The UK’s residential real estate market is an economic powerhouse, boasting a valuation of USD 120.2 billion.
Even more impressive is its projected growth, with experts forecasting a compound annual growth rate (CAGR) of over 3.4% in the coming years.
This strong performance paints a promising picture for property investors seeking sustainable growth and robust returns.
So, how can you tap into this burgeoning market and make the most of the growth opportunity?
The answer lies in a unique investment strategy: investing in the UK’s serviced accommodation sector with the help-to-buy scheme.
How? Let’s find out.
Key takeaway:
- The help-to-buy scheme offers a valuable opportunity for UK property investors interested in serviced accommodation.
- Go through the top tips to improve your serviced apartment investment.
6 Best Tips for Better Serviced Apartment Investment
Serviced accommodation refers to fully furnished properties available for short-term and long-term stays.
These properties offer a home-like environment with hotel-like amenities, making them popular among tourists, business travellers, and even locals seeking temporary accommodation.
The rising demand for such accommodations, fuelled by the growth in tourism and corporate travel, offers a profitable avenue for property investors.
But where does the help-to-buy scheme come in?
The UK government introduced this initiative to make property ownership more accessible by offering equity loans and mortgage guarantees.
While the scheme primarily targets first-time homebuyers, it can also catalyse investors looking into the serviced accommodation market.
With the scheme reducing the initial deposit needed to secure a mortgage, investors can acquire properties with a smaller upfront investment.
Here are a few tips to make the most of your investment using the investment scheme.
1. Understand the Help-to-Buy Scheme
Before capitalising on the benefits, it’s important to truly understand the ins and outs of the help-to-buy scheme.
As the noted financial expert, Robert Kiyosaki once said, “The size of your success is measured by the strength of your desire; the size of your dream; and how you handle disappointment along the way.”
The scheme is designed to help you handle financial disappointments, making achieving your dream of owning a property easier.
2. Research the Market
You wouldn’t start a journey without a map, so why start your investment journey without understanding the market?
The city of Birmingham, for instance, experienced an average property price increase of 6.6% in 2022, significantly higher than the national average. This indicates a strong, growing market ideal for serviced apartment investment.
3. Choose the Right Property
Location, location, location. It’s an adage in the property industry, but it still rings true. A serviced apartment in the heart of Birmingham, close to amenities and transport links, could attract a diverse range of tenants, from corporate clients to tourists, thus ensuring a steady rental income.
4. Optimise Your Finances
As billionaire investor Warren Buffett wisely said, “Price is what you pay, value is what you get”.
The help-to-buy scheme can help lower your price, enabling you to get more value from your investment. Don’t forget to account for ongoing costs like property management, maintenance, and insurance in your financial planning.
5. Ensure Legal Compliance
Investing in serviced accommodation involves several legal considerations. Not only do you need to ensure your lease agreement permits the property’s use as serviced accommodation, but you’ll also need to comply with health and safety regulations.
These include fire safety regulations (such as installing smoke alarms), gas safety regulations (annual gas safety checks must be carried out by a registered engineer), and electrical safety regulations (electrical installations must be safe and regularly maintained).
Remember, you are responsible for providing tenants with a safe and secure environment. Also, depending on the local council, you might need a license to operate serviced accommodation. Some councils require a mandatory HMO license for properties housing a certain number of unrelated tenants.
6. Partner with a Professional Agency
Property investment can be complex, but you don’t have to go alone. By partnering with a professional agency like Pluxa Property, you can gain access to expert insights and support.
We can take the stress out of your property investment. Our in-depth market knowledge and professional service can make your investment journey profitable.
By following these tips and leveraging the help-to-buy scheme, you can make strategic and profitable investments in the serviced apartment sector. It’s not just about investing, it’s about investing wisely.
So, what’s making you wait?
Choose Pluxa Property for Serviced Accommodation Investment with Help-to-Buy
Embarking on a property investment journey can seem daunting, especially when navigating schemes like help-to-buy and sectors like serviced accommodation. However, it can be rewarding with the right guidance and support.
That’s where Pluxa Property comes in.
As specialists in the UK property market, we provide a wealth of knowledge and expertise, offering tailored advice to help you optimise your investment. Our understanding of local market dynamics, legal requirements, and property management can be invaluable in maximising your returns.
By partnering with Pluxa Property, you can tap into the booming serviced accommodation sector and leverage the help-to-buy scheme. We can guide you in making strategic decisions, choosing the right properties, and managing your investments effectively. Contact our property investment experts to kickstart your investments.
FAQs
What are the main risks associated with R2SA property investment in Birmingham?
While Rent to Serviced Accommodation (R2SA) can yield significant returns, like any investment, it does come with certain risks. Here are the main ones associated with R2SA property investment in Birmingham:
1. The value of a property might decrease
2. Periods without tenants mean no rental income
3. Unforeseen repairs or renovations can add high costs
4. Changes in economic conditions or property market trends can impact your profitability
What are the legal considerations and requirements involved in R2SA investments?
The legal considerations and requirements for R2SA investments are numerous, and it’s essential to understand them before venturing into this type of investment. Some of the key legal aspects include:
1. If you don’t own the property, you’ll need the landlord’s permission to use it as a serviced accommodation.
2. Depending on the local council rules, you might need planning permission to operate a serviced accommodation.
3. Your property must comply with health and safety standards, fire safety regulations, and other building regulations.
4. Regular residential property insurance might not cover serviced accommodations.
Peter Juhasz is the founder of Pluxa Property, the biggest property investment company in UK and Group CEO of AIP Capital Group and a property investment expert with over a decade of experience in the UK market.
He built a successful property company using innovative cashflow strategies like Serviced Accommodation and HMOs, scaling to 200 units in four years.
Peter leads a team specializing in property and business acquisitions across various sectors. A former co-host of “Cashflow With Property,” he shares his expertise in real estate investing and business scaling.
He is committed to continuous learning and helping SME owners and investors maximize their returns, driven by his passion for empowering others to achieve their financial goals.
To learn how Pluxa Property can help you in UK property investment, contact our experts.
