Strategies for Property Investors
The London Property Market is slowly returning to life following a period of stagnation resulting from tax changes and the Brexit vote. Recent changes to the lending criteria have also forced property investors to search for alternative ways of achieving a good return whilst minimising the risk. There are numerous examples of such investment including the following:-
1. Investment in Hotel Suites
This is typically where the purchaser acquires a stake in a hotel room and in addition to benefitting from limited usage of the room throughout the year, they will also receive a return based on the income generated from occupation of the room. For more information I would refer you to www.londonlink.co.uk.
2. Joining Property Investment Clubs
A club of this kind will spread money invested over a variety of properties. This is considered a sensible low risk way of increasing the yield achieved. For more information about this please visit www.propertypartner.co.uk.
3. Becoming a Member of a Property Focused Private Equity Fund
This is extremely popular in the Far East. Capital is pulled together from either high net worth individuals or institutions and used to buy a large portion of off-plan units with the investment being used by the fund to pay the initial 10% deposit and subsequent construction deposits. A variety of options then exist which include cashing in before the units are completed by way of assignment of the contract. Another alternative includes retaining the property and selling on after completion or finally renting it on completion. For more information, please visit www.congressltd.co.uk or www.henleyinvestments.com.
The number of buyers purchasing through a limited company appears to be on the increase. The new SDLT rules means that a company purchase attract a rate of 15%. This is meant to discourage properties being purchased mainly by overseas entities with only limited usage intended. A genuine use for letting will avoid this rate with just the additional 3% second home rate applying. Tax advice is essential as annual tax for enveloped dwellings will apply to properties costing more than £500,000.
The alternative investments outlined above are commercial agreements and anybody interested in investing is advised to seek appropriate legal advice before making any commitments. For more information on any of the above please use the links provided or contact us at Sykes Anderson Perry.
1 February 2017
Solicitor & Director
Sykes Anderson Perry Limited