No matter where you are on your journey, before establishing a property investment strategy, it is vital to have clear and realistic goals.

For first time investors, establishing clear goals may increase your chance of success, as your objectives will help you to measure results.

To begin with, you will need to take into account the amount of money you are willing to spend, what your financial obligations will be, the type of property you want to invest in, the location of your property, and whether you want a hands-on investment or take a fully managed approach.

Once you established these important considerations, you will need to set clear goals based on your motivations and your desired outcomes.

Adopting a property investment strategy with goals in place will give you a clear focus and it will help you to gauge eventual outcomes.

If you are investing to secure an additional income from a rental property, you will need to consider locations with strong demand from a large pool of tenants such as university towns or cities, areas in London’s commuter belt, or Northern Powerhouse cities that undergoing regeneration. By investing in a location where the demand for rental property is consistently high, you will enhance your chances of achieving your goal of securing a reliable rental income stream.

When it comes to long-term goals like securing strong capital growth potential, it’s important to research destinations that have a proven track record of steady price growth and areas with room to see values climb.

A forecast from Savills released in March 2021 predicted that the average UK property would climb by 21.1% from £230,920 to £279,644 by 2025. However, in 2022, in the wake of the war in Ukraine and the cost-of-living crisis, it revised its UK-wide average forecast to 6.2% by 2027.

With several regions expected to outpace the UK average including the North West (11.7%), property investors who expand their property search outside of London are set to secure the strongest capital growth potential.

When it comes to selecting the type of property you want to invest in, again, you should consider your goals. If capital growth is your main motivation, residential property is more likely to deliver the strongest gains.

However, if you are looking for a short-term investment that produces higher than average yields, a fully managed apartment within a purpose-built student accommodation development has the potential to deliver higher returns.

No matter which objective you are prioritising, clear and realistic objectives will give you a way to measure your results and if you need to adjust your property investment strategy or offload an asset.

Whether you are investing for a passive income, boosting your retirement pot, or aiming to build a successful property portfolio, once you have established your motivations and have a clear picture of your goals, it is time to take the next steps in your property investment journey.

As a first time investor, part of your property investment strategy should always include a significant amount of time conducting research across a variety of different areas.

After you have determined your budget, it is time to consider property investments that are available on the market. Contacting an experienced consultancy like Town Square Invest will provide you with access to market insights and a dedicated consultant who can determine which opportunities will suit your goals.

Whenever you are dealing with a property consultancy, it is important that you remember your objectives and a reputable company will never pressure you into making a fast decision.

As with everything in life, education is a fundamental part of the decision-making process, so sign up for newsletters and reports from companies including Savills, Knight Frank, and Town Square Invest. If you want to expand your knowledge, consider investing in books, audiobooks, and listening to property podcasts to stay on top of trends in the market.

Once you have done your market research and have selected an opportunity that fits your budget and your goals, you will need to appoint a solicitor to assist you throughout the purchase process. Consultancies often suggest a solicitor to work with – which is often a great option if you don’t have a trusted solicitor – or you can appoint a solicitor of your personal choice.

According to the Money Advice Service, on average, the minimum deposit for a buy to let mortgage is around 25% of the property’s value.

This rate will vary depending on various factors including the lender, the type of property you are buying, and the amount of rental income the property is likely to produce. Most big banks offer buy to let mortgage options however, you might be better off finding an experienced Mortgage Broker to get you the best deal.

As with all big financial decisions, you will need to be aware of the costs surrounding your property purchase – not just the repayments – and whether you want to secure an interest-only mortgage, or if you would like to pay off the balance.

For many years, London was a beacon of the UK’s property market. The prestige of owning a property in the capital combined with the market’s resilience and extraordinary growth following the 2008 global economic crash, made it a popular choice for investors. However, in recent years, local capital growth rates have been amongst the lowest in the UK. London is not necessarily the best option for an investor at the beginning of their property investment journey.

In recent years, house prices have slowed significantly in the capital.  The latest forecast from Savills predicts that prices in London will actually fall by -1.7% by 2027. By contrast, it expects average UK-wide growth of +6.2% over the same period.

Price growth can vary between regions, with cities like Manchester, Liverpool, Birmingham, and Newcastle set to be at the forefront of rising values over the next five years. First time investors who include location diversification in their property investment strategy and broaden their search outside of London are in a position to maximise the growth potential available on the market and benefit from the lower entry of property in regional cities.

Recent workplace trends – whereby a mixture of office and remote working has become the norm in the wake of the Covid-19 pandemic – have provided property investors with the opportunity to take advantage of the demand from city workers for property in London’s commuter belt. Rents in popular commuter locations including Brentwood located in the East of England have seen rents rise substantially.

Staying on top of trends and being open to investing in regional hotspots are two proven ways to improve your property investment strategy.

Since this guide was written, the UK residential property market has seen significant change. As a result of the cost-of-living crisis and turbulence in the financial markets after the September 2022 mini-Budget, conditions became more challenging for investors. However, the market has remained surprisingly resilient and many indicators now suggest that the outlook may be improving.

Capital Growth

In March 2023, ONS released its January house price index, which showed that the year-on-year rate of growth had slowed to 6.3%. This is slower than during much of 2021 and 2022 but, as many commentators have discussed, this represents a slow readjustment towards longer-term norms. There was no price-crash as some pundits had suggested and instead, the market has continued to be characterised by resilience and a good deal of stability. This is underpinned by an enduring imbalance between intense demand for property and very restricted supply. As a result of this imbalance, many sources expect capital values to return to growth in 2024 and to remain on an upward trajectory thereafter.

Rental Values

Despite the cost-of-living crisis, rental values have grown very quickly, more or less in line with inflation, which was running at just over 10% in the first quarter of 2023. In March and April, different sources quoted growth rates of between 8% and 11%, with even higher rates in certain towns and cities.

Interest Rates

The Bank of England announced a succession of rises in the Bank Rate in 2022 and 2023. In March 2023, it climbed to 4.25%. However, while the base rate was rising, lenders were actually cutting some of their rates. As the dust settled after the mini-Budget, market competition prompted banks and building societies to introduce more attractive rates. Moreover, in April 2023, the IMF announced that it regarded the current inflationary conditions as a short-term aberration and expected natural interest rates to fall slowly across all developed nations. The forecast, which extends as far as 2050, suggests that investment conditions could improve steadily over the next decade and beyond.