WHY INVEST NOW?
Rental demand will continue to grow at an exponential rate over the next 10 years due to the increasing numbers of:
- First time buyers being pushed out of the market due to escalating house prices.
- Single parent families and divorcees looking to rent. Students and single people looking to rent.
- Individuals spending disposable income as opposed to investing in a home.
- Families relocating due to more flexible employment
The compounded average annual increase in house prices has been 11% since 1948. According to the Office of National Statistics, rents have risen on average by 13% per annum since 1962. The government predict there will be a shortage of 3.8 million properties in the UK by 2021. Rental demand has increased by 50% since 1988 and the Centre for Economic Research predicts the demand will double in the next 10 years.
The key factors to ensure any property investment is successful, is to ensure the property is cash flow positive (or an income producing asset) and that it will provide good sustainable long term capital growth. This is governed by ‘affordability’ determined by the correlation of an individuals earnings and property values.
Scotland has the most affordable properties in the UK and quite surprisingly the highest rents in relation to property prices. This leads to high yields and strong capital growth. Typical properties are ex-local authority flats and houses and traditional Scottish tenement flats.
Prices range from £20,000 - £100,000 with yields of 7.5-12%