New Ways to Invest

Jan 2007

The buy-to-let market has been reported as booming recently with 12% of UK households renting, and now there are even more ways to enter into this field of investment.

There are now over 200 products aimed at investors, and with more opportunities than ever, the buy-to-let sector may grow significantly in the coming year according to current reports.

There are also more innovations for buy-to-let than in previous years, with specialist student or holiday lets becoming popular.

Buy-to-let prisons

Even the Home Office has recently announced the radical idea of buy-to-let prisons, as they are desperate to find funding for 8,000 additional places. They would like to build three new “super prisons”, and may look to small investors to provide funding for these real estate investment trusts (Reits).

When the facilities have been built, they could then be rented out to operators who will provide the return or shareholders. This idea has been used in the US for some time, and has proved a sound investment for many people.

Buy-to-let hotel rooms 

Perhaps more tasteful for the current investor is another idea that has arrived from the US – buying a room in a hotel. These ‘Owner Hotels’ have already proved popular in London and Spain as well as the US, with excellent capital growth and re-sale potential. The Armchair Property Investor is one company who making this niche market a success.

You can currently buy a room in a 4 star boutique hotel in Hull from £70,000 to £110,000, depending on the size and number of beds. Owners receive 50% of all income from the room, and can stay in it for up to 52 nights a year if they desire. (Well perhaps not - we are talking Hull here.) In addition, there's a guaranteed yield of 10% for two years, but returns are of up to 15% are mooted, due to the success of previous schemes.

These recent ideas suggest that for those lucky enough to have investment capital, but-to-let is one market sector that is going to experience growth over the next few years.

Leeds still booming

Leeds continues to be a buy-to-let hotspot, with more and more off-plan units sold to UK-wide investors.  The rental market in Leeds looks set to grow within the foreseeable future, but it's a case of knowing where and what to buy. If you're interested in investing in Leeds, call our Lettings team to discuss rental potential within the District.