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  • 8-12% NET annual yields
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How to decide which investment is best for you

Oct 22, 2018

There are a few factors you need to take into account when weighing up different property investment options:

  1. How much of your capital will you have to tie up?
  2. What’s your yield going to be?
  3. What are your capital growth prospects?
  4. How much time and effort is going to be involved?

No owner responsibilities

To address the last issue first, traditional buy-to-let property ownership can be a 24/7 commitment and may not be ideal for somebody holding down a full-time job.

Not to worry, though – there are property investments available where every single operational aspect of the asset is professionally (and cost-effectively) managed on your behalf.

This allows you buy a property – and then forget it. You won’t even have to collect your rent, which will be paid automatically into your account.

Mortgage-boosted investments

By using a bank’s money rather than your own, you can free up a lot of your cash to invest elsewhere to diversify your portfolio or to treat yourself to a few luxuries.

Buy-to-let mortgages are available as tracker, fixed or variable deals and you can expect to pay around 1.5-2% of the mortgage as an arrangement fee.

You’ll need to put down 25% as a deposit, although some mortgages may demand 40%. According to MoneySuperMarket, the average buy-to-let deposit in financial year 2016/17 was just over £62,300.

A mortgage also allows you to enjoy a geared income; our boutique residential buy-to-let apartments at The Walton and The SE15 Peckham Rye are scheduled to yield 7.1% and 9.8% NET respectively – impressive for a buy-to-let in London and the suburbs.

Buyers of these apartments can also benefit from discounted purchase prices thanks to Emerging Property’s group buying power.

Our mortgageable holiday cottage investments at The Bay are classified as Furnished Holiday Lets (FHLs). Owners of FHLs can claim Capital Gains Tax relief, capital allowances for furniture, equipment, fixtures and fittings, and can count profits as earnings for pension purposes. The full package of benefits can result in years of tax-free income.

Outperforming other property investments

Asset classThe BayTraditional buy-to-letStudent property
Income after tax in 10 years£87,366£48,000£81,600
Purchase price£160,000£160,000£160,000
Yield (%)7.3%5%8.5%
Annual income£11,680£8,000£13,600
Capital allowances£43,200£0£0
Income after tax£11,680£4,800£8,160
Income after tax in 3.7 years£43,216£17,760£30,192
Years of tax-free income3.700

Cash-only investments

Some of our clients may find their age works against them when applying for a mortgage, or maybe they just don’t want to take one on. In this case, our UK serviced apartments at Ilfracombe Holiday Park will deliver an assured 10-12% NET annual income for 10 years. They are available from just £69,500.

Another cash-only investment, purpose built student accommodation, has been the UK’s highest-yielding commercial property sector since 2011.

Although our latest developments are sold out, our student properties sometimes come back onto the market. The remainder of the fixed income period will transfer fully to a new buyer, as will the property’s build warranty.

Capital growth

In the case of our buy-to-let apartments, it’s worth noting that UK residential property prices have historically doubled every decade.

Our fixed term serviced apartments and student properties, with their contracts transferring at resale, allow yield compression to deliver capital growth of as much as 40%.

Next steps

We’re always keen to speak to potential investors – there’s no substitute for a one-on-one conversation before you commit anything. However, true to our ‘no hard sell’ approach, we prefer you to make the first move.

To find out more about investment in general or property in particular, arrange an informal consultation with one of our experts at a time that suits you best – with no obligation at all.

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