The start of a new year is often a time for reflection, and for investors, it is a prime opportunity to review investment assets. Not only does this offer a recap of their performance, it can often highlight new investment avenues for the year ahead.
For many UK property investors, 2021 was another successful year. With strong demand, rising prices and a thriving rental market, UK property went from strength to strength. Bolstered by promising forecasts for 2022 and beyond, the number of landlords in the market has reached an all-time high.
With more investors now looking to either begin or build upon a property portfolio, what exactly should be considered when investing in buy-to-let in 2022? Joseph Mews, a leading UK property investment company, discusses some of the key considerations for buying-to-let in the new year.
On the surface, some investors may focus solely on the numbers - prices, yields and forecasts - when it comes to investing in buy-to-let property, but what exactly is at the root of these metrics? Tenant demand. Without tenants wanting to rent the property and consistent demand, it’s often unlikely that property prices and rental yields will rise - or even remain competitive.
Tenant demands are always evolving, but since the UK’s property boom these priorities have changed beyond measure, making them a key consideration in 2022. While tenants are now demanding more from rental properties, affordability will always remain a priority for most renters.
The pandemic has catalysed a myriad of changes in the rental market, the majority of which have come from a shift in lifestyle. With more flexibility in the workplace than ever before, tenants are living and working from their homes - which seems to be a permanent change. As a result, more spacious properties are expected to be the first choice amongst tenants in 2022.
With 43 out of 50 of the UK's biggest employers offering an office/home split, additional space for home offices is crucial in today’s market. That said, access to outdoor areas is also a key priority amongst modern tenants. More specifically, research has shown that since the pandemic, searches for properties with terraces have increased by 204%, highlighting the potential of these assets.
In addition to tenant demands, emerging property trends can also have a significant impact on the property market, and more specifically, an investor’s portfolio. In more recent years, the sustainability of the residential market has been a key focus area, and as green spaces continue to become more valuable, property restorations have emerged as a notable trend in the market.
By definition, property restoration is the process of rejuvenating and repurposing existing buildings as opposed to developing new areas. In comparison to new builds, property restoration offers a wealth of different advantages, including the opportunity to savour unique features and benefit from prime locations.
While property restorations pay homage to an area’s iconic past, these developments strike a balance between contemporary and historic. For example, Lockside Wharf - a property restoration located on Birmingham’s waterways - will retain the original features of the site’s former glassworks while providing premium apartments with the latest fixtures and fittings.
It’s no secret that green spaces and open areas are becoming a rarity in city centres, the process of redeveloping existing sites will continue to push the popularity of property restorations. Combined with tenants searching for more characterful properties and prime locations, this property trend is a key consideration for investors buying-to-let in 2022.
Regenerative locations should always be a priority when it comes to buy-to-let investing. Areas that are in the process of regeneration projects typically have significantly more potential than those without any inward investment, which usually has direct benefits for the local property market.
With new public spaces, green areas and amenities, regeneration projects usually bring more employment opportunities and subsequently, entice a bigger population. Translating into a greater demand for property, these regeneration schemes offer more opportunities for both capital growth and increases in rent.
For example, Birmingham is in the midst of its biggest transformation to date, which is not only expanding the city’s opportunities, it’s increasing the potential of the property market. As well as hosting the 2022 Commonwealth Games - a spectacle that will reach more than 1.5 billion viewers - the city will soon house a HS2 hub and benefit from new public spheres across the centre.
As a result, Birmingham has become one of the best places to invest in the UK in 2022. Not only are prices forecasting up to 24.5% growth by 2026, but average rents could increase by around 14% in the same time period. While the city’s expansion is at the root of this price growth, it is also enticing further investment into Birmingham.
While each and every new year comes with a wealth of opportunities for property investors, 2022 arguably has a lot more. The pandemic has impacted every inch of the UK property market, with new tenant demands and property trends presenting new considerations for investors. From the value of space and the rise of property restorations to the potential of regeneration projects, it’s crucial to consider these areas when building a property portfolio in 2022.