There is an opportunity for savvy property investors to put together a portfolio of tenanted rental properties of 2-3-bedroom flats in prime central London.
The investment strategy will be based on taking advantage of substantial stamp duty savings for related purchasers, buying from landlords who are no longer incentivised and then maximising returns with ancillary services and centralised administration and maintenance.
The property rental market is changing, from one that was dominated by “mom & pop” investors with 1-4 properties to one that will be led by professional and institutional landlords.
Those property investors were often accidental landlords and held 70% of the total property rental stock in the UK.
Over the last 5 years all this started to change. As renting has become a lifestyle choice, small, accidental landlords are being forced to leave the property rental market.
The Government has introduced several tax changes to help address the housing shortage by discouraging small landlords and overseas investors, and encouraging institutional investors to provide medium to long term investment and security of tenure.
Property investment opportunities have started to reshape the way people invest and the property investor profiles.
One such model is led by group purchase initiative called Property Partner ( https://www.propertypartner.co ).
There are other tax incentives such as related purchases of 6 or more units which represents substantial savings on stamp duty for multi-unit purchases and also ways to mitigate inheritance tax exposure for overseas investors.
Government is also changing legislation with a view to giving tenants security of tenure and ensuring that properties are available for the medium to long term. Landlords are going to be obligated to manage their properties well, failing which there will be legal consequences for them when they ask tenants to leave.
All government legislation, taxation and policy is driven by the housing shortage that we are facing. If investors follow the guidelines there are still huge profits to be made from UK property investment.
Rental investment in prime London property is still an attractive option, safer than other assets and pays a better return both in appreciation and yield.
Markets always take time to adapt to change. The time that it takes for investors to return to the market is impacted by sentiment.
Whilst there is uncertainty nothing happens. As soon as Brexit is behind us rents will start to rise and investments from institutions will continue to grow.
Residential property investment portfolios have had strong demand in the new homes market with some established US brands such as Greystar investing heavily into the private rental sector.
Please contact us for a more detailed discussion.
Palace Gate manages all aspects of property ownership and complex lifestyles.