Category Archives: Investment

A Guide To Investing In Student Property in Bolton

Posted on by Aspen Woolf

The student property market is an area that has been attracting investors for some time now, but many tend to overlook parts of the UK that are not commonly known as university cities or towns. This is a mistake, as there are some excellent opportunities to be had away from the likes of Oxford, London, Durham, and Cambridge.

Bolton is one such town. Despite only having one university within its boundaries, Bolton is still a viable option for those looking to invest in student property.

An overview of Bolton’s economy

student property investments

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As with so many towns across the North West of England, Bolton’s heritage lies in industry. The former mill town has been associated with the textiles industry ever since the 14th century when Flemish weavers first settled in the area. As the industrial revolution took shape, Bolton was handily placed to make the most of the booming manufacturing age and the cotton mills were the main source of employment for local people.

At its height, Bolton had over 200 cotton mills in operation. However, the First World War spelt the beginning of the end for the British cotton industry and the amount of mills in operation began to decline until the cotton industry virtually ceased to exist in the 1980s.

bolton property investment

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The traditional industries that once fuelled Bolton’s economy have now largely been replaced by more service-based sectors. While this has been the case for much of the North of England, Bolton has seemingly done rather well from the transition. Regarded as the fifth largest employment base in the northwest, the town is experiencing growth year-on-year and is a major player in the Manchester City Region.

The town’s location has a lot to do with its growing prosperity and the area has been able to attract household names such as AXA, Hitachi, RBS, and the grocery giant, Warburtons, to invest in it. Good road and rail networks and easy access to Manchester Airport mean that investment in the town is far from over either. Analysts predict that Bolton will see further investment over the coming 10 to 15 years that could run into the hundreds of millions, creating in excess of 10,000 jobs across a number of sectors in the process.

Location and transport

bolton transport

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As mentioned above, Bolton is in a great location. Situated just 10 miles northwest of Manchester, Bolton is ideal for those who need to commute to the city for either work or education. The town is served by both local buses and the National Express coach network as well as being part of the West Coast Mainline Manchester loop. This provides commuters with an easy 35-minute train journey to Manchester Piccadilly station.

The local road network is decent, too. Both local and national routes are well catered for with the A666 providing routes north and south. The southern end of the A-road is also a spur road for the M60/M61 motorway network.

Planned regeneration projects

newport street bolton

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Regeneration is often a good indicator of where a town or city is heading, and Bolton has been in the news of late for all the right reasons. Bolton town centre looks set for an overhaul, with the local council announcing that a £3 million regeneration project for the pedestrianized Newport Street is underway.

New paving, lighting, trees, and seating areas will transform the look of the walk-through, and shop frontages will also be spruced up in order to give the area a more consistent and uniform look. It is hoped that the work will give residents and visitors to Bolton town centre a ‘seamless, open route’ to the £48 million transport development that is taking place at the interchange from Victoria Square.

Le Mans Crescent Bolton

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The co-location of Bolton’s main bus and railway station is the centre of the £48 million transport interchange redevelopment that is taking shape in the town. Included in the plans is an impressive pedestrianized ‘skylink’ bridge, and the Newport Street overhaul is hoped to play a part in restyling the changing face of the town centre.

However, it doesn’t end there for Newport Street. A £6.5 million office development on the corner of Great Moor Street was also announced earlier this year. The 30,000 square ft. of Grade A office space is being built to complement its surroundings, and demand for the building is already said to be high. It is hoped that all work will be completed by the end of 2016.

bolton property investment

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Bolton Council has also identified 11 areas of the town where urban regeneration needs to take place. They have put in place a Neighbourhood Renewal Strategy (NRS) that will run alongside the Council’s Community Strategy in order to create a better standard of living for residents in the nominated areas.

Working together with residents, it is hoped that the council will be able to bring the 11 areas up to the high standard that the rest of the town enjoys. This will prove to be beneficial to investors in Bolton in the long-term, as the overall regeneration project will help the town move forward towards an even brighter future than it is experiencing now.

Future housing developments

bolton sunset

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Alongside the aforementioned office space in the town centre, there are a few housing projects of note taking place in and around Bolton too. Catering for the young professionals that are being attracted to the town by the ever-larger companies who are setting up shop there, these housing developments are sure to help existing property prices to rise.

Bolton Council’s core strategy for housing aims to distribute the amount of new homes built across the town by 2026. The percentages of new build properties per region are as follows:

  • Bolton town centre – 10 to 20%
  • Horwich Loco Works – 10 to 15%
  • Renewal areas – 35 to 45%
  • Outer areas – 20 to 30%

bolton town centre

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The council has promised to operate a policy that concentrates on delivering quality property in locations where it is most needed. The Regional Spatial Strategy reported that there should be a minimum of 578 new homes built in Bolton each year up to 2021, with the recommendation that this figure continues on through to 2026.

The report also requests that a minimum of 80 per cent of all new build dwelling be constructed on Brownfield sites, which will make use of the towns many industrial areas that are now redundant.

Why invest in Bolton?

clarence street school bolton

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As we have already touched upon, Bolton is an area that is currently being invested in by big businesses and the local council. Economic regeneration is fully underway across the whole of the Greater Manchester region and Bolton is seen as one of the guiding lights.

Both the public and private sectors have invested in excess of £1 billion over recent years and the trend looks set to continue for the foreseeable future. It is worth remembering that much of this growth and investment has taken place against the backdrop of the recession and decreased spending thanks to the austerity measures that have been put in place countrywide.

bolton town hall

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The investment that has been made is starting to have a dramatic effect on the property market in Bolton. Yields are beginning to increase as the town flourishes and even the overspill from Manchester’s poor property supply is providing beneficial consequences for those who have property with a BL postcode.

Those looking for capital gains will also welcome the fact that Bolton has some of fastest rising house prices across England and Wales. Prices in Bolton are now 3.1% higher than they were a year ago and the town outperformed Manchester, which only saw a 2.5% increase, across the same period.

bolton canal

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Getting in at the bottom of the market is naturally the most desirable point at which to enter, but that does come with an element of risk. Bolton, however, has already started to show some fantastic signs of growth in recent times so investors would be wise to give this northwest town far more than just a cursory glance.

Bolton’s educational facilities

As you are looking to invest in student property it stands to reason that you would want to know as much as possible about the further education that is on offer in Bolton. This town, however, differs from most, as it not only has its own university for which your property may be rented, but also the universities of the city of Manchester as well.

student property investments

Photo Credit: UNH Manchester via Flickr

Property supply in Manchester is scarce and largely unaffordable for many struggling students and Bolton provides an attractive solution. That being said, Bolton’s only university does still have a number of students that will be looking for accommodation too, so you are presented with a number of options.

Property around the University of Bolton is in high demand from students looking for places to stay for the duration of their studies. The areas around Farnworth and Moses Gate railway stations are particularly attractive to students who need to travel into Manchester city centre.

The University of Bolton

the university of Bolton

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Bolton’s only university is relatively new. It gained university status in 2004 and changed its name from the Bolton Institute of Higher Education to the University of Bolton after much deliberation over what should be its new moniker.

The primary campus is situated on a site that sits between Derby Street and Deane Road and the university currently has just over 9,000 students enrolling each year.

The university has been undergoing renovation and it recently unveiled a new University Technical College and a facility for Science and Engineering after winning a £10 million seal of approval for the new building from the government. Further expansion and renovation across the current campus is expected to continue through to 2017.

university of bolton

Photo Credit: University of Bolton via Flickr

Much of the university’s student population comes from the local area, but there is also a good head of students who enroll from outside of the UK too – the vast majority of which always require decent accommodation for the duration of their studies.

Student life in Bolton

Bolton offers a number of bars and clubs locally, but it is the close proximity to the nightlife offered by Manchester that is likely to widen the eye of the student. The big city is only 30 minutes away and the wealth of entertainment on offer there far surpasses that of Bolton itself.

bolton students

Photo Credit: University of Bolton via Flickr

For those who like to shop, the same applies. Manchester has a fantastic array of shopping options and the restaurant scene will keep even the most enthusiastic foodie happy too.

Sporting facilities are decent in Bolton with a number of gyms, leisure centres, and sports fields available to those who prefer to keep active.

Conclusion

Bolton is a town on the up, and it’s proximity to one of the UK’s largest cities, Manchester, is a huge benefit to those who wish to invest here. With house prices in Bolton having risen by more than 3% compared to last year, and money being spent in the northwest town, the future looks rosy for those looking to be a part of Bolton’s future.

Feature image credit: albert barker via Flickr.

Is Student Property The UK’s No 1 Investment?

Posted on by Aspen Woolf

Ask the average person on the street which method of investment ranks above all others and you’ll probably find that the vast majority will respond with one word – property. Putting our money into bricks and mortar has long been the investment of choice for us Brits, but what about drilling down further still? Which part of the housing market offers the very best return on investment?

Student property has been a popular choice for many investors of late, and for good reason. The demand for student property is rising and the record numbers of places being offered by universities up and down the country looks set to increase year on year for the foreseeable future.

Couple this with the fact that there is a huge shortage of preferred accommodation for students and it is easy to see why student property is regarded as a winner by many investors. Purpose-built student accommodation (PBSA) is lagging way behind the demand, which is leading to fantastic returns for those putting their money into this section of the housing market.

International demand as well as domestic

international students

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With the government lifting the restrictions on the amount of students UK universities can take on, student numbers are set to skyrocket over the coming years. This demand will not only be fuelled by British students looking to get the best possible start in life, but also by those from overseas.

The UK is widely regarded internationally as having one of the finest academic systems in the world and overseas students are looking to capitalise on the opportunities on offer here.

Investors are proving hungry for specialist property

50 pound notes

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The specialist property market is outperforming even expert analysts’ wildest dreams at present, with £5.9 billion being invested in the first six months of the year. Student property is leading the way in the sector, contributing around £3.5 billion towards the overall figure – a total of 59% of the whole market.

If investment continues at the current rate, the final figure for 2015 could exceed £12 billion, a number that would blow the original estimate of £10 billion for the year out of the water.

Student property doesn’t follow normal investment cycles

success sign

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The majority of traditional investments are subject to fluctuation and changes within their relative markets, but PBSA has, to date, been impervious to these fickle forces. Student property performed well throughout the recent economic crisis, showing a stable return while other investments floundered and flopped.

One reason for its trend bucking nature is the fact that, during times of recession, young people are far more likely to go to university rather than risk spending their early working life in long spells of unemployment. This stability can mean the difference between a healthy portfolio for investors and one that keeps them awake at night.

Will it continue?

yes or no

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It is believed that the student accommodation sector will prove to be a great market for many years to come. Reasons why this should be the case are wide and varied, but some of the key points to take note of include:

  • Low supply of quality accommodation currently in the UK for students
  • Growth of students enrolling expected, thanks largely to the lifting of number restrictions
  • Increasing numbers of overseas students choosing to study in the UK
  • Great fill rates and exceptional returns
  • The overall appetite for property investment in the UK remains strong

With these points taken into consideration it’s hard to see student accommodation investments doing anything other than going from strength to strength over the coming years.

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What The Future Holds For the Property Market if a Brexit Comes To Pass

Posted on by Aspen Woolf

After a majority win by his Conservative party earlier this year, Prime Minister David Cameron once again reiterated the government’s intention to hold an in/out referendum on the United Kingdom’s membership of the EU.

Proposals for a referendum, which is now planned for 2017, had been previously rejected by the PM. However, pressure from the British electorate has seemingly forced his hand and the decision over whether the UK stays in the European Union or not looks set to be put to the British public after all.

David Cameron

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So, what does this mean for those of us with an interest in the UK property market? Let’s take a closer look.

Uncertainty is rarely a positive market driver

With the possible referendum on the UK’s membership of the EU still well over a year away, speculation is already rife as to what the end result may be. This is only going to get worse as we slowly draw closer to the vote being cast.

Uncertainty such as this is very rarely a good thing when it comes to investments, whether that be property markets or the stock exchange, so we may well see a correction in the run up to the vote regardless of the outcome.

question mark

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The media are certain to have a huge impact on proceedings and the resultant jitters may well have an effect on markets even before the first X is placed on a ballot paper.

Medium term worries

Many analysts are already voicing concerns over a possible Brexit and what leaving the EU would mean for UK markets over the short to medium term. A German report, made just prior to the last general election, speculated that a Brexit could result in the UK dropping as much as 14% of its GDP.

It is, however, worth remembering that the forecast for growth in Britain over this term is rated as considerably higher than the rest of Europe, so a counterbalance may be struck when taking in the markets as a whole.

london property investment

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Nevertheless, a study conducted by PMA (Property Market Analysis) forecasted that London’s seemingly unstoppable commercial property market could be in for a rude awakening. PMA has stated that a Brexit could be a disaster for the UK economy, and the capital could be hardest hit with drops of 25 to 30% in office values.

Should this drop in value across London come to pass, the worry would then be focused on a contagion effect that could see property values in other parts of the UK drop as confidence in the British property market wanes.

Longer-term prospects

While the short to medium term outcomes are somewhat dividing the analysts and their predictions, longer-term prospects look slightly more optimistic. Many commentators are drawing on the fact that the UK will remain a global business hub whether it stays part of the EU or not.

european union flag

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Although a Brexit could have serious implications across the early years, analysts and property pundits alike are cautiously confident regarding the way Britain will bounce back in the future. However, this rebound in fortunes is subject to as many variables as the initial downturn in market value, not least of which would be the measures taken directly after a yes vote to come out of the EU.

Remember, there is no crystal ball!

With all this in mind, it is vitally important to remember that speculation is just that – speculation. There are no hard and fast ways of accurately predicting what will happen should an exit actually become a reality, but being aware of the market and putting yourself in a position to pivot at the drop of a hat will do you and your portfolio no harm at all.

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If you enjoyed this blog post then perhaps you would like to read “What The Future Holds For The UK Property Market If A ‘Grexit’ Comes To Pass“?

What Jeremy Corbyn’s Election Could Mean for UK Property Investment

Posted on by Aspen Woolf

Jeremy Corbyn’s recent election as leader of the Labour Party has caused more than a few eyebrows to rise amongst commentators and investors alike over the last couple of days. The left-wing MP for Islington North has seemingly caught everyone off-guard with his unexpected win, but what does it actually mean for the UK property market?

Well, firstly, it is important to remember that the leader of the opposition doesn’t hold any direct power over the policies implemented by the government. While debate may shift further to the left than we have been used to in recent years because of Mr Corbyn’s election, actual policy change is unlikely.

jeremy corbyn talking

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However, the change in focus will undoubtedly lead the other major parties to adopt a more socially conscious outlook, and affordable housing is certain to be high on the agenda.

Generation Rent are becoming increasingly fed up

It is believed that a large proportion of votes went to Corbyn because of his stance on housing, and the growing discontent among those unable to get a foot on the property ladder is likely to fuel the new leaders desire to make a difference in this area.

Corbyn recently stated that he would like to see the Right To Buy Scheme extended to private tenants as well as those currently living in council accommodation. The Labour leader believes that the discounts enjoyed by council tenants who wish to purchase their rented properties should also be given to those who rent from private landlords.

buy to let investments

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The conservatives have already committed themselves to extending the Right To Buy to those living in housing association properties, as they are considered not-for-profit landlords. However, Corbyn would like to take things further still. Under his control, for-profit private landlords, too, would have to sell their properties to longstanding tenants at a discounted rate.

Buy-to-let tax relief

Another area of concern, and probably a more viable one, is the upcoming changes to the tax relief available on buy-to-let mortgages. New rules have angered many landlords, with the limit on tax relief restricted to 20 per cent from 2017, but Corbyn’s election could play into the hands of the government and strengthen their position.

Petitions have been made to scrap the move in order to have the tax relief on buy-to-let mortgages reinstated. However, with Mr Corbyn sitting on the other side of the despatch box, it is highly unlikely that the new rules will receive any challenge whatsoever. Some commentators are even going as far as to say that the election of Jeremy Corbyn could give the chancellor, George Osborne, the opportunity to cut the tax relief even further.

buy to let tax relief

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Politics and property have clashed before

The fact of the matter is, however, that turbulent events have hit the property market in the past and have had little to no effect on the stability of the UK housing sector. Talk of property in the UK is almost as ubiquitous as that of the weather and – with so many of us invested in it – it is unlikely that someone who wishes to rock the boat too much will get anywhere near having the power to influence any actual decision making.

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If you enjoyed this blog post then perhaps you would like to read “Impact of New Budget Changes on Property Investment“?

A Guide to Property Investment in Spain

Posted on by Aspen Woolf

With any investment, doing your homework is often the key to success. Buying property abroad is no different and, for those who wish to purchase a property in Spain, this guide will help you get a handle on some of the dos and don’ts of Spanish property investment.

Why Spain?

For many, the global economic crisis was a disaster that they would sooner forget. Property markets across the globe were hit dramatically and many have struggled to make any gains at all since the storm hit back in late 2007. However, some analysts now believe that many of the markets that suffered through those dark years have now bottomed out and they are starting to represent great value for those who are willing to invest again.

tossa de mar spain

Photo Credit: Neil Howard via Flickr

Spain is one such market. Property prices there have been adversely affected since 2007, but things are starting to look rosy once more – especially at the higher end of the market. Spain is also well known to us Brits, and the familiarity that we have with the country gives us a sense of security that we simply wouldn’t have if we chose to invest abroad elsewhere.

The Spanish government has also recently made amendments to its so-called ‘golden visa’ scheme that should make the opportunity more straightforward and accessible for non-EU investors to gain residency. The scheme – which has been slow to take off since its inception back in January 2013 – has now been simplified and it is hoped that overseas investors will be tempted back by the offer, fueling growth once again in the housing market there.

benidorm spain

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How the market stands currently

Property in Spain has already been seeing the first shoots of recovery over the last 12 months or so. Annual price growth to June 2015 was reported at 5.12%, largely thanks to overseas investment in the luxury property market.

However, overall property transactions have also increased by 7.9% across the same period, which underlines the hope that the Spanish property market is indeed on the up.

Average house prices across the entire country are down by 29% on their pre-bubble levels, so the room for growth here is extraordinary. Many experts are strongly advising that now is the time to get back into the Spanish market as demand is expected to rise sharply again over the coming months and years.

spanish houses

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Buying a property in Spain for investment purposes

Now that we have an overview on the current situation in Spain, it’s time to dig a little deeper into how best to go about acquiring a property there. While each individual’s circumstances will be different, there are certain things that everyone who wishes to invest in property abroad will need to take heed of. Let’s get started

Finding the right property in Spain

Buying property as an investment is different to buying property to live in. There are certain things that need to be taken into consideration in order to get the best ROI possible and keep costs to a minimum.

spanish buildings

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Many of the basics of property investment remain the same regardless of where you are buying, these include:

  • Selecting a favourable location – Don’t let price influence your decision at this stage of the process. Look for areas that have obvious potential and good surrounding amenities and infrastructure.

Buying a property simply because it suits your budget will not guarantee investment success, so it’s vital that you choose a property based on the needs of others rather than your own.

Look out for places that people want to move to and research the local schools and transport links, and delve into the employment situation in the area.

  • Study the local market – Explore the local market as best you can. Try to find out how property prices have performed over recent months and what the turnover rate has been like in the area.

Ask about relative rental yields and occupancy rates, too. Any information you can gather prior to moving forward with your investment will prove invaluable at the decision making stage.

  • Do your sums – Once you have a certain amount of knowledge you will then be able to better calculate whether or not the investment will be right for you.

Take into account all of your costs and remember to add a margin of error into your equation too. Doing so will give you a buffer should your estimations fall short.

statue in spain

Photo Credit: jacinta lluch valero via Flickr

Legal guidance

Even if you are completely familiar with the conveyancing process here in the UK it is vital that you seek the help of a Spanish land law specialist. Urbanismo (Spanish land law) is quite different to ours and the conveyancing system in Spain can prove to be challenging.

While it is perfectly fine to opt for a UK based lawyer or estate agent, it is important that you check their credentials prior to proceeding. Anyone handling property purchases for you should specialise in International Transactions and be registered with the UK Law Society. Drill down further by inquiring about their previous dealings with the Spanish conveyancing system and, wherever possible, try to obtain testimonials from previous clients.

spanish pavement

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Should you choose to have a Spanish lawyer handle your purchase, ensure that they are registered with the local bar association (Colegio de Abogados) and that they are currently practicing. Your legal representative should hold professional indemnity insurance too.

Do not, under any circumstances, sign anything or part with any money until you have received independent legal advice.

Dealing with the language barrier

Independent translators can be worth their weight in gold for those who do not have a good grasp of the language. While the vast majority of legal representatives you’ll deal with will be fluent in English, your contracts and documentation will all be completed in Spanish. Therefore it is vital that you get these translated into English so you know exactly what you are signing before you put pen to paper.

spanish language

Photo Credit: Dani Vázquez via Flickr

Obtaining a mortgage

Many British banks will be happy to give you a mortgage on overseas property, but, on occasion, better deals can be had if you deal with a local Spanish bank. Unlike banks in the UK, many Spanish banks set their own rates and fees.

So, within the same overall bank, different branches can offer different rates to borrowers. Shopping around is a must when looking for a mortgage in Spain as the variation between one high street lender and another can be vast.

spanish town

Photo Credit: Arrano via Flickr

The majority of mortgages issued in Spain will be variable rate mortgages. These can rise and fall according to the changes made to the base rate, which is set by the European central bank.

Fixed rate mortgages are available, but they are not common. In fact, as little as 3 per cent of all mortgages issued in Spain are fixed rate. Similarly, mixed mortgages – those fixed for a certain period at the beginning of the mortgage, which then turns variable when that period has elapsed – can be found through most lenders, but they are not the norm.

Again, the importance of research cannot be understated. Make sure that you are fully aware of any clauses or stipulations set into your mortgage before you sign.

spanish lake

Photo Credit: Paulo Brandao via Flickr

Deposit levels

Current deposit levels vary across Spain, and things are getting better in this regard. Spanish banks have been risk-averse over the last few years for obvious reasons, but many are now loosening their belts and offering more reasonable deposit rates to purchasers.

Non-Spanish buyers can expect to be hit harder than Spanish nationals, however. In some cases, you will find that some banks are even willing to go as low as 90% with their deposits; depending on personal circumstances.

spanish fields

Photo Credit: jacinta lluch valero via Flickr

This is largely done in the hope that it will stimulate overseas investment once again, and this can only be a good thing for those looking to turn a profit in Spain, but don’t have a big deposit to offer. As long as you are willing to invest your time and efforts, this is a great moment to seriously consider venturing into the world of Spanish property investment. That is, once you know all the facts of course.

Taxation

Spain has introduced a raft of new taxation laws over the last year, so it is important that you consult with a Spanish tax specialist prior to moving forward with your purchase.

Tax levels in Spain can vary between resale properties and new builds, and completion taxes can be high in some instances. La Complementaria, or ‘bargain hunter tax’ as it is known, has caught many unawares.

spanish park

Photo Credit: jenny downing via Flickr

This supplementary tax is added to properties after completion as the Spanish tax office alleges that purchasers have underpaid their property transfer tax. Thankfully, there are preventative measures that one can take prior to purchase to ensure that you do not fall foul of this stealth tax.

A good taxation specialist will be able to help you through the potential minefield, ensuring that you do not incur any nasty surprises after your purchase goes through.

spain in autumn

Photo Credit: Miguel Ángel García via Flickr

Getting a return on your investment

As an investment, you will naturally want to see a decent return on the money you invest initially. While capital gains will potentially give you the greatest reward, you will obviously want a more immediate return too. This can be achieved in one of two ways: short- or long-term lets.

Short-term lets

Short-term lets to tourists can be a great way to get higher returns from the property, but it is not without issues. Short-term lets require more work from you or your property manager to ensure good fill rates are maintained throughout the year, and there are legal implications as well.

benidorm skyline

Photo Credit: Les Haines via Flickr

The regulations for letting property to tourists will vary by region, so your lawyer or estate agent will be best placed to advise on this once a suitable property has been found. It is worth bearing in mind that fines for non-compliance can be extremely large, up to €30,000 in some cases.

Long-term lets

Longer-term lets are subject to the national rental law rather than the more complicated regulations laid down for short-term rentals. That being said, it is always worth seeking the advice of a professional to ensure that you and your property are fully compliant with Spanish law.

You will need different contracts for your lettings depending on how long the let is for. These contracts are easy to come by, and they are an essential part of the process that should not be overlooked.

spain beach property

Photo Credit: Miquel Fabre via Flickr

Consider using a letting agent

Letting out property overseas can be a headache so it is well worth considering using a local letting agent to handle the day-to-day running of your property. They will be able to keep occupancy rates up and deal with any niggles that your tenants may have while they are renting from you.

Certain areas of Spain, such as Murcia, require you to have a specialist agent from a tourist apartment management company to handle all short-term lets to tourists, anyway. Again, this is something that your lawyer or estate agent can advise you on when you make your initial inquiries.

spanish ocean

Photo Credit: Paulo Brandao via Flickr

Conclusion

While the above will stand you in good stead when choosing your property, it is also important to have the right people on your side too. Be sure to do your due diligence on anyone you deal with throughout the process.

The amount of companies offering investment opportunities both at home and abroad is growing by the day, so it is essential that you stick with an established name such as Aspen Woolf for added peace of mind.

If you enjoyed this blog post then perhaps you would like to read “Why Now is a Great Time to Invest in Spanish Property“?

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The Benefits of Student Property Investment Through a UK Investment Pension

Posted on by Aspen Woolf

University places are in high demand and, with in excess of 2 million people enrolling each year since 2000/2001, so too are decent properties close to Britain’s many great seats of learning. Student accommodation is highly sought after these days, and investing in student property can be a great way to bolster your pension plan.

Unlike the standard funds and equities commonly associated with pensions, investing in property can be a great way to get your money to work for you and maximize your ROI. Property is usually held for a significant period of time and this can allow gains to flourish as yields in the housing market will commonly outperform other investments over the longer term.

student property investment

Pension schemes also provide legal separation

Another benefit of holding property in a pension scheme such as a self-invested personal pension (SIPP) is that the scheme is regarded as a separate entity to the individual or any company associated with it. This means that should you or your company fall foul of any financial difficulties, your pension scheme would be protected.

Holding multiple assets in a SIPP is advisable, however, as the scheme would be liable to any ongoing charges should the single property be left unoccupied for a significant period of time. The beauty of investing in student property, though, is that this is unlikely to happen inside of term time thanks to the high demand. Higher yields will also cover the shortfall encountered for the out of term months, namely July and August.

piggy bank

Student property shows great resilience to market blips

Even those investing in student property later on in life through a SIPP can enjoy decent returns thanks to the stability of this section of the housing market. Student accommodation has proved to be one of the most unfaltering areas of investment over recent years, a record that takes into account the financial meltdown of 2007/2008.

It is the only part of the property sector to show increased annual returns across this period, a factor that cannot be understated. Pensions came under close scrutiny during the recent recession, with many retirees left out of pocket thanks to unscrupulous fund managers taking unnecessary risks with innocent people’s money.

A SIPP puts you back in control of your future, and by diversifying your portfolio with student property you are adding an element of stability without sacrificing the growth necessary to make a pension plan worthwhile.

student property

Many lets will come with parental guarantors

Students themselves have also changed for the better, too. Gone are the days of the ‘Young Ones’ moving in and trashing your property. In fact, you will generally incur fewer problems from student lets than other sectors of the rental community.

Even if the worst should happen, landlords have grown wise to the potential problems and many now insist on parental guarantors to cover any damage done whilst their little darlings are in residence.

Buy-to-let student property looks set for continued growth

£3.98 billion was invested into the UK’s student housing market in the first half of 2015, an increase of over £1.5 billion from the same period in 2014.

This dramatic rise is largely due to investors viewing the sector as a better acquisition than standard residential buy-to-lets thanks to the perception that student accommodation enjoys greater yields.

student property investing

Demand is outstripping supply

The final benefit of investing in student accommodation through an investment pension is the fact that occupancy rates are generally far higher than residential buy-to-lets. As touched upon earlier, student property is currently in extremely high demand, and this is a trend that is expected to continue for the foreseeable future.

Despite the rise in the amount of purpose built student accommodation over recent years, the demand for good property is still not being met. Add to this the fact that international student enrollment is on the increase – a section of the student population who are always looking for somewhere to stay while they study – and it is easy to see why this appetite for accommodation is not going to go away. All of these points make the student property sector one of the most alluring opportunities available for those looking to secure their future with an investment pension.

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If you enjoyed this article then perhaps you would like to read “A Guide To Buy-To-Let Investments“?

Impact of New Budget Changes on Property Investment

Posted on by Aspen Woolf

The announcement of George Osborne’s budget in July seems to be a double sided coin for Britain’s property industry. The announcement that the government will be cutting the tax relief that private landlords get on their mortgage payments seems like an attempt to help first time buyers, but according to property experts it seems like this decision could have a detrimental effect across the whole property market. The announcement of the raise in the threshold for inheritance tax however means that most honest, working people will see their hard work paying off in their legacy.

Private Landlords

keyhole

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The expected rise in interest rates coupled with the cut in tax relief could prove to be crippling to private landlords who could find themselves up to 20% worse off – that could be £2000 a year based on average rents. Many private landlords have invested in property due to the economic instability of pensions or that their savings weren’t earning them any interest, and unfortunately it seems like these are the people who will suffer the most.

Obviously, those who could afford to buy properties in cash will see almost no difference, except maybe a rise the properties to buy (to let) as existing or potential landlords get put off.

Renters

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The rental business is just like any other business. If costs rise, so do prices. Landlords aren’t going to just swallow the deficit that they will be making; it’s likely that this will be passed on to the renters. A new poll by the letting agents, Rentify has found that 56% landlords are intending on raising rent prices to cover the deficit, so those who are already paying high rental prices will end up even more out of pocket.

Britain’s rental market is already struggling with too much demand and not enough supply, and with the potential for private landlords to sell up and get out due to these budget changes it looks like it is only going to get worse – another reason why rent prices are due to rocket.

Another significant difference that the changes could make is in the quality of rental homes. With less money, landlords may spend less on the upkeep of their properties or buy cheaper properties in the first place, creating a shift in the rental marketplace.

First Time Buyers

first time buyers

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According to George Osborne, the tax relief changes were designed to help younger people get onto the property ladder. However, he seems to have over-looked an important point – that these first time buyers are usually the ones that are renting. So with a rise in rental prices, it will be difficult for them to save.

Inheritance Tax

Whilst the change in the inheritance tax threshold has been welcomed by most, some industry experts are worried that there will be a fall in down-sizing. As older people down-size their properties, there is a continual replenishing of the housing stock, and as people are now more likely to pass their properties on to their families this could cause a blockage in the availability of houses to buy.

Whilst not all bad news, it seems like there were some fundamental aspects which were overlooked in the July budget changes. The over-riding problem in Britain’s property industry is that there is a shortage of affordable housing and it seems like these changes aren’t going to aid the cause.

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If you enjoyed this blog post then perhaps you’d like to read “A Guide To Buy-To-Let Investments“?

A Guide To Commercial Property Investment

Posted on by Aspen Woolf UK

Although the media headlines often concentrate on the purchase of residential property for investment purposes, many canny investors are moving toward commercial properties to help diversify their portfolios. This makes a lot of sense, as having all of one’s eggs in one basket can lead to trouble.

Property values often move independently of other asset classes and are typically not associated with fluctuations in the stock market. This gives the investor a good opportunity to spread their risk and even out their investment strategy.

What does commercial property mean?

office building

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Commercial property generally covers all types of property that are purpose built with the intention of making an ongoing profit. Just some of these are:

  • Offices
  • Industrial units
  • Warehouses
  • Retail developments
  • Hotels
  • Eateries, such as restaurants and cafes

As you can see, the term covers a broad spectrum and it is this diversity that gives commercial property investment its appeal.

Why should I invest in commercial property?

Commercial property is attractive for a number of reasons, but it is the lease structure in the UK that often tips the balance for investors. Here we have a far longer length of lease for commercial properties than in either the US or Europe, and this can work in the investor’s favour.

London leases can be between 10 and 15 years while the rest of the UK still averages out at around 8 years. Compare this with a residential property lease of 6 months and it is easy to see why investors like the idea of putting their money into commercial property.

view of london

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Diversification is obviously another reason why so many investors choose to enter into the property market. Dealing in physical assets can bring about a relatively stable income return when compared to other investments such as the stock market.

Property is currently performing well and it has recovered fantastically after the dark days of 2008. When looked at alongside the current rates of interest available from savings accounts, commercial property becomes all the more attractive for those with a long-term view of their investment strategy.

Commercial property investment options

different investment paths

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The options that you have available to you as a commercial property investor differ somewhat from those who want to invest in the residential market. The three main ways to invest are:

  • Direct investment – If you are looking to have full control over the property that you invest in then direct investment is the way to go. However, for most private investors this simply isn’t an option due to the amount of cost involved. Direct investment means that you would be buying the whole property, either by yourself or in a group, so the outlay can be vast. It is for this reason that the majority of investors choose a different route into the commercial property market.
  • Direct commercial property funds – Often referred to as ‘bricks and mortar funds’ this option is a far more common way to get a foot in the commercial property door. These collective investment schemes invest on your behalf into a wide-ranging portfolio of commercial properties that would commonly be out of reach for most individual investors. Examples of which can include warehouses, supermarkets and office space.
  • Indirect property funds – Another form of collective investment scheme, indirect property funds invest in property companies by buying shares that are listed on the stock market. This can sometimes fly in the face of the diversification process as this type of investment is closely tied to the rise and fall of the stock market itself.

investment funds

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Funds such as unit trusts, investment trusts and OEICs give the smaller investor the opportunity to be part of multi-million pound building projects that they would otherwise be unable to invest in. These funds normally operate in one of two ways: direct property ownership or by owning shares in property related companies.

Profits are paid to investors either by way of rental income and capital growth in the case of property ownership, or by the payment of dividends and growth in market value for shares in selected property related companies.

Many funds cater for very small investment amounts, some of which only require a lump sum of just £500 or monthly payments of £50 for those who wish to invest on a regular basis. This is what makes bricks and mortar funds ideal for those who are thinking of entering the commercial property market for the first time.

What drives profits?

investment profits

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As mentioned above, dealing in commercial property generally gives the investors two potential revenue streams: capital returns (a change in asset value) and income returns (money generated by the asset). Capital returns are determined by how well the overall property market is performing, whereas income returns depend upon the lease structure that has been signed off between the tenant and the owner.

Supply and demand naturally comes into play when investing in the property market. Strong demand from businesses that wish to rent property that you have invested in will obviously push prices upward and increase the overall rental yield. Strong demand will also mean that the owner will not have to incentivise businesses with offers such as rent-free periods, further strengthening the returns for the investor.

monopoly money

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Good asset management will also help to push profits in the right direction. Rent reviews are typically made every five years where they are set to market level if that level has gone past what the tenant is already paying at the time of the review. Upward only reviews are common throughout the UK although there are other options available to the management team. These include:

  • Turnover related rents – This is where the rent is set as a percentage of the occupying tenant’s business turnover made from the space they are renting. This type of rent is more volatile than the upward-only model, but it is a popular way of setting rent for the retail sector.
  • Fixed uplift rents – As the name suggests, this type of rental agreement sees a fixed increase made to the rental amounts charged to the tenants after a certain period of time has elapsed, normally every three to five years.
  • Index-linked rents – A somewhat new way of managing rental increases in the UK is the index-linked model. These agreements are linked in to indexes such as RPI inflation and increases to rental charges are made in line with the movement of said index.

What are the risks?

danger tape

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Dealing in commercial property does come with a certain amount of risk, much like any other investment. However, narrowing down the different risks associated with this sector is difficult as there are so many ways for an investor to enter the market.

For instance, the risk associated with direct investment will be entirely different to the risk you will have if you choose to put your money into an indirect property fund. The individual investors appetite for risk is also a factor, as some funds will offer greater risk for higher returns and vice versa.

Due diligence is key here. If you decide to enter into the commercial property market it is vitally important that you research each individual fund or property yourself so that you are fully aware of the risk involved with that particular investment.

Final thoughts

lightbulb

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2014 saw gains of 19% in the commercial property sector so it is little wonder that this form of investing is receiving greater attention of late. The UK economy is doing well and this naturally leads to more businesses looking for property to rent. The increased demand for commercial space means higher rental yields are easier to command.

If you are looking for a way to spread the risk of your investment portfolio, commercial property certainly offers up a viable way of doing so. However, research into your investment vehicle of choice is vital and it is advisable that you use commercial property as part of a wider investment strategy.

Commercial property investment may not be suitable for inexperienced investors, but for those with a little knowledge of the investment market it can prove to be a valuable addition to a well-managed portfolio.

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If you enjoyed this blog post then perhaps you’d like to read “5 Mistakes Property Investors Make“?

A Guide To Buy-To-Let Investments

Posted on by Aspen Woolf UK

More and more people are looking towards the property market for a way to diversify their investment portfolios, and for many buy-to-let is the obvious choice. If you are someone who is thinking about investing in a buy-to-let property then you’re in the right place.

Our guide aims to explain all you need to know about creating your own property portfolio and give you the advice you need to get things right first time. So, without further ado, let’s get started:

What is buy-to-let?

Firstly, it’s important to understand exactly what buy-to-let means. Buy-to-let is a type of property investment where an individual purchases a residential property not to live in, but to rent out to others. By undertaking this investment, the purchaser becomes a landlord and they collect rent from their tenants for the duration of their contract.

Who are buy-to-let investments suitable for?

property investments

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Investing in property may seem like the easy way to untold riches but the truth is it’s not always that simple. Buy-to-let investments are not for everyone, and the main issue that you must address is whether or not you can afford to take the risks associated with dabbling in the property market. Despite the media hype surrounding buy-to-let investments, the risks are very real and you should only take on a BTL mortgage if you can manage those risks sufficiently.

You must also have a decent credit record in place before attempting to get a mortgage for a buy-to-let property and it is highly likely that the lender will only consider you if you already own your own home. This can either be held outright or with an existing mortgage, but it is very rare that mortgage providers will supply a buy-to-let mortgage to someone who doesn’t already have a property in their name.

Your age will also be taken into consideration and this can potentially be a stumbling block for those looking to take on a BTL mortgage for retirement. Many people leave the decision too late only to find that lenders are reluctant to take them on if they are over a certain age.

While there has been a recent discriminatory court hearing on this very subject, it will still be more difficult to get a BTL mortgage if that loan is set to end after you are 75. So, if you are looking to get a 25-year mortgage, the latest you should apply for one is 50-years of age.

Where do the profits come from?

profits from investment

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As with any investment, the main aim is to make money and the way that this happens with buy-to-let is twofold. In the short-term, money can be accrued from the rent received from the tenant. This is sometimes referred to as rental yield.

The rent you charge should always cover your mortgage payments and more, so that you can build up a reserve fund just in case any repairs or maintenance needs to be undertaken on the property.

The second way that profit can be made is when the property is sold. After holding the property for a period of time the hope is that the market will have moved upwards and the property can then be sold at a profit. This profit is commonly referred to as capital growth.

When considering a buy-to-let investment it is important to look toward the medium to long-term as opposed to hoping for any short-term gains.

Selecting a property

key in door

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The key to a successful property portfolio is in the selection of the properties that you place within it. Making the right choices at the start will stand you in good stead for the future. But how do you make the right choices? Following these key points will get you off on the right foot:

  • Research – Ask around your local estate agents about the types of property that are hot at the moment. Find out the areas that are mentioned frequently and look for a pattern. Enquire about what kind of rent these properties are fetching and who the tenants are; i.e. young professionals, students, retired etc.

Once you have this information you can then research the specific area further. Find out about the local amenities such as transport links and schools to see how they fit in with your prospective tenants.

  • Target – Make a list of the types of properties you wish to target. Bear in mind all that you have found out and work this into your equation. Location, tenant and property type should all fit together.
  • Calculate – Now you can start to work out the financial aspect of your investment. Look at the property types that you are targeting in the area you wish to make your purchase, and begin to calculate yields and whether or not you can obtain a mortgage for these properties.

Calculating rental yields

for rent sign

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Rental yields can be calculated to give you an idea of your returns over the course of a year. This is important to know, as a cheaper property may not always be the best investment.

Thankfully, the equation is simple and you only need to have two figures to hand – your projected monthly rental return and the amount of money spent on the property. Let’s take a look at a couple of examples:

Property A

Monthly rent = £1050

Investment made = £250,000

£1,050 * 12 = £12,600

£12,600 / £250,000 = 0.0504

0.0504 * 100 = 5.04% yield

Property B

Monthly rent = £900

Investment made = £225,000

£900 * 12 = £10,800

£10800 / £225,000 = 0.048

0.048 * 100 = 4.8% yield

As you can see, Property B cost £25,000 less than Property A, but Property A has a higher yield than Property B. This makes Property A the better investment of the two in the medium/long-term.

Financing your investment

investment finances

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Buy-to-let mortgages differ somewhat from normal residential mortgages. With a residential mortgage, the amount that you can borrow is normally calculated based on your income and outgoings. Buy-to-let mortgages, however, are worked out by taking into account the amount of rental income your property is likely to generate.

The base figure for most lenders is 125% of the mortgage payments that you will make each month. So, if your mortgage repayments are £950, your prospective rental income will need to be at least £1,187.50 for the mortgage provider to consider lending.

You will also need to be able to put down a fair size deposit on the property you wish to buy, typically around 25%. Some lenders may accept lower but this is a good guide figure to make your calculations around. It will also be expected that you have a personal income of £20,000pa or more on top of what you anticipate you will earn from the rent that you will receive.

What are the risks?

danger sign

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No investment is entirely without risk and buy-to-let is no different. Property markets can fluctuate and this can affect both the amount of rent that you can command and the overall value of the property should you wish to sell.

Structural problems too can take their toll on investors. If you are sailing close to wind in terms of what you are receiving in rent compared to what your mortgage repayments are you could find yourself having to delve into your own savings to repair a roof or deal with burst pipes.

Smaller problems such as broken appliances also cost money to repair and replace, and general wear and tear will eventually have to be taken care of too. As a landlord you have a duty of care to your tenants so you will need to fix any problems that may arise while they are renting your property.

Unsurprisingly, these issues never happen at a good time, and they can catch you unawares if you haven’t made the necessary provisions to deal with them.

Can you insure against the risk?

insurance button

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There are certain things that you can insure yourself for, but not all. Things like moves in the property market are not insurable but damage to your property can be safeguarded against. Similarly, you should have insurance for public liability too. This will cover you should a tenant or service provider be injured in your property.

Loss of rent can also be insured and there are other elements that can be protected as well depending on how much you wish to spend on insurance each month. Do your research and make an informed decision upon the level of cover you wish to take out.

As for contents insurance, tenants should be encouraged to take out their own contents insurance should they wish to cover their own personal belongings while they are renting your property.

How about tax?

When you take on a buy-to-let investment you are effectively running a business as a landlord. Therefore there are tax implications to take into account. These include:

  • Stamp duty land tax (SDLT) – Charged when you first buy the property
  • Income tax – Charged against the rental income
  • Inheritance tax – Charged if you should die whilst holding property
  • Capital gains tax – Charged when you sell the property
  • VAT – Charged whenever you make purchases or pay for services related to the property

Are there any additional fees to pay?

annual fee

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Other than your insurance costs and the expense of maintaining the property to a standard fit for someone to live in, there can be other costs associated with owning a buy-to-let property.

The main one would be if you choose to have a letting agent manage your property for you. Doing so can relieve a lot of the headaches that come with being a landlord, but that stress relief doesn’t come for free.

Ask around your local letting agents to see what sort of charges they make for managing the type of property you are looking to rent out.

Interviewing prospective tenants

If you are not using a letting agent you will need to interview and assess your prospective tenants yourself. In order to avoid future problems, you will need to find out as much as you can about them before you rent your property out.

The five main things you must obtain are:

  • Proof of identity
  • Proof of credit rating
  • Proof of current address
  • Employer’s reference
  • Reference from their previous landlord

Are there any other obligations?

electrical check

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As a landlord you will need to meet certain obligations in order to legally rent out your property. These are:

  • Mortgage consent to let – You must have permission from the mortgage lender to rent out your property. For the majority of buy-to-let investors this will not be a problem, as you will probably have a specific mortgage for the purpose. However, if you already own a property and are considering renting it out you must inform your mortgage provider and obtain consent to do so.
  • Hold an up-to-date gas safety certificate – If you have gas appliances fitted in your property it is part of your duty of care to have a current gas safety certificate.  These need to be carried out annually and by a Gas Safe registered engineer.
  • Have a current electrical safety check – Although it is not a legal requirement to have annual checks performed like the above gas safety check, you will need to comply with the Electrical Equipment (Safety) Regulations 1994 and the Plugs and Sockets etc. (Safety) Regulations 1994. This is an obligation of all landlords and the Health and Safety Executive enforce these regulations.
  • If you are supplying furnishings for your property they must comply with the Furniture and Furnishings (Fire) (Safety) Regulations 1988 which extends the scope of the Consumer Protection Act 1987 (CPA).
  • Energy performance certificate – Failing to produce a valid energy performance certificate can result in a £200 fine from your local TSO (Trading Standards Officer).
  • Fire safety measure need to be put in place too. Any building built after 1992 must have a mains operated interconnected smoke alarm fitted on the entry level to the property. Older properties should have battery operated smoke alarms fitted.
  • General safety is also an obligation that must be fulfilled by the landlord. Renting out a property that is hazardous could result in a £5000.00 fine, 6 month’s imprisonment, and it could invalidate your insurance policy.

Becoming a landlord involves a great deal of work and it is not an entirely hands-off investment. However, the rewards can be great, so if you feel you have what it takes to go through with purchasing a buy-to-let property why not begin your journey today – it could be the best investment you’ll ever make.

Feature image credit: Ken Dodds via Flickr

If you enjoyed this blog post then perhaps you’d like to read “Ways to Increase Buy-To-Let Profits“?

Ways to Increase Buy-To-Let Profits

Posted on by Aspen Woolf UK

With the summer budget hindering buy-to-let property owners in the UK, landlords can be left looking for other ways to increase profit margins. Although first-time buyers will benefit from the announcement, existing home owners can only now claim tax relief on mortgage interest payments at 20%. This could be much lower than the previous marginal rate.

In this sense, squeezing as much money out of your incoming rent as possible has become more important for landlords. Here are a few ways to do so.

Tax Relief

tax relief

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Many landlords don’t realise they can offset various costs for tax purposes. The potential savings can be substantial, particularly through mortgage fees and interest. Although, as previously mentioned, the interest rate will be set at 20% from April 2017. Likewise, broker and arrangement fees can also be claimed back when the mortgage is taken out.

Further tax breaks can be made on letting agent fees, insurance premiums, general maintenance and utility bills, amongst others, which landlords should include on their self-assessment returns. If an accountant does this on your behalf then their fees are tax deductible also.

Landlord Insurance

insurance policy

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Although there is no legal necessity for to take out landlord insurance in the UK, it is highly advisable and usually required by mortgage lenders. Home buildings and contents insurance will not cover rented-out properties so be aware of this.

Shopping around for the cheapest insurance deal will help increase your buy-to-let profits. A recommended approach is by using price comparison websites or seeking out specialist insurance brokers. In addition, landlords with multiple properties can combine their entire portfolio under one policy to save money.

Tenants

student housing

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The price of insurance may depend on the occupants in your property. For example, long-standing professionals will be looked on more favourably than DSS tenants or a group of students. Their previous history can also be a factor as those with previous evictions or a criminal record can push premiums up.

You also need to have a strong degree of trust with new tenants as, if regular maintenance is required, your profits will be severely affected. In addition, landlords will be charged if any repairs are left unresolved or inadequate. Your insurance premium can also rise if household pets are present so consider this as well.

Area

globe

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One simple way to increase profits is by researching rental hotspots where rates are high or expected to rise in the upcoming months. Most prospective landlords will only invest in property close by for convenience, neglecting larger profits that can be made further afield.

The recommended approach is to use various online outlets or estate agents to gather information. For example, a recent report by HSBC suggests that properties in cities such as Manchester, Blackpool and Kingston-Upon-Hull are producing healthy rental yields of nearly 8%.

Landlords across the UK should consider all options available to them in order to cut down costs and maximise profit margins. Look into all the possible tax breaks whilst choosing your tenants and location wisely to boost rent income.

If you liked this blog post then perhaps you’d like to read “Buy-To-Let Market Buoyed By Low Rates And More“?