UK Property Market - What high yield investments are available?

The Bank of England recently paved the way for a future rate hike in the “coming months”, however given that the base rate is currently 0.25% and that any increase in the base rate would have to be fed through to savers rather than just charged to borrowers, this news is unlikely to send the former giddy with joy.

In fact, in and of itself, it really does nothing to counter the view that anyone who wants a decent return is going to have to look for alternatives to the trusty savings account or even the cash ISA. Stock market investments and bonds are always available, but the safer versions of these are hardly offering scintillating returns, while the higher-risk ones might perform well - or might not. Against this context, it’s hardly surprising that people are looking to property to protect their wealth and fortunately there are many ways to invest in it.

Traditional buy-to-let

While there have been plenty of headlines about the government’s attack on buy-to-let landlords, the simple fact of the matter is that the rental market is driven by the laws of supply and demand and while there is still strong demand for rental accommodation, there is still the prospect for good returns. Successful buy-to-let property investment is about buying the right property in the right location at the right price so as to be able to make a sustainable income and right now the north of England is ticking all the boxes in this regard.

Commercial property for residential purposes

The law draws a clear line between residential property and commercial property, but actually that line is far more blurry than it might appear. There have long been ways for homeowners to monetize their property, such as by taking in a lodger, although AirBnB has made this fact more visible. Likewise there have always been forms of commercial property used mainly for residential purposes. Hotels are the obvious example of this and while many hotels are set up mainly for short-term stays, there are also plenty of “apartment hotels”, which cater to people on what might be called “medium-length stays”. These can present good investment options as can student accommodation and retirement accommodation.

Student accommodation

By this we mean modern “student halls” rather than traditional buy-to-let with students in mind. Anyone who pays attention to the news will probably remember that the education sector was strongly opposed to Brexit, voicing concerns about its ability to continue to attract students from the EU. While Brexit has yet to happen, the fact is that the majority of demand for places at UK universities comes from young people in the UK and this demand just keeps on growing. In the UK, young people tend to choose their universities based on what they perceive that university can offer them rather than just heading to their “local” university, hence the strong likelihood that one way or another there will be a continued demand for student accommodation investments.

Retirement accommodation

It’s no secret that the population of the UK is ageing and there is starting to be an awareness of the fact that providing quality accommodation for retirees is essential if family homes are to be released for younger people to raise their own children. This is therefore one investment area in which huge growth is expected.