INVESTMENT
STRATEGIES

INTRODUCTION

There are some specific reasons for why investing in the UK property now is such an interesting and rewarding prospect. The combination of various economical factors makes UK property market a sound and stable investment option, which will provide potential investors with great benefits in the years to come.

A GREAT TIME TO INVEST IN THE UK PROPERTY

The property sector is financially rewarding. It’s exciting too. This is a sector that can deliver consistent income, even beyond retirement. Throughout recent history, property prices have, in the long run, always risen. The upward trend has been especially strong since the 1970’s. Yes, there have (always will be) dips in the market – recent examples being last recession and the crunch. Research shows that, In recent years, property prices have grown faster in the UK than any other European country. Since 1988, house prices have soared by a huge 333%. That’s an average of 12.3% per year. Is it any surprise that property investment is now seen by many experts as the best way to offer you long term financial security.

Average UK house price increase

1

House prices will carry on increasing. Thanks to a number of social and demographic factors, the UK is suffering a severe shortage of housing stock. Over the coming years, the population is expected to expand rapidly. This will put pressure on the housing market and, in turn, push up house prices, for many years to come. According to the Office of National Statistics, for each year of the next decade, there will be an annual UK housing shortfall of over 100,000 properties. This could culminate in a 1 million housing shortfall by 2025.

Year average
property price
avg. inf. adj.
price
inflation
2016 £279k £284k 1.8%
2015 £270k £278k 1.0%
2014 £258k £271k 2.4%
2013 £246k £266k 3.0%
2012 £238k £267k 3.2%
2011 £233k £274k 5.2%
2010 £236k £290k 4.6%
2009 £213k £262k -0.5%
2008 £217k £275k 4.0%
2007 £219k £292k 4.3%
2006 £203k £279k 3.2%
2005 £189k £267k 2.8%
2004 £178k £259k 3.0%
2003 £156k £232k 2.9%
2002 £138k £210k 1.7%
2001 £119k £184k 1.8%
2000 £107k £171k 3.0%
1999 £96k £155k 1.5%
1998 £85k £143k 3.4%
1997 £78k £135k 3.1%
1996 £71k £126k 2.4%
1995 £68k £124k 3.5%
Data source: Price Paid Data
2

High rental demand means high rental returns. Rental demand seems set to keep rising fast. This is due to immigration, more people living alone and rising house prices preventing first time buyers from setting foot on the first rung of the ladder. For landlords, this is excellent news. Buy-To-Let properties are being let more quickly than ever – a trend that looks set to continue.

UK population increase over 10 year period

3

Low interest rates. Interest rates have been at record low levels for many years. This makes borrowing cheaper. This combined with increasing rental income, makes this the ideal time to invest in the UK property.

SPECIAL PURPOSE VEHICLE COMPANIES (SPV)

Property investors holding properties through Special Purpose Vehicles (SPVs) will be subject to Capital Gain Tax at 18% or 28% if they are higher rate taxpayers. This is a very attractive rate of tax especially when compared with the higher and the additional rate of income tax which is 40 and 45 percent respectively. In other words SPV model could become significantly more tax efficient.

WHY WE RECOMENd THEM?

You might set up an SPV company specifically for the purpose of managing each property investment. The SPV ‘holds’ the property and is a brand-new, non-trading company. It has no history, only the ‘seed’ capital that you have lent it. It has its own assets and liabilities. Look at it from the point of view of a lender. When you need to obtain finance for your project, your SPV represents fewer risks and liabilities than a company with a variety of interests and activities. So, for the lender, it’s a clean and easy proposition. In short, your SPV has no baggage.

SPVs AND BUY-TO-LET

Buy-to-let lenders who offer mortgages to businesses often prefer SPV companies to trading limited companies. They find them more transparent, easier to understand, evaluate and underwrite. Furthermore, investors increasingly consider purchasing rental property through an SPV company. If proposed changes to tax relief on finance costs for individual landlords are phased in, the SPV model could become significantly more tax efficient.

HERE’S HOW SPV COULD WORK FOR YOU :
  1. You take on Property Advisors to invest in a suitable development.
  2. With our help, you set up your SPV – a new limited company.
  3. We proceed with your project. On completion, you choose whether to sell the development or you keep it.
  4. With our help, you then go through the formal process of closing down the SPV, before moving on to the next one.

To find out more about our unrivalled offer and how we could help you achive solid, secure and predictable income please contact our advisory team.

Your three property investment options:

A significant benefit of working with us is that you’ll benefit from the tremendous flexibility we offer. We invite you to choose from one of the following options:

MINOR INVESTMENT STRATEGY

Are you new to the world of property investment and like the idea of dipping your toe into the property investment pool? Or perhaps you’re a current investor who simply wants to extend their portfolio, step by step. Either way, taking on a Minor Investment project could be the best choice …

MULTI-BUILD INVESTMENT STRATEGY

Multi-build strategy represents one of our key development specialities. It often involves change-of-use conversion. Examples include: Town and city centre properties, with ground-floor retail. In the past, the first floor would be for warehouse storage or for offices. Today …

MAJOR INVESTMENT STRATEGY

Are you a high net-worth, professional and sophisticated investor? Is your goal to invest in large development projects that will give you high returns of 10% upwards? Do you represent a wealth management company? Or perhaps you favour a long-term build-to-let strategy. If any of these …