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Investment Property England, Scotland, Northern Ireland & Wales - Investors' Guide

Property Investment Guide UK

England, Scotland, Wales and nowadays Northern Ireland have been popular countries for investors for many decades given the history of being relatively safe and secure environs. The pound sterling is one of the principle currencies in the world, it is one of the most politically stable regions in the world and tax legislation is established.

The banking sector in the United Kingdom is one of the most recognised in the financial world with a wide choice of leverage and mortgages readily available for qualified borrowers.

A recent cut in the percentage payable of Capital Gains Tax - CGT - from 40% down to 18% on second homes and rental/ investment properties announced by the Chancellor Alistair Darling is an extremely positive move which should spur on the investment in properties in England and Wales.

With many first time buyers still struggling to get onto the property ladder in England and Wales even though prices have eased off a little in recent months, there is an expectation that many would be first time buyers may hold off a little longer and look to rented accommodation in the short term. With the banking world taking one hit after another and the sub prime 'situation' continuing it could be a while before many of these first time buyers are in a position to make their first investment.

The current higher deposit requirements from many lending institutions should create opportunities for more established investors and those that have stronger finances that can afford to pay 15-30% deposits. Those investing in rental properties will be able to take advantage of numerous offers from developers which can include guaranteed rental schemes, a growing demand for quality rental properties and in a couple of years when exiting the market the lower CGT rates.

Foreign Investment in the UK

It may be surprising to some, but approximately half of all properties sold in central London last year was to foreign nationals. Market confidence in England, Scotland, Wales and Northern Ireland is very positive especially by foreign investors who view the market to be a stable place to invest. Growth may not be huge but coupled with steady rental revenues, it is fairly reliable and those investors who are medium to long term investment specialists will be aware that they will see larger capital growth in the near future.

The successful key to investing in property is without doubt, information, and lots of it. Investors can do the research themselves, visit specialist seminars or work only with a professional network of agents and developers. Many successful investors in the United Kingdom invest in areas near to where they live or in areas where they hold a keen understanding of the local marketplace: what type of property has the highest demand, which locations have the highest demand, where the most popular schools are, which area has the best public transport links etc.

In and around cities that are principle business areas, there has historically been high demand for high end, quality apartments/flats that have been rented out to corporate clients - often visiting managers and directors - these are called corporate lettings. In recent years there have been a growing number of developers who specialise in the construction of these properties which are designed to meet the requirements of the corporate lettings market. The majority of these properties are sold off plan especially when experienced developers are involved.

Typically off plan properties have already been pre-approved by corporate lettings agencies before being offered for sale on the open market. They will be completed to a very high standard, with luxury fittings and in many cases the developer or future letting agent will have pre-arranged suitable furnishings which they know will meet the criteria of their corporate clients at completion.

Investment Strategies

Investor strategies differ in many ways but all have one key element in common - making money. Some investors require a regular cash flow whilst others are looking to build equity. Some buy holiday homes that they and their family can use, but can be rented out when not in use. At the other end of the spectrum are the serious investors that buy multiple properties every month and may not even visit them. The first thing you must do is establish what type of investor you are and what you ultimately want to achieve.

Secondly you will need to discuss with your accountant the positive and negative tax effects of investing in certain types of property. The tax system can be very complex and not something that should be overlooked, or taken lightly - Consult a professional!

Regular investors should have a good working relationship with lending institutions so that mortgages can be arranged quickly. A solicitor should be retained that understands your investment strategies so that they can not only perform searches upon request but so that they can give you professional advice that pertains to you directly.

Tourism Related Investment

Many British investors forget that England and Wales are considered as safe havens by overseas property investors. Buying off plan properties in the UK is a relatively low risk form of investment when compared with some of the emerging area around the world. Returns tend to be a little lower in England and Wales, however, they are reliable and investors with longer term strategies will find that capital growth is steady when viewed over several years. Commercial buy to lets in city areas are now established market places, but there are some niche markets in areas of natural beauty and along the coastlines that are also viable is the short term holiday market for national and internationals tourists is of interest.

As with any form of property investment, location is without doubt one of the key factors and there has been a growing trend in recent years to invest in off plan property in cities around England and Wales that have growing employment, improving infrastructures and plentiful local investment. New hospitals, relocating industry, universities, new airports and rail links are just some of things to look out for. The north of England has fared well over the past few years areas from Nottingham up to Newcastle with a great deal of off plan developments selling out during pre-construction phases, mostly due to sharply increasing local property prices.

One of the largest tourist markets of the last twenty years has been the American market, but due a weak dollar and the American concerns about terrorism, the numbers have reduced a great deal. However with the Euro at its strongest since conception, the Europeans are now rediscovering England and Wales in increasing amounts. Although London is a key destination, the European tourists are more than willing to explore vast areas of our green and pleasant land.

According to National Statistics regarding tourism to Britain:

• Visitors from the USA dropped 3% to 4.6 million between February 2007 and February 2008, however, visitors from Europe rose 3.3% to 24.4 million.

• With 49 national and international airports accepting flights from around the world access is getting easier for international tourists each year.

Summary of investing in England, Scotland, Wales and Northern Ireland

• England and Wales are stable societies which deliver a reliable rental revenue and steady equity gain over the longer term

• Rental yields are increasing in key areas where first time buyers cannot raise finance to buy

• Solid employment figures

• GDP increasing steadily month on month

• Attractive off plan property options often with guaranteed rental plans for the first two years

• A wide selection of financial products and lending tools available to fund property investment in the UK

• A growing demand for quality properties in key areas