04 September 2009
In recent years, those who have had money to invest in land and property have generally seen excellent results.
Many not only recouped their investment, but often made a tidy profit as well, while others found rising rents meant their investment provided a handsome regular income.
The recent credit crunch however, exacerbated by a lack of available funding, has changed all that, and led to questions about whether or not the property investment market is the right place to be putting your money.
One person whose 25 years' of experience make her ideal to offer advice is Pat Davies, property partner at B P Collins.
"Like many forms of business, property investment requires a market to stimulate a need, balanced by the availability of the commodity – in this case the actual bricks and mortar," Pat explains.
"While the imbalance between supply and demand makes a recovery inevitable, this will take time and the resulting market will be very different.
"There will still be the old adage of 'location, location, location' but the issue of timing is now equally important. The commercial and residential markets are different but there is opportunity in everything."
A member of the Association of Women in Property, Pat is well versed at giving solid, practical advice on all aspects of property transactions in both commercial and residential sectors.
Within the commercial property market, Pat says many investors feel prices have yet to reach their lowest point, but one change is an increased opportunity to buy into a freehold for owner occupation.
This is because some landlords, who may have been reluctant to sell previously, are now consolidating their property portfolios to reduce their own financial exposure and create financial stability.
A freehold can also be purchased and placed in a pension scheme so the rental income is building up assets for the future.
For those in the residential property market, Pat says B P Collins is experiencing an increase in new instructions, mirroring reports in the media about a slight recovery in prices. It is early days however, and some of the signs tend to be small and localised, but she says there is at least a feeling that any margin for price flexibility is unlikely to be substantial.
One sector which has seen a big reduction is the buy-to-let market, mostly as amateur and semi-professional property investors have fallen by the wayside.
"There has been a discernable reduction in the purchase of property for buy-to-let purposes but this may have been driven, at least in part, by those having little or no knowledge of the workings of the property and financial markets getting their 'fingers burnt'," said Pat.
"In reality many experienced investors have fared well, with the reduction in interest rates more than compensating for any reduction in rent or rental voids. In addition, there can be fiscal advantages to be had with long term planning. Properties gifted into trust can benefit future generations by providing income for grandchildren's school fees and by saving inheritance tax that would otherwise be payable following the investor's death."
"There continues to be a demand for rented property in the right location. This seems likely to continue and many cash rich and mature professional investors have been purchasing new builds, taking advantage of low prices and the many discounts available, as well as looking ahead for the long term."
Being able to take advantage of those opportunities means having access to finance and with banks reluctant to part with their cash and charging expensive fees – or even reducing lending to existing customers – the private mortgage market is staging a revival.
B P Collins works closely with private investors, many of whom are keen to grant mortgages to individuals as it offers them a safe, secure and profitable investment and enables them to realise a return on their money well in excess of anything the banks would offer.
Some private investors are also keen to grant loans to businesses, with the loan secured through a mortgage on a property. Mortgages can also be a good way to generate an income stream for older family members as part of the pension planning process or help younger family members build a future in their own home.
With the market now on the move again, it is clear there are a variety of options for those who have the resources available. There’s no doubt that for the canny investor there are good deals to be done – but the trick is in getting the right advice and the right timing. The clock is ticking…
Learn more about gifts of property into trust and inheritance tax planning.
To speak with a member of our property law team call 01753 279064, complete our online enquiry form or email comproperty@bpcollins.co.uk.
|
