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Do I need to own a home to invest in property?

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Owning a home is becoming a distant dream for a growing number of people in the UK. Many are looking at other ways to enter the property market. Property remains a popular and profitable asset, and British bricks and mortar remain appealing to investors. Owning a home is no longer a necessary factor if you want to invest in property. In fact, an increasing amount of people choose a buy to let property before they even choose to buy their own first home!

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Many people are now finding that the deposit for their first home that they have saved so hard for isn’t enough to purchase their dream home. Though this is obviously a difficult situation, there can still be a way for you to afford that perfect property, but in a different way. You have two options, one of these is to use the rental income you are earning from your buy to let investment to afford a more expensive rental property. This means you can maintain the lifestyle you want, in the area you want, whilst also owning a property which will boost your income. You could also hold onto the property, earn rental income, save that and then sell the property and use your profit to add to your deposit for your dream home.

A recent study found that 36.6% of investors are now first-time buyers, compared to 21.1% the previous year. The term ‘rentvestor’ has been coined to describe this new group of people who are renting a home in one area whilst earning rental income in another area from an investment property. For individuals who have managed to save a significant amount of money, investing in property can be a great choice. It also allows a degree of flexibility, where you can move around whilst still owning a property and earning revenue.

In the UK, the average deposit for first time buyers is £51,000, with an average monthly mortgage payment of £723. Across the country, renting is more expensive than a mortgage, with the average monthly rent costing a steep £912. Savvy investors can use the regional price variations in the UK to their advantage, choosing to invest in a property where monthly rental payments are far higher than the mortgage you are paying. In certain areas of the UK, you can purchase an entire property for the average deposit sum. Hamilton Hub, a development on the Wirral by RW Invest luxury apartments are available for just £45,450.  With yields of 8%, these lucrative opportunities mean that getting on the property ladder can be easier than once thought.

There are some considerations to think about before deciding to become a buy to let property investor. There are different tax implications, stamp duty charges and extra expenses like ground rent, landlord insurance and estate agent fees. In order to buy a buy to let property, you will need more of a deposit than you would than buying a standard home and some companies only offer properties to cash investors.

Despite this, becoming a buy to let investor is a great way of owning property and earning from it, and it can be far more affordable than buying in your dream area. Buy to let property investment allows you to both earn a monthly rental income and to gain capital appreciation as the property increase in value. You don’t need to own your home to invest in property, and it could in fact make it easier for you to buy that dream house in the long run.

Related - 3 ways to invest money from your sofa

Do I need to own a home to invest in property_