Recent legislative, tax and regulatory changes are making it much harder to invest in traditional buy to let. But, property is still a very worthwhile asset class and rental demand has never been greater. Today, we look at three alternative property investment strategies that are working particularly well in 2017.
Buy To Let Tax Changes
There have been a lot of changes in the world of property investing over the last twelve months or so in buy-to-let taxation, legislation and regulation. These changes impact everybody – from developers to landlords, to tenants – and are changing the landscape for property investors, in a fundamental way.
Buy-to-let is still very much the corner stone of the property investment industry and a key part of our current investment strategy at Property Investments UK. We have some great buy-to-let properties that we hold in good quality locations that we have no intention of getting rid of. But, we are diversifying. By investing in other kinds of higher yield properties we are preparing ourselves so that we might weather the storm when these changes take full effect.
Most investors, that we are seeing today, are preparing for what is coming, whether that is moving to an incorporated model of property ownership (setting up as a limited company) or diversifying; specifically, there is a trend towards investing in off plan developments.
What is clear is that the old buy-to-let model, where a landlord might own a couple of houses or a handful, is in serious trouble.
So, with this in mind, what I wanted to present here are three alternative investment strategies to traditional buy-to-let that will still work in 2017 and that help make your portfolio more robust to weather the changes that are currently happening across the industry.
New Build Developments
Despite changes in the buy to let landscape that make things more difficult for investors, the rental market itself is very healthy. In the right locations, there is an increase in rental demand and rental yields are increasing as well.
Investing in new build developments and off-plan property gives you the opportunity to add value to the project.
So, rather than buying an existing property, investing in an off plan development can give you a little bit more initial equity in the building. This is generally because, with off plan sites, you are likely to be able to purchase a property at a reasonable discount and with rental demand and prices on such properties going up such investments can be very valuable.
The sharing economy is becoming increasingly important in UK society. It is making inroads across the board and, to use the parlance of tech giants, is proving to be very ‘disruptive’ to traditional industries. Take, for instance, Air BnB and what it has meant for hotel owners. For taxi firms, there are Uber and Lyft.
Increasingly, people are coming to expect services that are low cost and easy to access. Housing is no exception and as a result, there has been a sharp increase in the demand for HMOs, serviced accommodation and short term lets.
Ultimately, however, there are plenty of different options to meet the increasing demand of the sharing economy so anything geared around that is worth exploring.
There will always be a tenant demand for vanilla buy to lets but with recent changes, it is worth looking at less traditional methods for investing in them.
The truth is that these days it is a lot easier to invest in property than it was even five years ago and certainly easier than it was ten or twenty years ago. So, if your focus is on vanilla buy to let – your interest being in quite mainstream, well-located property for say, working tenants, there are more investment options now.
Property crowdfunding, for instance, will allow you to invest in a wide range of different property types without the need for large amounts of money for deposits or for buying an entire house.
If also allows you to invest for shorter periods of time. Whereas some buy to let projects might be 3-10 years, crowdfunding might be a six-month investment (although a few years would be more typical).
Crowdfunding opens up property investing to people who would not have traditionally been able to do it. It is a faster investment, with lower time frames and requires much lower amounts.
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In there we cover a range of different property strategies to help you get started on building a long-term property portfolio or creating a cash flowing property business.
We also look at ways to increase your return on investment with any of the properties you may be considering and we also have a couple of cheat sheets and downloadable documents.
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