Is investing in houses in the UK a good idea? Check out the pros, cons and other considerations to help you understand whether a house in the UK is a good investment for you.
The idea of owning a house in the UK seems like a good idea. A place to call your own, bricks and mortar – how could it possibly be a bad decision Well, that’s the big question, isn’t it? Investing in a house isn’t necessarily a good thing or a bad thing – there’s a lot more to it than that. Whether a house is a good investment or not depends on many different factors, like where you plan to buy, whether you’re going to live in it or rent it out, and the condition of the property market.
In this brief guide we are going to take a look at the different benefits of investing in a house, and what to consider before you decide to take the plunge.
Benefits of Investing in Property
Investing in a house is considered by many to be a really solid financial move. A house is a solid, tangible asset that you can live in or rent out.
Historically, house prices have always gone up over time, even with minor dips along the way, the long-term trajectory is up. A graph of house prices in the UK from 2007 to 2023 shows prices dropped by nearly 10% in some areas in 2008, 2009 ad 2012, but since then there has been a gradual increase year on year, with 2022 showing an average of 14% increase in property prices across the UK.
Additionally, if you rent your house out you could receive a regular income from your tenants if the rent exceeds any mortgage payments. You can then use that monthly income to chip away at the mortgage, building equity long-term.
Considerations Before Investing
Before you first jump into the world of house ownership there are some important considerations to make. Firstly, the way the housing market in the UK is at the moment is a crucial factor. You need to know if houses are going for more or less than the asking price, and what the general trend is. Houses selling for less than the asking price means you could grab a bargain, but you need to accept that selling again has to be something you do many years in the future in order to retain the value of the property.
If houses are costing more, you also have to accept that if the market drops you could end up in negative equity.
It is also important to consider the fact that the property market in London and the South East, is likely to be different to the property market elsewhere in the UK. Different rules apply in every area depending on the economy, development and more. If you are living locally to the area you are considering buying in the you have insight, but if you are not local you will need some information to give you a better idea of the property market in the area you’re interested in.
You also need to take more personal considerations into account and not just what’s happening in the property market. Can you genuinely afford a house right now? Can you afford the property maintenance? Could you even get a mortgage?
Understanding the property market and your own individual circumstances means you can make a much more informed decision about whether or not a house purchase is a good investment for you at this time.
Risks And Challenges
There are many different risks when it comes to investing in a property in the UK. Firstly, as we mentioned above, house prices will go up and down so you need to be ready for those changes and how they will impact the value of the house.
Repair and maintenance costs are another big risk. When you take on the responsibility of a property you may need to fix major problems like electricity failures, leaks, infestations and more. This is especially true if you become a landlord, as you won’t be able to delay the repairs.
Steps To Get Started
To get the ball rolling on your house investment journey you need to read everything you can about buying a house in the UK. Blogs, vlogs – whatever you need to get a better idea of the process. You should also create a budget and financial plan so you know how much you could comfortably spend – you might need to match this with a meeting with a mortgage advisor to let you know if you would get a mortgage if you applied for one.
If you do decide to start looking at properties it is important to speak to estate agents and get information from them to help you understand local investment opportunities. This is especially true if the area is not local to you at all. It can also be helpful visiting as many properties as possible – even those you may not want to buy – so that you can get an idea of what is a well-priced property for your budget bracket.
Seeking Professional Advice
It is important to emphasise just how important expert advice is when you’re considering whether or not a house purchase is a good investment for you. This includes asking friends and family who have been through the house buying process, builders (if you’re looking at renovating an old house), solicitors, financial advisors, mortgage advisors – anybody who can give you more insight into this tricky life decision.
Making Wise Moves In The UK Housing Market
Overall, houses in the UK are a good investment choice if you have fully researched all the different factors mentioned above, and consulted the various experts. It can only ever be a good investment if it is an informed investment.
Stay informed, focused and dedicated to your research – a house investment could be a fantastic step to take for a much brighter future.
