Property Downsizing: Opportunities for Investors

Property downsizing over 65s moving to smaller home

The housing market, over the last decade has been through a huge number of changes. From the financial crisis that put property prices at rock bottom to prices clawing their way back up to where they are now. Along with this, there is a shortage of properties and the demand cannot be met and that has caused investors to shift their focus onto buy-to-let properties.

In amongst all of this, there are those who are looking to downsize. Gone are the days when homeowners would own the same property for their whole life because the over 65s are now taking a financially-driven approach to housing and where they choose to spend the latter stages of their life. Simply put, the over 65s are now actively planning for the future and their finances and so, more and more are looking to downsize.

Why are the over 65s downsizing?

As people get older, they become less mobile and less able to maintain a large property while there could be access problems in the future and so, downsizing means that they look to sell their current property and move into a smaller property. The whole idea makes perfect sense. Homeowners over the age of 65, sell their property, they move into a smaller property that is suitable for them as they grow old while releasing equity at the same time.

However, it is not as simple as this because there are now more over-65s looking to downsize than ever before. At one end of the market, you have first-time buyers who cannot get onto the property ladder because of prices and a lack of supply while at the other end of the market you have those looking to downsize yet facing a similar problem – a lack of options.

Property Downsizing: Opportunities for Investors Aspen Woolf

What does this mean for those who are downsizing?

A lack of options and sought after accommodation has meant that the market is saturated, effectively meaning that the supply does not meet the demand of those who want to purchase a property that they can call their home throughout the latter years of their life. As the market has adjusted to this increase in demand, it has meant that property that would be considered desirable to those over 65 has increased in value. Therefore, for those who are releasing equity from their current property, they are reluctant to invest it back into property that has been priced in a way that takes advantage of the demand and lack of supply. So, for those who are looking to downsize, it has meant that they need to consider looking at alternative options which includes rental property and this is where buy to let investment opportunities become a possibility for investors.

When people over the age of 65 make the decision to downsize, they perhaps might feel as though time is not on their side when it comes to waiting for the right property to come along. As time passes by, it could result in them becoming unable to move home with them effectively missing their chance and so, ideally they want to move as soon as possible. In this case, they then find that they have no other option other than to consider rental properties as a serious option.

Opportunities for Investors

There are many properties out there that are suitable for those who are downsizing but make great opportunities for investors who are looking to take advantage of the lack of supply in property on the open market. These buy to let investment opportunities come in the form of purpose-built or converted residential properties, that make it possible for investors to offer rental properties to those looking to downsize. As a result, investors offer a feasible solution while also being able to take advantage of excellent returns at the same time.

Due to the high occupancy rates, it has meant that rental yields of as much as 10% can be achieved in some areas. Investors should focus on those specific areas where there are increased numbers of people who are aged 65 and over. There should also be a focus on areas such as the South as well as many of the popular areas in the North such as Liverpool, Bradford, Leeds and Manchester.

Property Downsizing: Opportunities for Investors Aspen Woolf

Investors have to consider that many of those who are looking to downsize still want to remain close to those areas that they are familiar with, while family will also play a role in the decision that they make. Despite this, this is a growing rental market that is enabling investors to capitalise on an area of the market that specifically appeals to those who are over 65.

Properties that are specifically designed with special features such as lifts, parking, wider doorways and are also located near to main roads and public transport should be a serious consideration for investors. Along with this, the over 65s are even considering facilities such as an on-site chef, spa facilities and social events held on-site because this is something that can provide them with all that they require as they grow older.

When investors find the correct buy-to-let investment that appeals to those who are downsizing, it means that they can expect to see returns that are significantly higher than other areas of the buy-to-let market. These buy to let investment opportunities offer excellent rental yields but also the chance of an increase in equity as the property increases in value. With rental yields of anything between 6-10% as well as yields that are assured for anything up to 3-5 years, it seems as though investors have a clear opportunity to invest in a thriving and growing market that is almost guaranteed to offer them a return, regardless of whether that is in the form of rental yields or equity.

As the number of people choosing to downsize increases, it means that more opportunities will present themselves to investors. This will enable them to take advantage of the residential properties that are currently available that not only cater to the needs of the over 65s but also offer an exceptional return on investment.

 

Property Investment Strategies

buy to let buy to sell property investment strategies

Effectively, there are two simple forms of property investment strategy and these are to purchase a property with the sole aim of selling it on to make a profit, or to purchase a property to rent it out and make an income that way.

However, as simple as that sounds, there is more to it because there are a number of sub-strategies that can be used depending on the investor and their goals. So, what strategies are available?

Buy-to-Let

When purchasing a property to rent, there are two ways to make money and they are to charge rent that covers more than the cost of expenses, or to allow the property to increase in value over time, covering costs and expenses.

Single Lets

This is what many would consider to be your standard buy-to-let as it involves renting out a property to an individual or a family. It is an easy option, and one that requires you to calculate the costs in relation to the rent, ensuring that the rent is in excess of the costs.

House in Multiple Occupation (HMO)

This involves the rooms within a property being rented out individually. This can often generate a large income than if the property was rented out as a single property. It is worth remembering that there are higher costs associated with an HMO such as wear and tear as well as the management aspect, which is also more labour intensive with HMOs.

Student Lets

Student lets are a form of HMO although the student market is very different from that of other markets. It is a more predictable market as students are only there for a certain time of year and the contract will be taken out jointly. If a student leaves, the costs get spread out among the rest of the residents in the home. Knight Frank also predict that 2019 will be a big year for the Purpose Built Student Accommodation sector.

Housing Benefit Tenants

This involves renting a property out to those who have their rent paid for by a local authority. What this means for investors is that they know what to charge and it can sometimes be more than the private rental market. There is the potential for difficult tenants and as the rent is passed to the tenant, it can often not be paid to the landlord.

Property Investment Strategies Aspen Woolf

Holiday Property Lets

This involves renting out a property on a short term basis to people on holiday.  This is a strategy that can return significant yields and profits, especially if you have a property in a sought after, prime location such as a cottage by the sea. This takes an active management approach and there are things such as cleaning the property and maintenance that have to be taken care of.

To learn more, why not have a look at our Buy-To-Let Tips? Or, get in touch with our property investment specialists at Aspen Woolf to discuss adding to or creating your portfolio!

Buy-to-sell

Also known as flipping, this is the purchase of a property where there is no income but instead the property is sold on at a higher price than it was purchased for. This can be a strategy that can yield good returns in a short space of time and they can often be higher than the returns seen with a buy-to-let property. However, one thing to consider is that the property will not generate an income while you own it. Therefore, you are only making money once you sell the property on. The key here is to purchase the property at the right price, and try to ensure that all work remains in budget and doesn’t eat into your margins.

Commercial Property

This is a lot different to residential property as it is a market that behaves independently and is very much reliant on the economy and the success of tenants. While residential property relies on and thrives on demand from people needing somewhere to live, commercial property is different.

A commercial property will only be suitable for certain businesses and that means that once a property becomes vacant, it can remain vacant for some time. Despite this, once you have a tenant, the leases can be put in place for years and they will also be liable for repairing and insuring the property. So, if you have a reliable tenant, then it can mean that you can take a hands-off approach for some time.

Property Investment Strategies Aspen Woolf

Rent-to-Rent

This essentially involves renting a property from a landlord before renting it out to a tenant. It is a form of sub-letting but the aim is to charge a higher rent to the sub-tenant than you are paying your landlord. This is often something that is seen with an HMO strategy. So, you could rent an entire property from a landlord and then rent out each room in the same way as you would in an HMO. This will enable you to generate rent per room which will more than likely bring you in more income than what you are paying to rent the entire property.

You can find landlords who are open to renting properties at a discount, particularly if you can offer some form of guarantee that they will receive an income and no hassle. So, you could then choose to pay the landlord a lower rent as agreed. It is then possible to re-rent the property at the going rate of the market.

Lease Options

In a similar way to rent-to-rent, lease option provides the investor with the chance to purchase the property at a price for a fixed amount of time.

So, an investor would agree to take an option where they can buy the property at a fixed price at any time during the next three years. However, they can then take over the owner’s commitments as well as expenses and rent the property out. So, investors can then earn a rental income on the property while having the option to purchase it at some point in the future for a slightly higher price.

This is one strategy that has been seen in the past where properties were in negative equity and the owners could not sell their property at a value that would cover the remaining mortgage. So, by agreeing a future price, it enables them to forget about the property in the short term. However, this is an option that is very much market dependent.

Best Property Types to Invest In

confused person looking at property types

Finding the best property to invest in is tricky. Of course, you could simply pick something based on the yearly returns you’ll see… But that’s not the be-all-and-end-all of investing in property. That’s what this post is all about: not just what kind of returns you can expect, but what makes a property truly worth investing in.

Let’s start by looking at the best types of property to invest in, and what sets them apart.

HMOs/Houses in Multiple Occupation

According to official UK government guidance an HMO, or a house in multiple occupation, is a property rented out by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen. These properties are common around cities like London and Manchester, where there are students and young professionals that need relatively cheap housing near centres of employment/education.

HMOs offer the best yield of any property type. According to research conducted by Platinum Property Partners, HMOs offered a 12.4% gross yield on average between 2010 and 2014. That was far more than the 5% average yield from regular buy-to-lets during the same period.

However, there are two problems you’ll encounter if you invest in an HMO. First, you’ll have to get an HMO licence. Not every HMO needs one, and requirements differ between local councils. HMO licence cost varies too, from between £500 to £1000 or more, and licences can be valid for just one year, or up to five.

Besides that, there’s simply more work involved. With more people in the same living space, there’s more of a chance that your property will be damaged and require expensive repairs. This can significantly cut into your return. And since HMOs are often student accommodation, this adds more problems into the mix: late payments are more likely, and students are less reliable tenants, often moving on with little notice. So while a well-managed HMO offers excellent returns, they require more detailed management.

Best Property Types to Invest In Aspen Woolf

Apartments

Apartments are a good ‘halfway house’ between HMOs and buy to let houses. While your yield isn’t quite as high, apartments typically attract more stable and securely employed tenants. This is great news for a number of reasons:

  • There will be less of a difference between your gross and net yield, since you don’t need a licence, and there’s less chance of missed rent payments
  • Your property is less likely to become damaged, since your tenants are more likely to be young professionals and families who want to keep the property in good condition
  • There are new build apartments hitting the market up and down the country, many of which offer buy to let investors first access
  • Since apartments typically cost less than houses, you won’t be hit with as much capital gains tax if you should choose to cash in on your investment

All that being said, investing in any kind of British land or property has its benefits. The U.K. has a growing population, and the current shortage of new build properties keeps prices inflated. As such, house and land prices will only continue to grow. We offer a mix of apartments, HMOs and houses—we’ve no shortage of buy to let properties for sale.

Where to Invest in Property

Just as important is where you actually choose to invest. The UK housing market as a whole has offered excellent returns for several decades, a trend which is likely to continue into the near and medium term. However, even if the market does dip in certain parts of the country, it’s likely to continue growing at a healthy pace elsewhere. Let’s take a look at the best places in the UK to invest in property!

Buy to Let Investment Manchester

Manchester is England’s second city, and is rapidly growing. Near the city centre and the Media City hub, dozens of new blocks of flats are being built. The majority of these are being marketed for buy to let investors. Why? Because Manchester is seeing upper-single-digit growth figures in property prices. While London and the southeast generally have stagnated somewhat, this has been offset by growth in the north and in Manchester in particular. Not only that, but an influx of people trying to escape London house prices has pushed up prices here significantly.

Best Property Types to Invest In Aspen Woolf
No.1 Trafford Wharf, an investment opportunity in Manchester from Aspen Woolf

Not only that, but the satellite towns around the city—which form Greater Manchester—have seen similar levels of growth. Here, the price of terraced and semi-detached houses has grown far faster than in the southeast. Other northern towns like Leeds and Sheffield have seen similar revivals.

View property investment opportunities in Manchester from Aspen Woolf.

Buy to Let Properties Birmingham

Don’t let anybody from Birmingham hear you call Manchester the U.K.’s second city! Birmingham definitely has a claim to the ‘crown’. For starters, it’s the second most populous city in the U.K., with well over a million people, and about 3 million in the surrounding urban area. This kind of demand for property means that prices grow steadily here.

Not only that, but Birmingham’s population is growing steadily. The city is one of the areas of the U.K. that new immigrants feel most comfortable, which is rocket fuel for local house prices! Investing now, as the population continues to grow, is a smart move.

Buy to Let Properties London

The London property market grew at practically exponential rates over the last few decades. While that growth has slowed down, London remains a fantastic place to invest. As easily the largest financial hub in Europe, and a population centre, it’s highly unlikely that the market will fall from the heights it’s attained.

View available property investment opportunities from Aspen Woolf in London.

But no matter where you choose, the U.K. property market is an excellent choice for investment, with an eye to building wealth. At Aspen Woolf, our award-winning independent advice has been trusted for over a decade—much to our clients’ satisfaction. So contact us online, or talk to one of our experts at +44(0) 203 176 0060 today!

House Prices Continue To Defy Brexit Expectations

House prices brexit eu uk

It doesn’t matter what your political persuasions are – if you’re a homeowner, property investor or thinking about buying for the first time, chances are you’re eager to find out how Brexit will impact on the market. The Monetary Policy Committee recently voted to keep the base rate at 0.75% whilst Brexit-related uncertainty continues.

Key figures

Data recently released by Nationwide said only asking prices in London and the South East have been dropping throughout autumn 2018, with Chief Economist Robert Gardner saying annual growth remained stable in September, at 2%. Even in London, the decline seems to be modest, standing at a mere 0.7% and remaining just 3% below the record high of Q1 2017 and over double 2007 levels. Yorkshire and Humberside was the UK’s best performing region, seeing values increase 5.8% year-on-year. The East Midlands wasn’t far behind, with a rise of 4.8%. Wales and Scotland had increases of 3.3% and 3.1% in Q3, with Northern Ireland reaching 4.3%.

“A fairly steady market”

London estate agent Jeremy Leaf described the figures as “good news”, saying they represented a “fairly steady market”. The figures came as a surprise to many after house prices suffered the biggest fall in six years in August 2018. Stock shortages and low mortgage rates were offering considerable support to the market, with many purchasing properties following their summer holidays.

House Prices Continue To Defy Brexit Expectations Aspen Woolf

House prices since the referendum

House prices growth initially slowed down after the 2016 referendum, with BoE governor saying Brexit could slash a third off prices shortly after. Traditionally, growth has always slowed during the post-summer period, though the drop was greater than normal in 2018. Scotland performed better than the other UK nations during the year following the referendum, and there has been considerable growth on Wales and Northern Ireland during the past two-and-a-half years too.

Have house prices really fallen?

Despite decreasing levels of growth, actual house prices haven’t fallen substantially. Falls in value are being interpreted by some as a merely an inevitable market correction following a boom. The market may also seem healthier if we look at transaction figures. According to Which?, the referendum did not cause a sizeable fall in transaction numbers. There was a considerable rise in transactions in early 2016 due to the new 3% stamp duty surcharge for second-home buyers and buy-to-let investors, which resulted in vast numbers of individuals acting quickly in order to beat the change. Following the inevitable crash, transaction numbers slowly began to rise again.

How long are homes taking to sell?

Figures from HMRC tell us there were more sales in December 2018 than the previous December, with 102,330 houses changing hands compared to 98,760. When experts assess the performance of the property market, they often look at how long properties take to sell and how many homes are on the books of estate agents. Rightmove announced in December that properties were taking 70 days to receive offers compared to 67 the year before, with branches having 46 homes on their books as opposed to 43.

House Prices Continue To Defy Brexit Expectations Aspen Woolf

“Avoid rash decisions”

Which? Mortgage Advisers consulted a series of property experts on how to navigate the property market in the run-up to Brexit. The site’s own David Blake advised buyers to avoid jumping into fixed rates and making rash decisions. He said the market was becoming more favourable to buyers and said he expected prices to stabilise in the future even in the event of a short-term drop. At a time of lower mortgage rates, many buyers may be tempted into leaping into a fixed rate option “without considering the alternatives”. He added that there were several flexible products that wouldn’t remove the opportunity to re-mortgage further down the line should rates start to change.

Is now a good time to buy?

Kate Faulkner of propertychecklists.co.uk said those thinking of making a long-term investment should act now and purchase a property. She said some would-be buyers were hesitant to proceed, hoping prices would fall but claimed supply was also falling at the same time. Faulkner encouraged buyers to act now and “mitigate the risks”, saying the market would correct itself a few years down the line even if there was a temporary drop in value, echoing the advice of Blake. Landlords were reassured that reduced stock levels were likely to result in rent rises, though she did advise landlords to gain a rich understanding of their objectives and whether the investment was likely to be of benefit in the short and long-term.

House Prices Continue To Defy Brexit Expectations Aspen Woolf

When the picture is clearer

NAEA Propertymark Chief Executive Mark Hayward acknowledged concerns over Brexit but said a “flurry of activity” could occur once more certainty was available. The National Landlords Association’s Chris Norris expected long-established portfolio landlords to do particularly well during the coming years in spite of concerns about uncertainty and decreasing demand from those coming to live and work in the UK.

“Certainty of demand”

Executive chairman of the Home Builders Federation Stewart Baseley said the new-build market had “remained strong” over recent months and that he expected this to continue following the extension of the Home to Buy Scheme. The “certainty of demand” was allowing builders to plan ahead and boost their output, with record highs of planning permissions being granted by the authorities. He said the industry required skilled labour from overseas if housing targets were to be achieved.

House prices with and without a deal

Capital Economics property economist Hansen Lu predicted prices would rise by 1% in 2019 if a Brexit deal was agreed. Lu said the UK was likely to avoid a house price crash even in the event of a no-deal Brexit. The EY Item Club expected prices to rise by 2% this year in the event of a deal but to fall by 5% if no deal was agreed. Zoopla recently announced that prices were rising by double-digit figures in parts of the North, specifically the cities Manchester, Birmingham, Liverpool and Leeds, with Leicester seeing similar house price rises.

Property Investment Hotspots 2019

Bradford property investment 2019 aspen woolf

The mantra for 2019 when it comes to property investment seems to be making it Brexit-proof. While we still don’t know the likely outcome and investors may be worried, finding the right regions to put your money into is still as important as ever.

The key factors remain, therefore, when you are seeking a property in England that will give you a strong return. You should be looking at areas which have younger populations, growing job prospects and the prospect of future development. That may mean heading out of London for many investors and looking for bargains in slightly less well-trodden regions that have plenty of potential.

Many of these are currently in the Midlands and in the North West and East. Areas like Bradford, Manchester, Leeds and Liverpool are all certainly worth taking a closer look at. Here we take a look at the best property hotspots for the next 12 months.

Bradford

The North of England is increasingly viewed as a profitable area for investment and in many areas, you can get quickly start to build a really strong portfolio. Bradford is a fairly large town that’s ideally placed just a few miles from Leeds, and is cheaper to invest in than its slightly more “upmarket” neighbour. The area, in general, is starting to undergo significant regeneration which is an important marker for investors. Back in 2018 £75 million was committed to a number of city centre regeneration projects (with a masterplan for 2018-21) in order to attract the “urban entrepreneurs” of the future to the city.

There’s plenty of charm when it comes to the existing building stock too, with many properties that are likely to appeal to professionals who want somewhere low cost but attractive to set up home. Much of the beautiful gothic architecture remains, often converted into affordable apartments that could make for an excellent investment. In fact, Aspen Woolf have a number of such opportunities available in beautiful old buildings that are currently being refurbished.

You can still pick up one bedroom flats for between £40,000 and £60,000 if you select the right location and you can find a lower end terrace for around £70,000 in some areas. The town centre is probably your best choice at the moment and while there are some locations you may not want to buy just yet, these are well worth keeping an eye on as development progresses.

Property Investment Hotspots 2019 Aspen Woolf

Liverpool

From the doldrums of the 80s and early 90s, concerted regeneration and business investment have made Liverpool a pretty good choice when it comes to property investment. It’s a city with a fairly strong, younger population under the age of 30 and property prices have increased by around 25% in the last five years. Areas such as the Waterfront and city centre have been transformed over the last two decades and it remains an attractive location for creative industries such as art and music.

There is a growing young, highly professional workforce occupying the city centre and they’re mostly looking for long-term rentals. With a booming economy, it’s a surprise that house prices still remain some of the lowest in the UK. According to Zoopla, the average price of a property in the city is £173,000 with values rising 24.48% in the last five years.

Leeds

Not far from Bradford is Leeds. It’s a thriving university city that has a significant student population and that alone should make it attractive. There’s a fair amount of gentrification going on here but it’s still not too late to get on board and, if you hunt around, there should be some solid investment opportunities to take advantage of that will give strong returns.

For buy to let landlords who want to invest, there are no less than three universities in the city and there are potentially good yields with even with the average semi-detached prices at a shade just over £200,000. According to Right Move, house values have risen 6% in the last year, which is not bad when most people are worrying about a static market. Combine that with a competitive rental market and you have the best of both worlds.

Manchester

Like its near neighbour Liverpool, Manchester is a great location if you are looking to invest in property. With a population of over a half a million, there’s also a large student market looking for somewhere to stay. The city is home to a sizeable professional population who are also searching for high-quality accommodation. It’s a region that hosts major sporting and cultural events, all of which attract people from not only the North West but from far-flung reaches of the globe.

Often tagged as the London of the North, there has been a lot of investment infrastructure, particularly in areas like Salford Quays and it’s now a really cosmopolitan location that has a lot to offer.

The house prices are changing quickly and the Evening Standard reported last year that values had risen by 34% in the last three years. There are still areas where you can pick up a bargain in the city, particularly in the suburbs. The widening gentrification means you can expect decent returns if you get on board at the right time in the right area.  

Property Investment Hotspots 2019 Aspen Woolf

Birmingham

The Midlands have always been a strong area for property investment and it’s no surprise that Birmingham is near the top when it comes to UK hotspots. With a larger population than most other cities outside of London, property prices have grown by nearly 30% over the last five years.

Like Manchester, you’re looking at another fairly young population with a 65,000 strong student population to boot. The key factor is that the students tend to stay on in Birmingham more than other cities which means there is also a growing and sustainable population of new professionals. The potential for growth with the developing HS2 means that Birmingham is less than an hour and a half away from London.

The average house price according to Zoopla is just a shade over £200,000 but heading out to the suburbs can reveal some better deals. Particularly good buy to let hotspots can be found in areas like Edgbaston, Holloway Head and Erdington.

Nottingham

Finally, not far from Birmingham is Nottingham. This is a city that will also benefit from the development of the HS2 rail link and has a thriving, fairly young professional population. There’s a decent student population too but also families looking to rent in many areas of the city. Still relatively cheap property prices mean that this is a good area to get in at the initial stages of development and which could deliver great dividends if you invest wisely.

The average property price is just over £207,000 with a 28% increase in value over the last 5 years. For rental income and returns, it compares favourably with cities such as Liverpool.

If you are considering buy to let and other investment properties in locations such as Bradford, Leeds, Liverpool and Manchester, contact the professional team at Aspen Wolf to find out how we can help.

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.