Property vs. Shares

We speak to many would-be investors daily. The biggest question is “do I invest in property or buy shares?”.  Both have benefits along with pitfalls but overall, we love property and let us explain why.

Since the financial crash just over a decade ago, an annual gain along with the increase to gross rental yields in the UK, on average, would have given you a 92% return.

Buy-to-Let mortgages are freely available (subject to status) for a property investor – unlike buying shares where you need 100% of your cash available.  In fact, presently you can secure a 2-year fixed rate on a buy to let mortgage at 1.41% (terms apply / subject to status). So, to buy an investment property it only takes between 20% and 40% of your cash with the lender paying the balance.

So far this sounds great, but you MUST be a savvy property investor.  It is important that you buy in an area where there is great need, ideally in South East London (buy we would say that as this is where we operate) and close to good transport links.  Many people choose SE London because they feel the void periods are lower, due to great demand and there is greater potential of capital growth. Presently the average gross yield is around the 4% mark.

Recently, rents have been increasing and this is mainly due to reduced available rental stock caused potentially by Brexit – a very standard blaming tool!

If you are new to property investment, then please befriend some local professionals.  We recommend speaking to a friendly estate agent who knows what investors want and understand their needs – don’t go for the agent who is just desperate to sell you anything to get a ‘difficult to sell’ property off their books!  Ask them probing questions such as “why a tenant would wish to live in the property they recommend” or “what is the gross rental yield for this property” – if they don’t know what a gross yield is, or how to calculate it, then you can be assured they are not a good fit to give you their advice!

You also need an independent mortgage adviser (such as us… of course) who knows about property investment. You don’t need to pay for great advice – our BTL advice is free! Finally, it is worth speaking to an accountant to understand the taxation as this has changed in recent times.

For more information you can simply contact us by phone, email or by using this website.

Good luck.