nullified by any unexpected interest rate hike.

Bouncing Back

As with all other walks of London life, Brexit is sure to play a key role in how the property market goes forward, but even here, there is marked optimism. The so-called post-electionBoris Bounce” seems to have been reflected in the record value of properties put up for sale for a January – £10 billion. Glad that the political deadlock has been broken, people are starting to make plans, with estate agents fielding twice the number of enquires as this time last year. A corresponding 91% jump in sales leads has helped nudge house prices up, leading to a 2.5% increase overall. Too early to talk of a London Property Spring? Perhaps, but even the slightest inkling of returning stability has been enough to ignite the fires for both buyers and sellers.

Investing in the Future

Of course, everyone will be keeping an eye on the buy-to-let market as this is the sector that attracts investment and helps drive the industry through lean times. This is what makes governments cautious about making sweeping reforms, but adverse media reports about “rogue landlords” and “ghost neighbourhoods” still make politicians nervous. A reduction in tax relief was considered unhelpful by some, but there are encouraging signs that this present government sees the buy-to-let industry as part of the answer to London’s housing situation, rather than one of the causes.

New Order

New developments – some in the fringe suburbs and others closer to Central London – seem to be an ongoing trend and investors who would not even countenance buying outside Zone 2 a few years ago are now scouting as further afield as Harrow and Hayes. New builds are a vital income generator for the building industry as it helps keep much-needed expertise and technology in circulation around London.

As a bastion of stability and fair-mindedness, London still stands out as one of the best places to do business in and the long-term security and durability of its housing market is a proven asset. As long as London remains a global financial powerhouse, there will be a constant demand for good quality accommodation and amenities which, in turn, will require a focused and flexible approach from investors, developers and London property professionals alike.

If you would like an appraisal of your own property, need to sell or indeed are looking to buy a London rental property, do contact us. We are well placed to offer free, unbiased advice about where to buy for long term growth and return. We also have international offices providing a local service to our overseas clients. Visit our Landlords hub for further information.

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About the Author

A board director since 2001, Marc oversees the company’s London rentals operation as well as marketing and developing strategies for new business. He has been instrumental in the company’s expansion, working closely with managing director Anita Mehra to develop its core services and frequently co-hosts property seminars for investors in many international locations. Read more about Marc von Grundherr here - Read full profile

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