How Secure Is Buy-To-Let Property Investment?

Is Buy-To-Let A Secure Property Investment Option Aspen Woolf

Investing in buy-to-let properties has traditionally been seen as a simple way of making money. However, this isn’t necessarily the case. In fact, some people who make unwise buy-to-let investments find that they lose money in the long run. This is because there are a number of factors which can influence just how much profit can be made from any given property.

With this in mind, is a buy-to-let investment a secure one?

The Importance Of Research

Obviously, the stock market is a clear comparison – everyone knows that share prices can go up or down – however when it comes to property, some potential investors are under the impression that their investment cannot fail. This is not the case.

Just like stocks and shares, property prices can fluctuate. Some people who invest in property discover that the value of the home increases dramatically over the years thanks to improvements in the local area. Others, on the other hand, find that the area in which they purchased the property takes a downhill turn and becomes less desirable for tenants and buyers alike. This means that research is key to determining which property is the right one in which to make an investment. Aspen Woolf have over 15 years of experience in identifying excellent opportunities within the property investment sector, so instead of going it alone, talk to our advisors to ensure you’re getting excellent advice in the current property market.

The Potential Profit

It comes as no surprise that buy-to-let investments are frequently seen as being extremely secure. After all, property investments can be extremely profitable since they offer two distinct forms of revenue stream. Firstly, investors receive ongoing revenue every month from the property’s rental income. Secondly, when the investor decides to sell their property they receive more profit from the sale.

Today, there is an unprecedented demand for rental properties across most regions. There are ongoing shortfalls in local housing, and this is now paired with the inability for many young people and families to afford a property of their own. Both of these factors mean that if you carry out your research well, it’s possible to invest in a desirable property which will be popular with tenants and command a good rental yield. With infrastructure developments across the UK, such as the HS2, the road to London is becoming faster and more accessible, meaning that properties along the route will be highly prized. Aspen Woolf stay abreast of these changes to ensure we curate the most desirable properties.

For many investors, buy-to-let properties are often viewed as a longer-term investment instead of considering the rental yield. They purchase properties with a view to selling them at the perfect time so they can reap large gains on their capital value. However, if the income earned from rent is put aside, none of the property sale profits will need to be used as a deposit when making your next property investment.

How Secure Is Buy-To-Let Property Investment? Aspen Woolf
Image Credit: Pexels

The Potential Pitfalls Of Buy-To Let Investment

Although there are clearly many benefits to investing in a buy-to-let property, there are a number of potential pitfalls which should be borne in mind before taking the plunge. Potential investors must  acknowledge that no investment can be guaranteed when it comes to offering the expected returns. Although many buy-to-let properties turn out to be very lucrative investments, making more profit than previously imagined, others can end up costing the investor a lot more money than they intended to spend.

There can be a number of factors which can impact on the profitability of any buy-to-let property. While some can be foreseen, others may emerge out of the blue. For example, the recent uncertainty about the implications of Brexit has led to a number of unpredictable property market changes which could have a serious impact on any buy-to-let investment.

Also, for some considerable time, the interest rate has been at a very low level. Investors have been able to reap the benefits of this thanks to cheap mortgages. Unfortunately, however, there has now been a rise in the interest rate, and there is now a distinct possibility that more interest rate rises could follow. This means that landlords must ensure that they are in a secure financial position in order to rise those increases out. Interest rate rises mean that mortgage payments will increase at some point, whether that be immediately or once a fixed rate deal ends, so it’s essential to ensure the rental income of the investment property will cover those payment increases in order to avoid damaging losses.

Changes In The Property Market

When the property market goes through changes, this will impact on the success of any buy-to-let investment. House prices have seen growth, however in some parts of the country this growth has now slowed down. This means any potential property investor must always be vigilant on what this could mean for their property’s value. It’s always important to have a viable exit strategy which should centre around when the best possible price can be obtained for the property. This means that landlords need to decide whether or not they are financially able to wait and hold onto their property until the prices have increased should its value have fallen.

The Danger Of Empty Properties

One problem which a lot of landlords experience is their property lying empty for extended periods. This often comes as an unexpected shock since the rental market is so buoyant in many parts of the country. However, there are a number of reasons why a property can be empty. Sometimes, tenants will end their contract early. Sometimes, work has to be carried out before the property can go back onto the rental market. Other times, there is just a drop locally in demand.

When there is no income from rent for any period of time, landlords have to be certain they can still make their monthly mortgage repayments. If a tenant falls into arrears with their rent, this could also pose a potential problem, with landlords having to cover the mortgage themselves. With this in mind, rental property may not be such a lucrative choice as many investors think.

Overall, a buy-to-let property can be a very profitable investment. However, doing adequate research and keeping a close eye on the property and financial markets is essential for success. A successful landlord will also have a clear contingency plan just in case of an unexpected change.

How Will The Autumn Budget Affect Property Investment?

Property Investors Investment Autumn Budget Finance

If you have read the news lately, it has primarily been dominated by the big ‘B’ of Brexit, however, there has been another big ‘B’ we should be aware of and that is the Autumn 2018 Budget.

By now, you will have heard and read about Chancellor Philip Hammond’s 2018 Budget update. Hammond opened the 2018 Budget, with a confident prediction that it would “open a new chapter in our country’s economic future.” This can leave many people pondering on how it will affect them and their businesses and families.

If you are you wondering exactly how this will directly affect you as a property investor then read on as we will outline the most important changes that you’ll need to know about, from changes to tax bands, important information regarding foreign nationals, changes to stamp duty as well as changes to Capital Gains Tax.  

Tax Bands:

In the Autumn Budget, changes to tax bands were discussed regarding the 2019/2020 year. The personal tax-free allowance where the 40% higher tax is applied will rise from £46,350 to £50,000. Although it may seem small and many landlords were dismayed by the news, we have to be positive as this is still an increase on last year’s figure. Also important to note, is that the threshold for VAT registration will remain unchanged for two years. Read our post to discover if it is worthwhile to invest in property via a limited company rather than as an individual.

Stamp Duty:

In the Autumn Budget, the Government has stated that it will extend first-time buyer’s Stamp Duty relief in England and Northern Ireland to shared ownership properties, regardless of whether the purchaser chose to pay Stamp Duty on the market value of the property. This will even be eligible to be backdated to 22 November 2017, so that all of those who were not previously eligible can claim a refund.

Read about the other Stamp Duty change announced by Prime Minister Theresa May at the beginning of October, to the effect that foreign investors will be subject to higher charges.

How Will The Autumn Budget Affect Property Investment? Aspen Woolf

Foreign Nationals:

In the Autumn Budget, there was an important update regarding non-UK residents and international companies. It is vital to note that all non-UK residents and international companies that are intending on buying and investing in property will also be taxed on indirect disposals of UK land. These rules will apply when a person makes a disposal of an entity that derives 75% or more of its gross asset value from UK land. An exemption will be made available for investors in such entities who hold less than 25% interest.

There will be options available in order to calculate the gain or loss on a disposal using the original acquisition cost of the asset, or by using the value of the asset at commencement of the rules in April 2019.

Another aspect of the Autumn 2018 Budget was that all non-UK resident companies will be charged Corporation Tax rather than Capital Gains Tax on their gains. The Capital Gains Tax charge relating to the Annual Tax on Enveloped Dwellings will be abolished. The legislation will broadly come into effect for disposals from the 6th April 2019.

Capital Gains Tax:

In the Autumn Budget, there were changes regarding Capital Gains Tax. This is especially important information for landlords as the relief that’s been granted reduces Capital Gains Tax on the sale of properties that have previously served as the landlord’s personal residence, but, which are currently being used to let out to tenants as their residential accommodation. This relief sees a maximum exemption of £40,000 per owner.

However, it is important to highlight that from April 2020, this exemption will only be available for landlords who live inside the property with the tenants. There hasn’t been any information regarding single tenants, so we assume that live-in landlords with only a single tenant are not eligible for the lettings relief, meaning that this will only apply towards accommodation with two or more people renting rooms, unless we hear clarification from the Government on this.

Read more about the various taxes property investors face here.

Are you a property owner? Great news, the time period between ceasing to occupy a house and final sale has been reduced from 18 to just 9 months. Though this change does exclude sellers who are disabled and/or who are living in a care home, they will continue to receive the 36-month exemption.

How Will The Autumn Budget Affect Property Investment? Aspen Woolf

Housing News:

In the Autumn Budget, there were some interesting pieces of news regarding the wider housing industry market. Firstly, The Housing Infrastructure Fund will increase by £500 million, bringing the total to a figure of £5.5 billion. There will also be £8.5 million available in order to allocate land for affordable housing. This is great news for property investors looking to expand their portfolios.

Secondly, you may be aware that Sir Oliver Letwin was asked to investigate why it takes house builders such a long time to complete large housing developments after statistics revealed that just over half of the 684,000 homes with planning permission that was granted in July 2016 had actually been completed. The findings of his investigation were that “the idea that housebuilders are behaving like financial investors, speculating over future land values, is not compatible with how they run their businesses. Housebuilders’ profits are generated from selling homes, not from an increase in the value of land” he argues. The Chancellor agreed that the review did not find evidence that major house builders are engaging in land speculation as part of their business model.

Lastly, The Office for Budget Responsibility believes that GDP growth will be 1.6 per cent in 2019, up from previous forecasts of 1.3 per cent; 1.4 per cent in 2020 (up from 1.3 per cent); 1.4 per cent in 2021 (unchanged); 1.5 per cent in 2022 (unchanged); and 1.6 per cent in 2023. This steady growth can only mean good things for property investors.

To conclude, 2019/2020 seems like there will be a positive outcome forecast for property investors with plenty of reliefs including changes to Capital Gains Tax, increased tax bands, more money being delivered into investment funds, as well as Stamp Duty being extended.

Here at Aspen Woolf, we can help you with your property investment journey, whether you’re at the beginning or if you already have a vast portfolio, we have an expert team who are ready to hear from you today.

Foreign Investors to Pay Higher Stamp Duty on UK Purchases

Property website showing higher prices for investors from abroad

Investors from abroad who are looking to buy properties in the UK will be hit with higher charges in the form of stamp duty according to the current government. The change was announced by Prime Minister Theresa May at the beginning of October and is a response that is designed to address the current housing crisis.

It’s generally believed that foreign investors looking to buy a property in areas like London are driving up house prices, something that is putting them out of reach of many UK citizens. The market in the Capital may be currently experiencing a dip, but the average cost of a semi-detached property is still over £580,000, way beyond the means of many first time buyers.

While May cited the new tax as a way of creating a more level playing field, the building industry reacted by saying that it would put the brakes on an already stalling house market. That’s because fewer new properties would be built with less investment coming in from overseas, something which many developers depend on.

What is the Stamp Duty Increase?

The increase will be 1% but could rise to 3% later. If it comes into effect, it is expected to raise tens of millions for the UK government. That means, of course, for each property, an overseas entity or individual will pay more. The details have yet to be thrashed out, however, and a date has not yet been set for when it will come into effect.

There will be a consultation period during which interested bodies, including those from the building industry, will be able to put their points of view across.

Why has the Government Announced It?

There has long been a feeling that the current government in the UK has been swamped by the Brexit issue, with many domestic changes and policies getting lost in the drama and turmoil of leaving the EU. The announcement came as the Conservative government was about to start their party conference at the end of September.

Foreign Investors to Pay Higher Stamp Duty on UK Purchases Aspen Woolf

A number of factors have driven the proposed increase in stamp duty. Two years ago the stamp duty rate for second home buyers was increased in an attempt to give more opportunity to first time buyers who now pay no tax below a certain threshold.

In other countries, levies on foreign investors have already been introduced, including in Australia and Canada. The UK government seems to be following the same model in the hope that it will make the market more equitable for local home buyers.

There’s also an increasing crisis of homelessness in the UK’s capital city. It’s estimated that the tax levy will deliver £40 million that could be invested in providing homes and accommodation to this neglected section of society. If the government then decided to boost the stamp duty to 3% later, it would potentially bring £120 million to the chancery.

The major reason is equity. According to Theresa May:

“It cannot be right that it is as easy for individuals who don’t live in the UK, as well as foreign-based companies, to buy homes as hardworking British residents. For too many people the dream of home ownership has become all too distant and the indignity of rough sleeping remains all too real.”

What Does It Mean for Foreign Property Investors?

While the proposed change to stamp duty was broadly welcomed in political circles, the actual impact on the long-term housing market is uncertain. With Brexit looming large, by the time the consultation takes place, we could even be looking at a change of government and a major change of opinion.

Foreign Investors to Pay Higher Stamp Duty on UK Purchases Aspen Woolf

The Labour opposition’s approach to overseas property speculators say could well be a lot harsher. While putting in measures to collect more tax from companies that do business in the UK, they’re also planning to ensure that overseas property investment becomes less attractive across the board. That political socialism may well have much bigger consequences for those who choose to buy properties in the UK.

The major issue for foreign investors is not necessarily the extra cost in purchasing a property either but the potential impact it could have on the housing market. If builders are no longer getting foreign investment coming in, they may cut their own activity and put up fewer houses, flats, and offices. That could, in turn, put property prices at a premium for overseas cash investors – especially in lucrative areas like London – as well as local buyers.

The big issue is whether it will actually work to make the housing market more viable for local residents. The building industry and developers, in particular, understand that the overseas market provides an important source of funding. At the same time, the government announced that they would remove the cap on how much local councils can borrow to build new housing – that may balance the equation but it’s by no means assured.

There’s also no guarantee that lifting the cost of buying a property will bring the prices of homes down within reach of national home buyers. While the extra money raised by a 1% increase would be welcome, £40 million is still a drop in the ocean when put against the growing housing crisis and homelessness and what it actually takes to solve this problem.

For the moment, overseas property investors will have to wait and see when it comes to the stamp duty increase. The consultation is expected to be completed and delivered by the end of January 2019. In the recent budget, Chancellor Phillip Hammond also appeared to climb down from a future 3% hike in the stamp duty.

Before the consultation, however, you might expect to see a flurry of purchases by overseas investors attempting to get ahead of the game. If that sounds like you, or you’d like some further information about investing in property in the UK, our team can advise you on the most lucrative investments.

Will Expats Sell Up And Come Home After Brexit?

UK flag EU flag Brexit

Brexit has been a topic of discussion for some time now, and recent talk has worried expats. The question on many lips is, what are British expats planning on doing? Will they sell up their European homes and move back to England?

According to United Nations there are just over 4.5 million British citizens currently living outside of Britain; 1.3 million of these Brits abroad reside in European countries. This is a vast number of people, and the decisions they are likely to make following Brexit will affect not only them, but the entire country and beyond.

What might happen after Brexit?

The Citizen’s Rights Agreement was agreed between the UK and EU27 in December 2017 and ensures that Brits and EU Nationals reserve their residency rights. Following on, in March 2018 it was agreed that the effects of Brexit would be postponed until the end of 2021 (unless a deal is not agreed). If British expats living abroad wish to ensure their right to stay in the country that they are currently resident in, it is strongly advisable to make arrangements before March 2019 as the 2021 extended deadline is not guaranteed. After Brexit, British citizens will no longer have freedom of movement within the EU and the application process for living, or working, abroad is likely to be far more complicated.

Why expats might return to the UK after Brexit

Expats may decide to return to the UK for a variety of reasons; many of which are financial.

Although no one knows exactly how Brexit is going to affect the UK, there has been talk that travel might be more difficult. It is also expected that people living in other countries may not get the medical advantages citizens living in the UK get currently.

If travel is going to become challenging, then coming home occasionally might be slightly more difficult. In some instances, some European regional air routes may not be economical. Therefore, this could be a reason for British expats to move back to England. Travelling won’t become impossible but whilst Brexit is on the horizon, people might feel more secure to be in England whilst changes are being made.

Will Expats Sell Up And Come Home After Brexit? Aspen Woolf

Especially in Spain and Portugal, expats are contemplating selling their properties and moving back. Why is this? Well, their family is all at home and the fear of not being able to see them easily might cause a fright. There is the dilemma for having friends in another country, but their family waiting for them at home. There are also long-term benefits for moving back home, as Brexit may result in the country benefiting financially. There is talk that the UK property market may have a sudden growth and improve the UK economy.

Another worry which might explain why expats are thinking of moving back to England is the recent suggestions about scrapping state pensions for those who live abroad; this might turn into a new law making it illegal for expats to receive a state pension. Whilst many people move abroad once they are retired, a state pension is a huge important factor to enable people to live. Therefore, this might just be a scare for expats, but the risk might just bring a lot of people back to England.

With all of the current uncertainty surrounding Brexit, many may find investing in property within the UK to be a more straightforward prospect than abroad.

Why British expats might choose not to return to England

On the other hand, there are British expats who are staying firmly in their new-found country and home. There are many reasons, whilst Brexit is going ahead, people are not giving in and deciding to stay away from England.

If British expats were to move back to England, the possibility of them returning to their home abroad might be slightly difficult. Whilst moving homes is stressful, moving to a new home in a new country is an entirely different prospect. There is current uncertainty as there has been a “withdrawal agreement for expats rights”. This means there are no guarantees that it will be a smooth transition from inside to outside the EU.

People who do not agree with the idea to leave the European union may also be more likely to stay in the country they have moved to. With fear that leaving the union may cause revolt between other countries who decided to stay it might be easier for people to stay put. However, it is likely there are other factors why people may stay abroad.

In general, people move abroad when they have retired to escape from their busy lives and relax. The weather is also a massive reason why, despite Brexit, people will choose to stay in the sunny relaxed climate elsewhere. There are pros and cons, and Brexit is a huge consideration which is making people think twice whether they want to remain abroad or move back home.

Will Expats Sell Up And Come Home After Brexit? Aspen Woolf

Currency movements

There is another issue which contributes whether expats will sell up and come home after Brexit, that is the currency movements. At the moment it stands as €1.138 to the pound, this is fall of just over 20% just prior to the subject of Brexit, therefore it has gone down, thus affecting any sterling payments received by expats. This is another huge consideration when predicting whether expats will sell up and move back to England. This is due to the fact that it might be worthwhile for expats to sell their properties and move back to the UK, depending on what will happen to the UK’s economy.

All in all, there are considerations for expats to ponder. Deciding whether to continue to live abroad in a different country or to move back home is currently on a lot of people’s minds. Will the property market in the UK decline or take a different turn? Will the currency keep fluctuating and will Brexit improve the UK’s economy? There are many factors that are going to be affected when the Brexit movement takes full force therefore the subject of expats will be greatly talked about. Whilst holiday homes are becoming more popular as well as renting out properties abroad as an investment, living abroad is another matter.

There are many different factors which may keep expats in their home abroad, however whilst having family back home the decision whether to stay or move is the main focus as Brexit is beginning to start. There is currently no guarantee what will happen plus here is uncertainty whether rights in the UK to EU expats will continue and also what rights the EU will give to those who remain . With the fear of pension laws changing, access to UK bank accounts and flights being affected by Brexit there are many factors that are going to change which may result in people moving back to the UK or staying in their home abroad.

There is still no definitive answer to the question of expats of leaving their new home abroad and selling up to move home: Will it be for the better or for the worse? No one knows what Brexit exactly will entail, and what changes are going to be made in terms of the property market in the UK and abroad. For expert advice regarding property investment in the UK or abroad, get in touch with Aspen Woolf, property investment specialists based in London, offering property investment opportunities across the globe.

Taxes Property Investors Need to Know About

taxes property investors should know about title image

There are many different types of taxes that property investors face, therefore it is important to be aware of them to ensure when making decisions that any tax implications are taken into consideration. With recent changes to tax relief on mortgage interest, it is even more important to ensure that your property investments are sound and your tax planning is up to speed. 

Taxes are a huge consideration when buying a property investment and it is important to be informed on the taxes involved when buying and selling properties. However, with interest rates on savings remaining incredibly low, property investment is still a great way to see a good return on your money, even with increased taxes. Your accountant or financial advisor should be able to make sure you are aware of the taxes that also come with property investment and will inform you of how much these taxes will be.

Taxes Property Investors Need to Know About Aspen Woolf

Capital gains tax

Firstly, there is capital gains tax. This is type of tax is whereby more tax is added on the profit when you sell an asset that has increased in value. In terms of property investments, capital gains have to be declared earlier than that of assets such as shares,  and property can be taxed at a higher level.

Whilst capital gains tax applies to property sales, you can benefit from Private Residence Relief on any profit if you are selling your residence, however this may not be the case if you have previously rented out your home. When selling another property, for example as a property investor, Private Residence Relief is not valid therefore capital gains tax is applicable.

When selling a property you must ensure that profit forecasts for the sale include the deduction of capital gains tax. It’s worth noting that individuals get an annual capital gains tax allowance of £11,300 (this does not apply if you choose to invest in property via a limited company).

If you are a property investor and married, do not forget your spouse is also entitled to an exemption of £11,300. Finally, in order to decrease capital gains tax you can incorporate the use of your personal pension, however there is a cap of £40,0000

Mortgage interest tax relief

Next there is mortgage interest tax relief. There is now a new rule which came into effect in April 2017. This is where private landlords who are in the higher- rate tax bracket are now not allowed to offset their mortgage interest again their rental income. Many landlords are responding to this change by increasing rent in order to make up the deficit in profit.  However, this is something to refer to your accountant or financial advisor about.

Furthermore, from 6th April 2020 tax relief for finance costs will be restricted to the basic rate of income tax. Before this it was free for property investors and landlords to be able to eliminate mortgage interest from their rental costs, this happened before working out what the tax liability was going to be. However, now this is not possible therefore it will be 20% that is restricted to the basic rate of income tax.

Taxes Property Investors Need to Know About Aspen Woolf

Stamp duty

Stamp duty is a crucial factor that needs to be considered. Stamp duty is a law and needs to be paid within 30 days. If the property is valued between £125,000 and £250,000 a 5% stamp duty tax applies, between £250,000 and £925,000 it is 8%,, between  £925,000 and £1.5million you pay 10% on the portion of the sale over £925,000.01 and 12% on any remaining amount (over the £1.5m).

It is important to factor in stamp duty taxes in when investing in property.  As a property investor it’s also worth noting here that additional properties (other than the one in which you reside) are also subject to an additional SDLT cost of 3% on top of the normal rates that apply. There are exceptions to this and you can refer to the website for further clarification.

Taxes Property Investors Need to Know About Aspen Woolf

It’s of paramount importance that a property investor is aware of their financial liabilities in relation to any new investment. With recent changes to tax relief it is advisable to ensure that with those changes your investments are still profitable and to make adjustments to rents on rental properties if necessary.

In conclusion, capital gains tax and mortgage interest tax relief are factors property investors need to consider. Speaking to your financial advisor or accountant is a good way to decide what the best options are for you and your property investing business.

Should You Invest In Property Via A Limited Company?

Personal Ownership v limited company

Investment opportunities in properties look attractive in terms of higher annual return than savings accounts, and you might have considered are there any benefits if you shifted the investment to a limited company, rather than make the investment as an individual.

What are the characteristics of a limited company?

Well you should think of a limited company as a distinct legal entity from its owners, and the owners are protected by limited liability up to the amount they have invested.

So, say you registered a company (this must be done at Companies House, the UK registrar of companies), with say 1 share, with a value of £1, to yourself as director and sole owner. Your limit of liability in this case would be £1. So, if the company went into debt by £100,000, you would only be liable for £1.

Is a limited company a good place for your property investment?

Any thoughts would have to be discussed with a financial specialist in this area first, but while it appears on the face of it and attractive idea, it is potentially fraught with issues, so tread carefully. Whilst every decision in terms of business can have risks, these may be outweighed by the pros to investing via a limited company, however this is dependent on what size the business is and the amount of income that is generated overall.

By investing properties into a limited company, it means that the business will then have its own individual legal entity, this means that the business that is taken place is between your company (i.e. your properties) and the limited company, not dealt with you as an individual. This has its advantages and disadvantages but consult your accountant to decide whether this is good for you. On the other hand, before even considering investing in a limited company you might fall at the first hurdle, which is deciding on the company name and you need to make sure this is unique, uncommon and importantly doesn’t exist anywhere else. (Companies House will do this check for you). You will also have to check the trade mark registry as well, as you don’t want to end up with legal battles from day 1, just because you chose the wrong name!

Should You Invest In Property Via A Limited Company? Aspen Woolf

How would the limited company operate?

If you have an existing limited company set-up already, you could use this to purchase the investment property. So rather than paying income tax at 40% or higher (assuming you are in this higher rate tax band) as an individual, for a small business with profits under £300,000 the corporation tax is currently 19% (from 1st April 2018). You could then pay yourself dividends from the limited company, but the days of tax free dividends has now almost long gone, e.g. from 6th April 2018 to 5th April 2019, the amount you can pay yourself tax free on dividends, has reduced down to just £2000. Then if you are a higher rate taxpayer, you would still have to pay tax on the difference at 32.5% (arguably this is still lower than 40% though)

What are the possible cons to investing via a limited company?

You might not actually have a limited company set up already? Whilst it is fairly easy to set one up, there are annual expenses you have to consider in running the company i.e. Company house registration and yearly declaration charges, production of the company accounts (ideally best done by a qualified accountant), indemnity insurance, your office time to manage and collate records for the accountant, business banking costs etc. The government provide easy and cheap ways to set up a limited company, however accountants can charge you for this action. Therefore, if you are thinking of investing property via a limited company it is worth researching with your accountant what are the overall profit gains for your company.

So really you need to set-up a new company for the specific purpose i.e. as property investment company and make it as clear and as transparent to the tax authorities what you are doing and why.

Also consider any Capital Gains tax advantages from which you might benefit as an individual are lost when you dispose of the property via a limited company. (Plus if you are not in the higher rate income tax bracket to start with, you are not going to benefit in any case.)

Should You Invest In Property Via A Limited Company? Aspen Woolf

Does your limited company have any spare cash? Well if not, you would have to turn to a lender and borrow, and this is likely to cost more for a business than an individual, as some lenders are more cautious lending to businesses than individuals.

You also need to consider how the investment property is going to be used, e.g. if it’s a holiday let, and you decide to use it in quiet periods, this would be considered a benefit in kind, and guess what… more tax to pay! (P11D) In terms of student accommodation blocks, these are used most of the year, and with contracts that is what the students sign up for therefore that is what they will pay so it is not such an issue.

How long are you intending to keep the investment for? e.g. consider what you have to do to get the investment out of the company before the company is dissolved (which also incurs additional professional expertise and cost to do) i.e. you might have difficulty in extracting the cash in a tax efficient way.

The pros are that if you have multiple property investments, the benefits of reduced tax will compound, so if you keep the money in the company you might have the ability to properly offset expenses against revenue. So, for a long-term view, maybe involving any family members as company directors/shareholders, could be beneficial. In terms of investing property via a limited company it will increase the credibility of your properties e.g. if you are renting them out. This is due to the fact linking with a limited company people will assume immediately that your business has a commitment to certain performance and minimum standards will be met.

It can assume a brand identity and you will be able to link it to your own branded website and operate with branded email addresses. gives the impression of a large professional organisation, which in reality might only be a single person working in a small office.

So, in summary, seek professional advice, before going down this route, but for a small investor it is unlikely to be a good decision. For a larger investor, who wants to build up a large property portfolio, investing via a limited company might be the direction you want your business to go, particularly as the company is separate legal entity and will continue when you die, and could be continued to operate by your chosen dependents or anyone you want. Therefore, by seeking advice from an accountant or financial advisor this will mean you will get the right advice to suit you in your situation. With each pro there is a con for investing in property via a limited company, therefore it depends on what direction you want your business to take.

For property investment advice contact Aspen Woolf

Earn Good Returns In The Changing Buy-To-Let Market

houses and money

Are you having second thoughts about investing your hard-earned cash in the property market? Is the taxman giving you sleepless nights with spiralling tax duties on your rental income? Are you breaking down with high maintenance costs on your buy to let investment? If the answer to the above is yes, take a minute to check out our guide on how to adjust to the impending changes in the property market in the UK.

Buy to let is the best investment

You may want to reconsider and try other avenues of getting a return on your investments. Head to the stock market and you will have to contend with the headache of dipping stock prices and frequent ups and downs to guard your cash. If on the other hand you decide invest it into a savings account, be prepared to bear with low interest rates and a snail’s pace growth rate. Therefore, we are back to our buy to let investment, which is the best choice, if managed well. If you’re trying to decide where in the world to start investing, take a closer look at some of the United Kingdom’s unlikely cities reaping good buy to let investment profits.

Earn Good Returns In The Changing Buy-To-Let Market Aspen Woolf

How to get the best buy to let investment

To get into the property market, you need to consider some factors and research on the best buy to let investment opportunities. You can additionally carry out the following:

  • Perform thorough research on the buy to let market. The internet provides you with tons of data on the property market and this should be your first start. Talk to a buy to let investment broker or other property owners and get some advice on the pros and cons of this lucrative market.
  • Hunt for the best buy to let mortgage deal that is convenient to your available cash and plans
  • Get a backup plan if you are a first time buy to let investor to cushion you as you learn the ropes of the business.
  • Consult an expert advisor on the best buy to let investment opportunities. This will enable you understand the best locality for your investment, the target market and expected annual rental yields. The team at Aspen Woolf are on standby to receive your call and can assist you in selecting the right investment for your budget. Our sales team are on hand at every step of the way, including resales advice in the future.

Earn Good Returns In The Changing Buy-To-Let Market Aspen Woolf

How to maximise returns on your buy to let investment

Having gone through the above process and made your buy to let investment, all that is required is to sit back, enjoy your rental proceeds or make profit on your investment. However, with changing economic times, it is imperative to guard your investment against losses and stagnation. To remain afloat if you are considering the property as a long-term investment, you need to implement the following:

  • Consider purchasing low investment properties that you can renovate and build up to your specification after buying the property. Research shows that the average rental yield (percentage rental income versus the value of property) is high in Northern England and low in London, south and East of England. This is because the costs of purchasing property in these areas differ. However, the demand for housing near London is quite high hence your property

stays vacant for relatively fewer months before getting a new tenant if the former tenant’s lease


  • Never underestimate the student housing market. Purpose built student accommodation is highly sought after in university towns and cities. Sheffield, Leeds and Manchester all provide excellent investment opportunities at far lower costs than London.
  • You can consider furnishing your property before renting it out. This enables you to earn above the set rent. The added advantage is that the furniture can be used on long term by different clients.
  • To use an agent or solely manage your buy to let investment: weigh the pros and cons of each. You save lots of cash without agents by managing your own property, but you should be ready to dedicate your time soliciting for tenants, solving leaking drainages and other hitches. On the other hand, using an agent ensures that you get tenants quickly and raise your rent income without delays and also get more time and space for your personal pursuits.
  • You can consider renting your investment as an HMO (Houses in Multiple Occupation). Renting your property to multiple tenants enables you to raise more rent as opposed to a single tenant. It also minimises the risk of problematic and troublesome tenants. However, you should consider the council laws so that you do not face any fines.
  • You can make a bargain when purchasing investment. This is after thorough market research to ascertain the market prices of the property.
  • You can review your mortgage and get a suitable rate that saves you some interest.
  • Install add-ons like a dishwasher, fridge, freezer and air conditioner. These appeal to the tenants and provide you with a basis to increase the rent. If well maintained, the add-ons can go for many years thus giving you value for money despite them being installed only once.
  • Utilize the available space to elevate your property status. You can create a private balcony, garage, lounge or children’s playground out of the unoccupied space and manage to lease out your property at a higher value.
  • Increase the rent: Changing financial times demand a change in the rent of your property. It is best to use a gradual approach like leasing out your property for one year. Then you can increase the rent for the subsequent years as opposed to long-term leases.

If your buy to let property is however a short term investment, you can still maximise your returns by adopting the following measures:

  • Getting an agent to solicit and manage the property. It is much quicker for an agent to get short-term clients.
  • Carrying out maintenance and refurbishing the property to appeal to brokers and other property buyers. In this way, you make a profit by buying at a low price and selling it for a higher price.
  • Researching on the best buy to let investment opportunities for different localities and investing accordingly. In this way, you get to quickly buy and sell property suited to different tenants like student hostels for properties near a university, beach houses for a resort area among others.

Earn Good Returns In The Changing Buy-To-Let Market Aspen Woolf

Whether your buy to let property is meant for long term or short-term investment, you can always make the best of the situation in the changing times. Proactive measures like market research, proper KYC checks of the tenants and proper financial management will make you successful despite the changing buy to let market.

For further information on any of our fantastic buy to let investment opportunities, get in touch with the team at Aspen Woolf today,

UK Property Investment Pros & Cons

calculating tax on properties

Property has long been seen as a lucrative investment, with many investors choosing to put their money in bricks and mortar as a long term retirement plan rather than traditional, riskier investments such as shares. Even with recent changes to tax laws in the UK, there are still good yields to be gained from investing in buy to let property. Overseas property investment is also another option for your investment portfolio, and with the effects of impending Brexit (whether that’s a soft-boiled/hard-boiled or a no deal scrambled mess), choosing a location outside of the UK could be a good decision. So, what are the pros and cons for UK property investment?  

Property Investment In The UK

2018 has seen US investors flocking to the United Kingdom in their droves to add UK property to their portfolios, as well as continued high levels of investment from Asia, with over £26.9bn of investment coming from overseas to the UK so far in 2018 (as of September 2018). So, what are the pros and cons of UK property investment for our investors who reside in the UK? The UK for most people is the ideal place for investments. Below are the pros and the cons of investing in the UK.


The Capital City & Beyond

London normally takes the limelight when it comes to the United Kingdom. In fact, 90% of Asian investors choose property in London. This international appeal has seen prices continue to rise in the capital and beyond. In the next couple of years, properties are expected to rise by about 56%. London is expected to bring that average down. Over the past year, prices of houses in the Midlands have risen by an all-time high. The properties that are in the North East have appreciated by as much as £10,000 since September 2016. The cities found to the North such as Sheffield, Liverpool and Manchester have been producing very high yields in the recent past. Other lucrative cities to consider are  Salford where the yield inclusive of rental and capital appreciation has been at a record high of 32.3%, and Leeds. In the UK, the property market is gaining some form of balance because investors are now looking for the best yields all over the country. Other factors that investors are looking into are the market entry points as well as house price growth and this has led to spreading of investment to other cities. However, Oxford and London still remain the most expensive cities in the UK to live.

UK Property Investment Pros & Cons Aspen Woolf

Housing Shortage

The demand for housing in the UK is becoming higher than the supply at an alarming rate. Housing listings within the country are at an all-time low. This housing crisis is also contributing to growing house prices.  Would be first-time buyers are being priced out of the market, with many 18 to 34 year olds viewing renting as their only realistic option.Due to the pressure mounted on the government by different organisations, the government has vowed to build 1 million homes within the next two years. Opening up to foreign investment by the local governments will help meet the high demand. This is therefore an opportune time to invest and secure assets within the UK for both UK residents and foreign investors alike.

UK Property Investment Pros & Cons Aspen Woolf

Northern Powerhouse

The Northern Powerhouse Partnership, set up in 2016 with the objective of increasing the impact and contribution of the North of England to the UK economy, have already pushed ahead with a number of initiatives such as the High Speed 2 rail line and Square Kilometer Array. The undertaking of these projects will result in the creation of jobs as well as the spurring of economic growth. It would be a good time for individuals to take advantage of the prevailing economic conditions and invest in property.

High Speed 2 Rail

The railway line is in the UK and it links Birmingham, East Midlands and London as well as Leeds and Manchester. This will be the second railway line of its kind in the country and will cost a whopping £55.7bn. The concept of the rail line is to connect all the major cities and served by one city center station. By 2033 all the cities will have their own city center station. The network will enhance the travel between different major cities by reducing the time required to move from one place to the other. The railway line will bring continued growth as well as open new opportunities in the country. There is an anticipated growth of £3m for each region making it an essential project to the growth of the country as a whole. Many businesses are already looking to take themselves out of London (for example, HSBC announced they would move 1000 jobs to Birmingham from London). The completion date for HS2 is still not set in stone but you can take advantage of this knowledge now to make a sound investment in the North that will certainly see growth once the line is in operation.


Buy To Let Taxation

The ability to offset mortgage interest against profits is now being phased out in the UK, with the changes to be in effect in full by the end of 2020. This could potentially result in landlords paying tax on non existent profits. It is essential that you take proper financial advice from whomever deals with your taxes to ensure your investments are efficient.

UK Property Investment Pros & Cons Aspen Woolf 

Ongoing Risk and Personal  Investment

Investing in property can be an ongoing financial liability. As a buy to let landlord, for example, there are issues such as property maintenance, administration and advertising between each tenant, as well as the risk of having a vacant property. These issues can be combated by taking appropriate advice, and using an agent to assist you.

All investments carry some level of risk. However, choosing a UK property investment in today’s economic climate is, on balance, a smart financial move given that many of the cons can be mitigated with the appropriate planning. Speak to one of our team who can advise you further.


When Is The Best Time To Invest In Property?

When it comes to property investment, while the old adage goes, “location, location, location”, there’s actually a lot more to a successful investment.  As well as location, timing is also key as during the course of a year, the real estate market can change dramatically – making a wise investment a poor one if taken at the wrong time.

The best time of the year to invest in property can be determined by a number of different factors such as demand and supply, median price of properties and if the market is a buyer’s or seller’s market. These factors seem to all be intertwined and can affect each other in the market.

Buyer’s Market Or Seller’s Market

The prime time to buy property in the real estate market is during the winter months. During this time, most people are busy preparing for the holidays and the kids are still at school. Therefore, there are very few people willing to part with money and buy investment property. These conditions make it hard to make a major move and this pushes most people out of the market. The fewer the people interested in buying the property, the less the competition.

When there is minimal competition then this is what is referred to as a buyer’s market. For example, if an investor finds the ideal property to invest in, and has done all the necessary homework he may view this an opportune time to invest. However, if other investors have done their homework, they too will show their interest in the property and there will be a number of bids to contend with.

When there is this kind of a bidding war, it becomes much harder and the investor may end up losing out or paying exorbitant prices for property that could have been purchased much more cheaply. This scenario is not ideal for buyers, therefore, it’s not a buyer’s market and it would not be ideal to make an investment during this time.

In most cases, it would be advisable to purchase a house during the Christmas period because competition is at its minimum and sellers are generous with pricing during the holidays. Choosing to invest in property through a company such as Aspen Woolf gives you the upper hand as our team can advise you of new investment opportunities, often with a small initial deposit.

When Is The Best Time To Invest In Property? Aspen Woolf

Price Of Investment Properties

When looking to invest in income generating assets, then the price of the properties is a very important factor. When the price is lower, a lower amount of money will be required to invest in the market. During a buyer’s market, market prices are lower as compared to a seller’s market. Different organisations give information about the price of investment properties, the median days in a month that are good for the market as well as the proportion of properties sold above the stated price. Over the past eight years data has been collected and compiled to come up with figures that indicate the specific aspects of the market. The data between October and March has the following figures:

  • The median number of days in the market is 104
  • The median price of sales is £193,735
  • The percentage above median price of investment properties sold is 23%

The data above supports the fact that from October to March is the best time to invest in property. The data also reveals that January is the opportune time to make a move on property because the sale price is at its minimum during this time. There are some properties that will sell above the median price but the percentage is very low as compared to the other months. This particular time is very bad for those seeking to sell while it is the best time for those people wishing to purchase property because they have the negotiating power. Sellers are more likely to be desperate when the deal lags behind in the market and they will most likely sell on the cheap to recoup the money that they had initially invested.

When Is The Best Time To Invest In Property? Aspen Woolf

There is also a bad time to invest in the property market. Between April and August have the following figures:

  • The median number of days in the market is 67
  • The price of median sales is £233,895
  • The percentage above median price of investment property sold is 24%

According to the data above these are the worst months to invest in due to the higher prices. June specifically is the worst month during which to invest because the price of property is about £38,000 above that of property in January. The number of days property is on the market is relatively shorter by about a month, which significantly reduces the negotiating power of investors. The aspects that are in play during these months are characteristic of a seller’s market. However, there is a time during April and August window where investors can get a good deal for property.

The days surrounding Easter Sunday are quite ideal for any purchasing. If one does not do the proper research, then they might end up making a loss. For example, if during the month of August an investor purchases a property, then they will most likely get it at a very high price due to the median price during this time as a well as the shortage of days for property to stray on the market. However, if the same investor does wait a few months up to October or November, they will get the a similar type of property in the market and it will cost less due to the median price during this time and the number of days that property is available on the market.

When Is The Best Time To Invest In Property? Aspen Woolf

Supply And Demand In The Market

A buyer’s market and a seller’s market are defined by the supply and the demand in the real estate market. However, supply and demand in this market is not as obvious as it seems. People looking to sell their houses will look for the opportune time to sell their property because their aim is to generate income. This means that the demand for purchasing property might be lower in the winter months, which is good for people looking to invest in property but the supply will not be as high. Those looking to sell may wait till the summer when the demand is higher for them to sell their properties. At this time, an investor may find it hard to get what they are looking for and this may result into a problem for the buyer.

During the winter months demand is on the low and hence, people wishing to buy property and resell it immediately may be at a loss due to the limited number of people that are willing to buy the property at their asking price. For the investors that are looking to get a good investment deal, then it would be advisable to purchase property that will be used for rental because they will earn income off it. For those who want to have an income generating asset then buying during the summer and spring months would be ideal since you can buy an asset and resell it in the short term because demand is on the rise.


Short Term Lets Could Boost Your Rental Income

short terms lets include utilities furniture

Short term lets can offer a remarkable return on investment. More and more entrepreneurs are feeling the benefits of buy to let investment in the UK and cities like London, Manchester, Birmingham, Glasgow, Newcastle, Cardiff and Liverpool. The short-term let is becoming one of the hottest trends in the property investment sector.

Lucrative opportunities

In the past, most landlords gravitated towards long-term lets due to the security on offer. However, growing numbers of tenants are now showing more enthusiasm for short-term lets. This trend is delivering more lucrative opportunities for landlords wishing to take advantage of the Buy-to-Let market.

The difference between long and short-term lets

The definition of a long-term let is generally one that lasts for at least 12 months. Short-term lets commonly involve contracts of less than six months. Things like internet access, TV and utilities will normally be covered by the rent. The increased popularity of short-term lets can be linked to a range of factors. Today’s world is regarded is regarded as more transient than ever, with many young professionals eager to relocate frequently. There is a growing appetite for cheaper alternatives to hotels that still offer all-inclusive living.

Why opt for a short-term let?

Individuals may decide to rent out properties on a short-term basis for many different reasons. Some people require accommodation whilst their main home is being renovated or refurbished, whilst others look for short-term lets to deliver accommodation during temporary work contracts. Short-term lets can be advantageous for buyers who wish to get a taste of a specific area before they commit to a purchase, as well as people on extended holidays and those in need of temporary homes whilst they are in the process of buying and selling a property.

Other benefits of short-term lets

Landlords drawn to the short-term lettings market often include those that spend extended periods away from home and wish to monetise their property whilst they are elsewhere. The market is also attractive for landlords who live in popular tourist spots as well as those that are renting out a property for the first time and wish to see how they fare before they commit to a long-term let.

Reduced waiting times and administration

The amount of administration attached to a short-term let is much more modest compared to the paperwork involved in a long-term let. This delivers welcome flexibility and frees up valuable time. In a short-term let, the application process will normally be shorter, and all the rent will be paid upfront, in advance. This is another reason why the short-term let is so popular amongst those who need to secure accommodation quickly. Many people choose to opt for short-term lets as a stepping stone to finding a long-term home, either to rent or to buy. When tenants don’t know exactly how long they wish to stay for, they can sign up for the minimum period then ask for more time later. The popularity of Airbnb and other sites shows us just how big a force the short-term let has become in recent years.

Short Term Lets Could Boost Your Rental Income Aspen Woolf

Short term lets vs hotel stays

With short-term lets, bills are normally covered by rent. This provides tenants with greater clarity and makes it far easier to budget. Rents will be higher than those charged for properties where bills aren’t covered, but it may still be possible to make savings. In any case, the figure paid will normally be much cheaper than the cost of staying in a hotel for the same period of time. Tenants can also expect to enjoy more freedom and privacy than they would in a hotel, not to mention more space. It is generally much easier for tenants to make themselves feel at home when they opt for a short-term let rather than an extended stay in a hotel.

Is a short-term let right for you?

If you have a vacant property or expect that you will in the near future, you may well wish to opt for a short-term let. Short-term lets are generally better suited to landlords with more than one buy-to-let property, especially if this is their only or main source of income and the property still has a mortgage left on it. Should you expand your portfolio in future, it may well make sense to enter the short-term let market.

Charging a premium

You may be able to charge more than 50% more for a short-term let than you would for a longer-term tenancy. The extra cost is justified by the flexibility, convenience and inclusive bills offered by a short-term let, and many tenants are more than happy to pay this. You do need to ensure you have a plan in place for when the tenancy comes to an end and may need to start looking for new tenants quickly. When your property becomes empty, it will stop generating cash for you. Make sure the cost of offering the tenancy is covered by the rent that you charge.

A hands-on approach

You may need to adopt a more involved, hands-on strategy for dealing with problems when they arise. Short-term tenants are less likely to be patient when repairs and maintenance work are needed, and you will normally be expected to take action within 24 hours. This means you will have less time to source tradespeople to deal with the work if you are not carrying out yourself and may need to pay more as a result. Your reputation will hinge on the reviews that your tenants leave you, so expect to go the extra mile to keep them happy if you do wish to cement your status as a trustworthy, reputable landlord.

Is your property right for short-term lets?

Make sure your property adheres to all health and safety regulations, has suitable insurance cover and has undergone a fire risk assessment. Check your mortgage agreement permits you to let out your property on a short-term basis. Your short-term let plans are more likely to pay off if your property is located within a mile of public transport links and venues such as shops, bars and restaurants.