Introduction
The following article is designed to give individuals an insight into the different ways we can invest in property. Whether it’s a direct investment into residential or commercial property or putting your faith in one of the many retail funds out there, there are many routes you can choose if you want to get access to this particular asset class. As well as focussing on the various methods of investing, we shall also look at the benefits and drawbacks of putting your money into property, as opposed to different asset classes such as gilts, fixed interest, cash or equities. As this article was written specifically for your accountant’s publication, we shall also have a comprehensive look at the various tax implications of investing in property.
The article will also partly focus on the type of returns that property has provided in the past, so that by the end of this article you should have a much clearer understanding of the nature of investing in property and will be a much better position to decide if this type of investing is for you.
Overview of Property Investing
Investing in property is nothing new to UK investors. The notion of property as an investment really started to take off during the Thatcher years as the Right to Buy scheme encouraged many millions to purchase instead of renting. The new expanding middle class saw the potential for long term growth in rising property prices as opposed to “wasting” money on rent. However it was the Housing Act of 1988 that really provided the background for small investors to plug the housing gap created by the sale of council housing and it afforded tenants a level of protection into the bargain. However, the boom of the years from 1996 to 2007 where house prices rose a staggering 219% (according to Halifax), are a distant memory and common sense has been brought back into the marketplace. The rampant profiteering has given way to a much more cautious approach. There is still good money to be made in investing in property but only if you’re sensible and take good advice.
In the past it almost seemed as if one could not fail to make money out of property. However the reality is, as with all investments, that there are of course risks and in some instances people have lost a lot of money. The last few years have been a large wake up call for those that thought investing in property was an easy ride to fame and fortune. Both Commercial and Private Property have both found the going tough in recent times but investing in these assets is still vital for the diversification and long term growth potential that it brings to a portfolio.
Many of you will think of investing in property simply in terms of buying a property cheap, doing it up and selling it on for a profit, or in terms of Buy-to-let, which is where you buy a property and rent it out as a private landlord. Whilst these are two of the most common ways to invest in property they are by no means the only methods available. In this article we shall take a close look at the many ways we can get exposure to property and also try to analyse the pros and cons of each method we cover. New regulation has made investing in property funds more accessible in recent times and we shall look at the various investment vehicles such as ISAs and pensions and their tax advantages.
We will also look at the potential for growth, income streams, yields and cover the risks associated with property such as defaults and liquidity.
click here to read the full financial advice article on property
