It’s that time again – when we all vow to get fit, swear we’re going to eat healthily and promise to spend more time with the family.
Most of which has gone out of the window before mid-February.
But one New Year’s resolution that is eminently achievable and requires minimal effort is to get yourself on a sounder financial footing.
2016 was a topsy-turvy sort of year, with two completely unexpected election results causing political upheaval and global economic uncertainty. There are significant elections scheduled in several major EU countries during 2017; there could be further storms brewing in the ballot boxes.
So, it might well be that you’re thinking of holding fire on any investment plans until things settle down a bit; the trouble is, the investment that’s postponed is the investment that earns you nothing.
But then again, considering Hurricane Brexit passed over some seven months ago, it could be argued that the UK is something of an oasis of tranquillity in a turbulent world. Yes, the pound is low, but the cut in the interest rate means it’ll stay there for a while; so at least it’s a known quantity.
The same can’t be said of stocks and shares; even in the calmest of times, they can be highly volatile. Many investors are apprehensive about the inherent unpredictability of the stock market, and understandably so.
The same may apply to investment bonds, which are performance related and therefore beyond an individual investor’s control.
One of the most popular areas of investment is property; it can provide regular rental income and hopefully be sold on for a decent profit.
The old saying “Buy land – they ain’t making any more” strikes a chord with a lot of people and, although as a business philosophy it’s a bit shaky (it really does depend where the land is), it’s true that property is a solid, tangible, insurable asset.
Investors who feel comfortable with property tend to either invest in a managed property fund or, especially here in the UK, they go for a buy-to-let (BTL) property. Rental accommodation is in high demand, particularly given a projected housing shortage of 1.8 million by 2025 (RICS).
There can be one or two drawbacks to BTL, however
First of all, even finding a suitable property takes up a lot of time; it’s rare to find the ideal house the first time you go out and look.
If you have good building or DIY skills, you can probably do most of the decorating and routine maintenance yourself; you might even be capable of doing fairly major conversion work. Otherwise you’ll have to pay a professional, always assuming you can find one who isn’t booked up for the next month.
Then you’ll have to find suitable tenants and be constantly available to deal with any issues they may have with your property – be it a lost front door key or storm damage to the roof. And when a tenant leaves, you’ll have to find another one while the room stands empty, earning nothing.
You can always appoint a management company to carry out the day-to-day running of the property, but this will have a detrimental effect on your month-to-month rental income.
But even if you’re still happy to pursue your career as a BTL landlords & Property Investors, the authorities aren’t.
Because of the severe housing shortage, central government and local authorities are doing their best to restrict secondary residential property ownership.
All property bought for over £150,000 will incur an extra 3% Stamp Duty surcharge on each price band for residential BTL buyers.
And as of April 2017, rental income tax relief will be reduced and capped at 20% three years later.
Local authorities are also entitled to invoke Article 4, which requires BTL owners to apply for planning permission to convert their property into a home in multiple occupancy (HMO). This permission may not necessarily be granted and if it is, you’ll have to pay for a license which will have to be periodically renewed.
Don’t give up on your property investment dream
There is, however, an alternative.
We’ve mentioned the housing shortage; and with around 2.5 million students living in the UK, the government is keen to funnel them all away from private residential accommodation.
Purpose Built Student Accommodation (PBSA) is classified as commercial property, and as such is also exempt from Stamp Duty (below £150,000).
The same applies to Serviced Apartments.
PBSA has consistently been the top performing, highest yielding UK property sector since 2011 (Knight Frank), while Serviced Apartments is the UK’s fastest growing hospitality sector.
These two highly successful property assets are what we specialise in.
It comes as quite a surprise to many people that they can actually own an en-suite or studio in a university residence or an apartment in a luxury resort, derive a regular income from it and move it on whenever they like.
It comes as even more of a surprise that all they have to do is buy it. Thereafter, every single operational detail, day in day out, is looked after at no extra cost by an onsite management team – including all vetting, letting, rent collection and maintenance.
The best surprise of all is that we offer you sector leading 8-10% NET income every year for 10 years.
“Investors will need to have a handle on both the macro and micro factors affecting any asset that they are looking to acquire. The nature of the student market has become increasingly consumer led particularly with regard to location and specification. Such detailed research and due diligence is key to understanding any asset within the context of the market within which it operates.”
– Knight Frank, Specialist Property Report 2016
The location and properties you will see on our website are the ones that made the cut after our developer partner’s thorough research and due diligence process.
All that information is available to you, either on the website or from one of our knowledgeable consultants – feel free to call with any questions you may have, and rest assured that they work to a strict policy of no hard sell.
Resolve to do that and you’re in for perhaps your happiest New Year ever.
View all our available UK property investments in 2017.