If you take a look at major online property
sites like Rightmove or Zoopla, you’ll see that the UK’s property market is pretty buoyant right
now. Despite Covid-19, there is still a great deal of activity happening
currently occurring with thousands of first home buyer UK citizens taking advantage of the government’s last budget promise to offer a 5%
deposit contribution.
Another reason for the buoyancy of the housing
market is the extension of the stamp duty holiday that’s now set to expire on
September the 30th 2021. Many of these buyers are doing so on a buy-to-let
basis, so that they can enjoy the passive income that they offer.
The rewards are there in residential property
investment or there wouldn’t be so many people taking that route, but how does
it compare to UK care home investments? That’s something we look at here in
closer detail. By reading to the end, you should see clearly that one wins out
over the other.
THE RETURN ON INVESTMENT
To begin with, we look at perhaps the most
important element of any property investment - the yield. After all, people
don’t invest for the good of their health! Residential buy-to-let rental yields
rise and fall over time, but at point writing, you can expect an average yield
in the UK of around 3-3.5%, although you do have to check the location, as this
figure can vary depending on what postcode you purchase in.
Not bad you might think, but this pales in
comparison to what UK care home investments offer, as you can expect a return
on investment of as much as 10% year on year. The UK’s housing market might be
in rude health currently, but it still can’t compete with an option that offers
roughly triple what residential investments provide.
THE RESPECTIVE MAINTENANCE & UPKEEP
OBLIGATIONS
The many stages of buying a house UK customers have to go through is one thing, but maintenance and upkeep of rental
properties is another thing entirely. When you buy to let, you’re responsible
for keeping the place fit to live in, so if the washing machine breaks, you get
a leaky pipe or a central heating system that won’t work, it’s all going to
come out of what you make.
That’s not something that you typically have
to worry about with care home investments, as they offer a true hands-off
experience. Once you’ve invested, the only obligation you have is to receive
your monthly rent, so no having to call emergency plumbers, arrange replacement
keys or sort out tenant disputes.
Of course, you could enlist the help of a
buy-to-let agency to do it all for you, but this all eats into your bottom
line. There just isn’t any comparison to be made between the hassle involved
between the two.
EXIT STRATEGIES
Whether you follow a ‘how to
buy a house UK with no money[1] ’
get-rich-quick scheme or buy a simple buy-to-let flat in order to gain a
passive income, the same issue raises its head. The problem with buy-to-lets is
that your exit strategy is typically influenced by the state of the current
housing market - as if there are no buyers, you’re not going to get a sale.
Then there’s the issue of house prices, which
clearly go down as well as up. You could find yourself in the position where
the price drops to a point where you’re not actually able to exit at all, as
you’re sitting in a position of negative equity. Care home investors have no
such worries, as reputable investment companies will offer a guaranteed buy-back at set stages of proceedings.
As well as offering a guaranteed passive
income, care home investors also get the peace of mind of knowing that they can
get out after 3, 5, 10, 15 or 20 years as they see fit and all with no
questions asked. Getting out as a buy-to-let investor is far less
straightforward.
OCCUPANCY SECURITY
Lastly, we look at another important element that needs to be considered and that’s the element of occupancy security. There are many things that Covid-19 lockdowns have impacted and one of them is job security. As a buy to let investor, you could easily be faced with a tenant that can’t pay or in some cases - won’t pay. Then you’ve got the hassle and expense of getting them out.
Another issue on the horizon is that Universal Credit Rent Caps are causing millions of Brits to struggle to pay their rent. Government furloughing has been extended to September 2021, but it can’t be extended indefinitely, so at some point, there is likely to be many more struggling to meet their rent and it’s almost certain to impact buy to let investors.
UK care home investors on the other hand don’t have this concern, as the huge demand for care home places results in guaranteed occupancy. You’ll also never have to deal with non-payment or court visits for eviction proceedings. Again, another area in which care homes offer a much more attractive proposition.
CARE HOME INVESTMENTS WIN HANDS DOWN
Whichever way you look at things, it’s hard to
deny the fact that care home investments offer the better, less-stressful and
more profitable route. In addition to offering around triple the return of
buy-to-let investments, care homes involve less hassle, greater occupancy
security and they’re easier to get out of when the time comes.
So, if you’re currently considering your
options and you’re wondering which way to turn, then the evidence is clear. At
First UK, we have years of experience in helping investors make the most of the
demand for care home places in an industry that’s only moving in one direction
- and that’s up!
Get in touch with our friendly experts today
and we’ll happily talk things through with you and show you just how
hassle-free care home investment can be. That’s it from us for this time, we’ll
see you again next time.
