I neglected to buy for rent and bought these high class properties!

A young brown woman was excited by what she saw on her screen.

Image source: Getty Images

Exposure to the UK residential property sector remains a brilliant idea, in my opinion. Investors can opt for this by investing in buy to let. I went the other way and bought real estate stocks to grow my wealth.

I own shares in high dividend FTSE 100 Home builders Four developments, Taylor Wimpey And Persimmon. I am also a shareholder FTSE 250 Brick manufacturer Ibstock Increasing demand for new homes.

Why don’t I? House prices in Britain continue to rise at an alarming rate and so do private rents. But even so, I don’t want to buy an investment portfolio for myself.

Expensive business

This is because recent changes in laws have created a deficit in landlord profits. The end of tax breaks on items such as mortgage interest, coupled with higher costs associated with increased regulation, has driven buy-to-let investors away. A recent jump in mortgage rates has added to the tension.

As a result, the number of homeowners is decreasing. Estate agency body Propertymark said the average number of properties per branch of an estate agent fell to 15.6 in March 2022, down from 30 properties three years ago.

As I say, rents are exploding due to the shortage of properties in the UK. Average rents rose 8.5 percent year-over-year in August, according to insurance provider Homelet.

But according to the Chief Revenue Officer of Online Releases, Adam Mashrom, recently Financial Times: “If you’re new to the market without a lot of savings, it’s almost impossible to make a profit on rentals.He said.

Rising house prices

So while buying is becoming more and more stressful, I think people who have money to invest will somehow lose out by not having exposure to property. As well as those rising rents, property prices in much of the UK have continued to rise.

Average house prices rose to their highest level in 19 years in July, according to the latest ONS data. A year ago, the stamp duty return complimented these numbers. But the 15.5% annual increase is indicative of a rock-solid housing market where demand still outstrips supply.

A graphic showing that the UK needs 340,000 new homes a year
Image source: Microsoft

That’s why I increased my exposure to the homebuilding sector by buying shares in Persimmon in 2022. This special share was honored.”Strong desire“And”Strong future sales” in his latest financial update a month ago. And the news flow is positive in the industry.

16.5% dividend yield!

Rising interest rates pose a threat to these businesses. High affordability costs dampen sales of new construction properties.

But it is my opinion that the concern is reflected in the rock-bottom reviews of the home builders. Persimmon, Barratt and Taylor Wimpey all trade on forward P/E ratios of less than 6 times.

Coupled with their huge dividend yields, I think these high-dividend stocks are brilliant buys and much better investments than renting. The advance yield of these home builders ranges from 8.9% to 16.5%.

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