Understanding Capital Growth
Capital growth in property is seen as an added value or bonus on the investment. It is calculated via the purchase price of a property and is a barometer for some key performance indicators.
As an example, consider this hypothetical equation based on a property purchased for £100,000, and if we imagine that capital growth forecasts are calculated at 8% for the coming 3 years;
|Year||Capital Growth||Capital Growth £ (this year)||New value ofproperty £|
Coupled with a rental return of 10% per annum over the same period, **but worked on the initial purchase price, can make for a combined annual return of 18%, as below:
|Year||Rental Income %||Rental Income £ (this year)||Combined Return £ p/a|
Culminating in a return over a 3 year period of £55,971 55.79%.
Key Performance Indicators for Capital Growth
There are many factors you must research, consider and understand when deliberating whether an arrangement is both lucrative and reliable. Though capital growth is widely considered as a bonus, it is vital to the overall success of your investment, and it is a key contributor to the resale value.
Key performance Indicators are as follows:
- Which country are you making the investment, and in which region of the world is it placed
- What is the fiscal standing of the country, i.e. GDP, growth, economy
- What is the position of the legal system, political, policing
- Are there any signs of fledgling human rights, freedoms, abuse, voting rights, corruption
- Supply & Demand equations, is there a lack of new build homes (this actually increases value)
- Wages & employment – positivity enhances sales and values
- Access to finance – accessible finance leads to more sales, which in turn buoys the economy
- Housing grants from government positively affects the market
- Investment in infrastructure
- Standards of living, location desirability – regionally, nationally
Highlighted are most common considerations when weighing up both capital growth, and/or whether to invest in a location. Through your due diligence, bear these points in mind, though the UK boasts some of the most compelling reasons to invest. Take a look at our “What’s Great about Great Britain” article.
At Added Value Property Group, we offer some of the highest combined returns, for example 23% per annum, with 11% guaranteed rental income.
Here are some points to consider about the overwhelming reasons to invest with us:
Not only are the benefits financially robust, but the services we offer give you a completely “hands off” experience regardless of your location, as demonstrated below:
- UK has the reputation for being the most secure location to buy in the world.
- We are constantly regulated, reviewed, audited, and scrutinised for our conduct and practices.
- We are a transparent company, and we deal with our clients, tenants and partners with honesty and integrity. We deliver on our promises
- Guaranteed net rental income at 9.9%
- Pre – Tenanted the property is usually “long term” let before you buy
- High capital growth – predicted at around 12-14% per year
- Exceptionally low maintenance charges – just around £160 per annum
- No service charges – low management fees of 10% of your monthly income
- Recently renovated regardless of cost – all work carries a 2 year “no quibble” guarantee
- You can purchase multiple units – allowing you tax free income, anyone in the UK can earn £10,600 per year tax free
- We can buy your property back – commission and charge free whenever you wish to sell