{"id":7226,"date":"2022-09-05T12:50:27","date_gmt":"2022-09-05T12:50:27","guid":{"rendered":"https:\/\/www.black-brick.com\/?post_type=guide&p=7226"},"modified":"2022-09-15T14:38:54","modified_gmt":"2022-09-15T14:38:54","slug":"types-of-rental-property-investment","status":"publish","type":"guide","link":"https:\/\/www.black-brick.com\/property-guides\/types-of-rental-property-investment\/","title":{"rendered":"Types of Rental Property Investment"},"content":{"rendered":"

Prime rental property investment can take many forms, from lavish and luxurious accommodation commanding tens of thousands of pounds per week in rent, to more modest but well-appointed premises in super-prime rental locations.<\/span><\/p>\n

Knowing where to invest your money<\/a> can help you to maximise your rental yields in an ever-changing market, as well as to bolster your profits via healthy capital gains when it comes time to sell some or all of your portfolio.<\/span><\/p>\n

\u00a0Here are some of the main strategies to consider for rental property investment.<\/span><\/p>\n

Traditional Buy-to-Let<\/b><\/h2>\n

Buy-to-let prime rental property is one of the most common types. In this scenario, you buy existing property in a desirable location, or with other premium characteristics, with the intention of renting it out rather than moving into the property yourself.<\/span><\/p>\n

In recent years this has been the de rigueur way for landlords all over the UK to build their portfolio<\/a>. There are relatively few restrictions in most cases, especially if you are a cash buyer, but even if you need to finance the purchase, the mortgage lenders have dedicated buy-to-let loans available.<\/span><\/p>\n

With buy-to-let rental property investment, you typically buy a property that is already completed and may have been standing for many years, allowing you to tap into prime characteristics such as period properties and quirky conversions.<\/span><\/p>\n

By letting the property via a professional<\/span> property management<\/span><\/a> service, you can act as a hands-free landlord to gain long-term rental yields without worrying about the administrative burden or direct repairs to your properties.<\/span><\/p>\n

Build-to-Rent<\/b><\/h2>\n

In contrast to buy-to-let, build-to-rent property investment involves building new premises from scratch with the intention to rent them out. It’s a good way to get rental properties with specific dimensions and other characteristics, and to fit more units onto an area of land.\u00a0<\/span><\/p>\n

Purpose-built rentals in prime London locations have proved popular in the post-pandemic period, especially with foreign nationals moving to the UK capital for work. Build-to-rent homes offer an opportunity to <\/span>‘try before you buy’<\/span><\/a> within prime areas and have been going for well above the advertised rates.<\/span><\/p>\n

With limited housing supply across prime London, there are clear opportunities for new-build rental accommodation, with substantial value at the top end of the market. However, many build-to-rent properties remain under the ownership of the development company, rather than passing into the hands of private landlords.<\/span><\/p>\n

Build-to-rent investment is a commitment, which carries the extra burden of drawing up architects’ plans, negotiating planning permission, project managing the construction phase and ensuring the homes are finished to a high standard, but the yields – both rental and capital gains – can be worth it over the long term.<\/span><\/p>\n

Buy Off-Plan<\/b><\/h2>\n

An alternative to build-to-rent property investment is to buy off-plan<\/a> and invest in someone else’s development instead. There are benefits to this approach – you don’t have to manage the construction and you may be able to negotiate a highly competitive purchase price by putting in an early offer on a property under development.<\/span><\/p>\n

For example, Black Brick recently helped a buyer to secure a <\/span>\u00a35.35 million duplex apartment in the new Battersea Power Station development<\/span><\/a>. The main power station building contains just 250 apartments, only two of which were available and matched our client\u2019s criteria.<\/span><\/p>\n

Black Brick advised on the purchase of the 2,390 sq ft three-bedroom duplex, which had an initial asking price of over \u00a36 million, and was able to negotiate a significant discount. Though this acquisition was for an owner-occupier, it’s a great example of the unique properties available at the top end of the prime London market, and of the room for negotiation when buying properties still under development.<\/span><\/p>\n

Houses in Multiple Occupation (HMOs)<\/b><\/h2>\n

Houses in Multiple Occupation (HMOs) are properties in which multiple tenants live as separate households, while sharing communal areas like the kitchen and bathroom. Large HMOs (those with five or more tenants) must be licensed, as must smaller HMOs in some areas.<\/span><\/p>\n

There are several other requirements:<\/span><\/p>\n