Investors Are Turning To Property | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 25/11/2020

A combination of the impact of the Covid-19 pandemic and the coming to an end of the transition period for the UK leaving the EU has resulted in over half of UK investors being nervous about the economy, a recent survey by the investment company FJP Investment has found.

The survey, which was taken by more than 1,000 UK-based investors, all of who had investments and savings in excess of £10,000 excluding the value of their residential property and workplace pensions, found that 62% are concerned that the Government’s handling of the pandemic will result in a long-term recession.

As well as this, 41% of those surveyed said they were worried about the impact of the UK leaving the EU on their finances and less than half, 42%, said they believed the UK would remain a global investment hub following the UK’s exit from the EU and Covid-19. But the survey also found that 51% believe that UK real estate will be a sound investment regardless of Covid-19 and the outcome of the trade negotiations between Britain and the EU. The survey also found that 40% think that house prices will increase in 2021, compared to 19% who are expecting it to decline.
Commenting on the survey, Jamie Johnson, CEO of FJP Investment, said: “The economic disruption caused by Covid-19 clearly has investors worried. With the Bank of England downgrading its latest GDP growth forecasts and announcing a further £150 billion economic stimulus, investors are concerned there is still a long way to go for the UK to overcome the pandemic-induced recession.

“At the same time, the lack of progress between London and Brussels on Brexit negotiations is posing further challenges. A no deal Brexit is looking increasingly likely, and this uncertainty is making it difficult for investors to plan for the future.

“Despite these issues, however, our research shows that investors are still positive when it comes to property. House prices have been growing at a remarkable rate recently and many investors are confident this will continue over the course of 2021. This is important – any attempt to stimulate investment and economic growth will be boosted by a vibrant property market. As such, it is vital for the Government to implement policies that sustain this interest over the long-term.”

Property investment options

A common way for consumers to invest in property is through purchasing a buy-to-let (BTL) property. The reduction in stamp duty, combined with competitive BTL mortgage rates, has resulted in BTL properties becoming particularly popular with investors over the last few months. While a BTL property can result in attractive rental yields for investors, when considering investing in BTL, it is important to factor into the investment ongoing costs such as property maintenance and covering mortgage repayments if the property is empty for a period of time.

Investors who do not want the commitment of a BTL property but who still want to invest in property can consider a real estate investment trust (REIT). A REIT is a property investment firm that is listed on a stock exchange and aims to generate a return for shareholders and investors through earning a profit from its property portfolio. More information about investing in REITs can be found here.

Consumers considering investing in property should be aware that these investments carry the risk of the investment not making any returns, but also could result in the investor losing their initial capital. As such, it is often advisable that those considering investing in property speak to an independent financial adviser to ensure it is the best option.

For more information about investing in property, read our guide How to invest in property.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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