We are all having to drink the Cocktail of Uncertainty in regards to our economy both nationally and globally and this may be affecting Landlords investing in the Private Rental Sector the most. first there were blows from George Osborn about the reduction of mortgage interest relief then came the introduction of the extra surcharge for second properties in the form of SDLT now Landlords are facing even more uncertainty in the build up to the EU referendum and Brexit.
Things are looking bleak when you mix them all together. With Stock markets underperforming, pension returning near to nothing and if you’re putting “savings” in the bank it actually loses you money.
“Volatility is likely to rip through financial markets in the first half of 2016. Today’s turbulence is only the beginning.” – Nigel Green, CEO of deVere Group, a financial advisory firm based in the U.K.
So going forward how could you make your money work a little harder and go a little further? First off is to make sure you know the impact your potential investments can have on your income and tax. Second is to decide on the strategy you choose going forward.
To help I’ve listed two key property strategies to consider:
- Cash Flow
Often the starting strategy. Increasing income to enjoy more of what life has to offer. But remember the more you earn the more tax you will have to pay and depending on how much you earn will determine whether you purchase in your name or through a Limited Company.
The two main types of investment for the Cash flow strategy are Buy to Let (BTL) and Houses of Multiple Occupation (HMO) each has its pros and cons but considering what is happening in the market I would suggest investors look at HMOs as the ROIs and Yields can often be 3 times higher than traditional family BTLs but be warned with HMOs you’re going to need to find an experienced letting agent or be a lot more hands on to reduce those void periods.
- Capital Appreciation
In my experience this type of strategy is often used when the investor can afford to “Park” some cash for a certain period of time. Often employed in larger cities like London and Cambridge where homes are in extremely high demand and in very short supply, this creates a stable environment for houses to continue to appreciate and hold their value hedging against inflation. With this strategy due to the location and house prices the investor will not be making huge amounts of profit in each month but once sold the property should release a lot more due to the increase in value. John B. Friedrichsen suggests.
“Long term secure investment in core markets will be the norm,” – John B. Friedrichsen, CFO of Colliers International.
These are the two of many types of investment strategies for property. If done right they can work for you the most important thing to do is make sure your calculations are air tight and you have several exits. Property investing should be thought of a long term approach to building wealth and those that game and speculate often get stung and lose.
Please get in contact if you’d like to speak to one our team about your properties.
*This article was originally published in IQ Magazine before BREXIT