As a property buying agent will typically confirm, investing in property as a way of growing your capital has always been popular and remains so today. The statistics relating just to second homes alone make impressive reading:
- 10% of UK households in Britain own at least one second property;
- almost 750,000 are used as holiday homes, holiday lets or for occupation while working;
- 165,095 homes are used for holiday purposes across England and Wales.
The value of these properties has now reached an astonishing £1trillion.
However, it is important to recognise
that purchasing whatever is available and just sitting back to hope its value
grows, is rarely a successful strategy. The help of a property buying agent may
Property investment types
An important first step is to be
clear in your own mind as to the type of property you’re looking for and why.
It’s usually highly advisable to
consider first and foremost your objectives for the property, in terms of how
you plan to use it once purchased. That
will define the type of property you are looking for and of particular
importance, its location.
For example, after purchase you may
consider using your property for any of the following:
- long term letting to private tenants;
- similar letting but targeted at the corporate marketplace including things such as executive relocations;
- a house for multiple occupation (HMO). Here you will have multiple tenants and that might be particularly lucrative in university cities where student accommodation is at a premium;
- a holiday home which typically means short-duration stays and perhaps is most commonly associated with the summer months and some public holidays such as Christmas and New Year;
- occasional letting, typically found in situations where you regularly use your second home yourself for recreational purposes but would like to obtain occasional income from it when not required. That might be associated with things such as Airbnb.
This list is far from exhaustive
but it gives an indication of the many potential uses second properties are put
to. Being clear on your objectives in
this respect will allow you to focus on suitable properties and areas – and
property finders can typically assist in helping to identify suitable matches.
What sort of return are you looking for?
As part of the above deliberations,
there are some significant issues to take into account. These are often related to the type of return
you’re looking for and both the nature and amount of effort you are prepared to
put into generating it.
Potentially, your property might be
able to offer you capital growth through any one of a number of different
- increasing asset value
alone. This might typically involve
buying a property, renovating it and then on-selling for a profit (sometimes
called fix-and-flip). It is essentially
a property development line of business and can be lucrative but the
identification of the right properties based upon expert market intelligence is
the critical success factor;
- buying and then
retaining your property for use as some form of regular income generator for
you – usually involving some of the letting options as outlined above;
- capital growth and
leisure potential. Significant numbers
of second homeowners use their properties primarily for their own benefit and
that of their wider friends and family network whilst watching its value
increase over time by way of a longer-term investment.
There is a significant degree of potential in the above ideas and their subsets but your evaluation criteria for selecting property will be significantly different from those associated with purchasing your primary place of residence.
Essentially, the first two
categories above involve running a business and unless you are already
experienced in those domains, having guidance from an expert to ensure you
purchase the best type of investment property, one fit for purpose, could be
Considerations when investing in property
When you are purchasing a second
property, the things you will need to be clear on will vary depending upon your
If you are considering using it for
any form of income generation, by definition you will become a business and
that brings certain issues to the fore:
If you’re planning to use your
property primarily for your own leisure purposes, do remember:
- if your property sits unoccupied for more than a specified period of time defined within your property insurance policy (typically somewhere between 30-45 consecutive days) then you may need unoccupied property insurance in order to maintain your protection;
- maintenance of your investment property is always extremely important and that is something that can be overlooked in situations where it is not our primary place of residence. Some form of property management company assistance might be advisable in such circumstances;
- some local authorities have regulations restricting second homeownership in their area, where such ownership will result in the property sitting unoccupied for extended periods of time through the year.
All of these factors are perfectly
manageable and quantifiable providing you have appropriate help but they should
be very clear in your mind before you start to consider investing in a second
The financial opportunities arising
from potential second property ownership are considerable and it remains an
attractive proposition for many.
Even so, the investment needs to be
taken extremely seriously, as there are pitfalls that may cause some
difficulties for the unwary. That is why
expert assistance from property finders is particularly important when you are
considering property from an investment rather than a primary residence point
As an experienced property finding
agent, we at Garrington can provide advice and guidance and assist you to find
a suitable property for your needs. Why not call us today on 0207 099 2773 to
see how we can help.