A Beginner’s Guide to Investing in Property

The world of finance and investment can seem an impenetrable one to those unfamiliar with money management. Even the simplest of principles is often mired in complex language and logic, presenting something of a prohibitive barrier to complete personal financial independence for the average worker in the UK.

But investment is a shrewd endeavour, and one which can greatly improve the safety, security and future of one’s finances. The importance of this security has been made all the more evident by the UK’s current economic situation. A steep rise in energy costs at the end of 2021 precipitated a national cost-of-living crisis, while the government’s recent mini-budget created a run on the pound sterling, which nearly sank to parity with the dollar.

The combination of high inflation and the falling value of our currency has drastically reduced spending power, and threatens to decimate savings – even those kept in high-interest savings accounts. But economists and financially literate professionals are in a better position to weather the storm, thanks to their knowledge of the power of investment.

You, too, can benefit from investments in the short and long term. While there is much to be said for the stock market and the exchanging of currencies, there is a much simpler form of investment with a lower barrier to entry and higher average returns: property.

Why Invest in Property?

Investing in property involves buying, or buying a share in, a physical property or premises. Property investment is uniquely strong against other forms of investment, as demand for property remains high in both domestic and commercial markets. Indeed, the value of an average UK home increased by 20% between 2020 and 2022 – a rise double that of even the highest rate of inflation.

Essentially, property is the safest form of investment with the fastest and most predictable growth patterns of any other market. If you have savings, they are better placed in property than in high-interest savings accounts. But just buying a home isn’t quite enough. how can you best profit from property investments?

Property Development

The leading way in which people profit further from investment in property is through something called property development – better known to some as ‘house flipping’. Here, investors buy an undervalued home that requires remedial or decorative work, and make improvements to it that grow its value. The cost of repairs is outflanked by the rise in property value, both passively and actively – netting a tidy profit on sale.

The expenses involved in the development of a property are as simple as materials and labour – but there are risks inherent to any development, from costly structural issues to catastrophic weather events. Home renovation insurance is a sensible breakwater for the costs these unexpected things can create and ensure your profits are preserved.

Property Rental

Of course, a property does not need to be sold to be profitable. Even sitting on a property will allow it to accrue value along with the rest of the market. But additional, active long-term returns can be created by renting property out either as domestic lets or holiday lets.