Why invest in property?
At PFL we are passionate about property investment and believe that it is the best investment vehicle for the average person to secure their financial future for the following reasons;
Growth and Profit
Statistics show that over the last 30 years average property values have doubled every 7 years.
Figures produced from Nationwide Building Society House Price Index show this
Will this growth continue? To understand future property growth one needs to look at the two factors main factors which drive property price growth; employment and interest rates
Interest Rates
Interest rates are still at historic lows when compared to the last 30 years.
Employment
The UK currently has historically high levels of employment.
In the longer term there are a number of factors that will keep property prices high.
- The UK has a serious shortage of housing supply relative to the demand.
- On the demand side high levels of immigration, higher life expectancy, and the growing number of single person households have all put pressure on property demand.
- On the supply side there is very little land being released for construction of housing. Lengthy delays in planning applications and the growth of nimbyism is restricting the availability of new housing coming onto the market.
The Treasury report on the housing market by Kate Barker revealed a huge shortfall in the number of new housing units coming onto the market with recommendations to increase construction to 300,000 units per year. Current building rates are about 180,000.
Download Kate Barker's report (PDF)
Low interest rates, high employment levels and a stable economic environment are all major contributors to a strong housing market. These factors should ensure that the price of property will continue to increase over the long term.
Safety and Security
Property investment offers the best means of building substantial long term wealth in a safe, stable and predictable manner.
Unlike the stock market there are not huge fluctuations in the value of property within a short period.
Property is considered a forgiving investment thereby offering great investment security.
Control
Property is a tangible asset which you own and control.
Because of this its value can be increased through simple measures such as an extension, a new kitchen or bathroom, or simply a coat of paint. By furnishing a rental property it is possible to not only increase the rental income but also determine the kind of tenant that you will attract.
With the stock market you have no control over what can happen to your investment.
Leverage
An investor can generate a high return on the capital invested through borrowed money – also known as gearing or leverage.
Most lenders will now lend up to 85% of the value of a rental property (subject to certain requirements). By using this bank funding you don't require large sums of capital to build a property portfolio and the tenants pay the interest on the borrowed money.
Because you can borrow nearly all the money to purchase the investment it is possible that the return on your capital can be consistently high. It is not impossible through property to achieve a return on capital of 100% or more.
Taxation
This is the icing on an already fantastic cake. When the value of property increases you can re-mortgage the property and the additional loan taken out is, in effect, tax free profit. If you set up a property business you can also deduct many types of expenditure before you declare any income for tax.
Click here for more information on taxation
So now you know why property is the best investment vehicle there is you can see why so many investors turn to Property for Life to help them build a strong property portfolio through the purchase of discounted property. Check out the rest of our website to find out how we can help you to achieve your goals.
