Street view

Deciding Your Property Investment Mix

As part of a balanced portfolio, bricks and mortar can appear an attractive investment when people are looking to secure their family’s wealth. Over the past 20 years property prices have gained significantly – although this has not been without its downs as well as ups.

Choosing the right strategy

Rental income can be particularly useful for those who have retired, or are looking to do so in the near future, as it can potentially supplement a pension income while ensuring that the capital remains invested for the next generation. But others may simply be looking for an appreciating asset that can be sold at a later date. In such cases a second home may fit the bill.

Student housing boom

Another option is the student housing market, which has been a resilient and stable investment during the downturn1, although there is no certainty that this will continue. There has been a sharp increase in the number of students in higher education over the past 20 years1. To potentially maximise rental yields and help ensure the property is more easily let, investors should think about ways of making sure it suits possible tenants. For example is being close to the main university building or close to key transport links important to them?

Buy-to-let for young professionals

According to Knight Frank, the estate agents, buy-to-let investors are getting an average yield of 5%– comfortably beating the current returns paid on some savings accounts2. In cities such as Manchester this yield can be as high as 6.8%, although it drops to an average of 5.5% in London3. After access to employment, the key priorities for attracting tenants are good transport links. When it comes to choosing their new property, over half (52%) ranked living close to work or their place of study as their number one priority4. Also, the survey showed that almost a third of renters would pay more for luxuries such as private balconies, en-suite bathrooms or access to private gyms or pools. This suggests an opportunity for quality build targeted towards affluent professionals.

In recent years, the property market has been subject to flux, making it an interesting, exciting yet potentially volatile investment. Although not a guaranteed investment, with the right amount of research and guidance, and as part of a balanced investment portfolio, this type of investment could provide a source of revenue which could yield returns generation to generation.

Sources:
1.Savills ~UK student housing report 2015
2.LendInvest, Rental Yield, 2016
3.LendInvest, Britain’s buy-to-let property hotspots revealed, 28 July 2016
4.LSL Property Services PLC Group, Tenant Survey, 5 February 2016

Important Information

This article has been provided to Lloyds Bank plc by external/third party contributors and contains their views as at October 2016 and should not be relied upon as fact and could be proved wrong. The information and opinions may not be accurate after this date. The views expressed may not reflect the view of Lloyds Bank plc.

Past performance is not a guide to future performance. Investors may not receive back the full amount originally invested and the value of investments and the income from them may fall as well as rise.

For access to advice from a Private Banking and Advice Manager, you’ll need at least £250,000 in savings, investments and/or personal pensions and/or a sole annual income of at least £250,000.
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