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Should Foreign Buyers of UK Property Pay Extra Tax?

This article by 4 News on September 25th, 2013 reveals if an overseas buyer of UK should pay extra taxes considering that demand for houses rise all the time.

In London about one third of property buyers are now from overseas. With demand for houses rising all the time, this is having a knock-on effect on prices across the UK, say campaigners.

According to a report drawn up for the Mayor of London Boris Johnson in December 2012, the problem is even more acute in prime London locations, where up to 75 per cent of buyers are from overseas.

Many of these properties are sold "off-plan" (before they are built), an arrangement more familiar to foreign buyers than to those in the UK, where potential purchasers usually expect to look round a house before putting in an offer.

This state of affairs is distorting the whole market and not meeting the housing needs of Londoners, according to Darren Johnson, Green party member of the London Assembly.
He told Channel 4 News that this is not just a problem for the capital:

"London is at the sharp end of this, but house price inflation impacts on the country as a whole.

"It shows why we need to push for more stringent affordable housing targets, particularly for social rent. We need more public investment for social rent, not just building for overseas investors."

Speculation tax

While Darren Johnson has floated the idea of a cap on the percentage of overseas investors in any development, the authors of a report for the Smith Institute have proposed the introduction of a property speculation tax. Countries such as Switzerland, Australia and Singapore already have controls on overseas investors.

According to the Smith Institute report, overseas buyers are estimated to have invested over £7bn in London in 2012.

It suggests that, with the exception of owner-occupiers, sellers - including corporate investors - could face a tax on the resale of properties. Unlike capital gains tax, this levy would apply to all sellers, regardless of whether or not they are UK taxpayers.

The authors argue that this could damp down price inflation by discouraging speculation.

But they also concede that such a tax could have the unintended consequence of reducing the available finance for social housing projects. With finance for new developments hard to find, it is not just private builders who are chasing cash from overseas buyers:

"Housing associations (and some councils) are seeking to build properties for open market sale in order to provide the cross-subsidy [for affordable housing] are becoming reliant on overseas buyers to sustain demand (and prices)."

The vital role of overseas cash is a point emphasized by London Mayor Boris Johnson, who told Channel 4 News: "If you don't make sure that the market is attractive for investors, they simply won't come and build and then you'll get no homes at all - so it is much more important that London should be open and dynamic than try and close people out."

Business concern

The lack of affordable housing is worrying the business community too. In response to Ed Miliband's conference pledge that a future Labour government would aim to build 200,000 new homes by 2020, the business group London First said "a failure to provide enough homes for London's growing population will put a brake on the city's economic success".

In a survey, 28 London First members - mostly large businesses - said the capital's housing shortage threatens their ability to atract the staff they need. Some 78.6 per cent of respondents thought that the authorities should increase the amount of public investment put into house building.

London First Chief Executive Baroness Jo Valentine commented: "We need a step change in house building which requires government, the Mayor and the boroughs to work together to create a new housing settlement for London that will deliver the volume of homes we need."

And prices are certainly becoming increasingly unaffordable.

According to Darren Johnson's report on the subject, Crumbs for Londoners, house prices should not be higher than £140,000 for a single earner and £170,000 for a couple if they are to be affordable for the average household.

Article Source: http://www.channel4.com/news/property-foreign-buyers-house-prices-speculation-tax

Financial Reasons to Invest in London Property

If you are a property investor you might want to consider investing in London property. Here Gulli Arnason of financialnews.co.uk on August 22, 2013 discusses the financial reasons to invest in London property.

Residential property in London has attained a reputation as a safe asset class and as far as any investment is a safe bet, London property appears to be the place to invest with values outpacing all other investment types, and it’s not just the case in the more affluent areas of London like Kensington and Chelsea or Mayfair – up and coming boroughs like Lewisham and Tower Hamlets are seeing prices continue to increase too.  According to a report by estate agent, Savills, Lewisham is set to see its property prices rise by 20% over the next five years. 

But it’s not just Savills that are recommending investing in London property as a sound financial decision. The world’s biggest property agent, CBRE, has produced a report that ranks the UK’s capital city right at the top spot for the most attractive places to invest in property. And, in fact, London was in pole position on the same report last year too. So, with property prices continuing to rise in the capital despite the rest of the UK’s continued economic turmoil, could London make it three years in a row?

Despite property prices hardly being buoyant in other areas of the UK (Craigavon in Northern Ireland has been the hardest hit with property prices having fallen by 18.4% down to an average of £91,530), London prices have remained safe within their own economic environment. property investment opportunities in London are plentiful and can be found all over the capital. The top five places to invest, according to a report by Savills, are the boroughs of Westminster, Kensington and Chelsea, Hammersmith and Fulham, Camden, and Islington. For some of the best property investment options, visit Galliard Homes.

New research by estate agents, Cluttons, has revealed that the average price of a flat in central London has soared above £1 million for the first time ever. Elsewhere in London, however, it is possible to stay well under this price bracket – and the Land Registry of England and Wales shows that the average price of a flat in London (information sourced between January – March 2013) was £391,496. 

A popular place to buy property outside the central London belt – but within easy reach of it – is Greenwich. Here, property owners have the benefit of all the amenities of London on the doorstep but live in an area with more of a village feel. Greenwich park, the Observatory, and the Cutty Sark – along with the Thames, a great selection of pubs, independent shops and the ever-popular market, continue to make Greenwich a popular prospect with buyers. What’s more, with the newly improved tube network, commuting time from Greenwich has been eased considerably. 

There are more financial benefits of investing in property in London if you are to consider the property renovation market. Although somewhat saturated with people turning their hands to property makeovers, there are still opportunities in the property market for those prepared to look. First time buyers can climb the property ladder quickly if they’re prepared to turn their hand to property development. London boroughs on the outskirts of the capital are more likely to hold investment opportunities within an affordable price range. 

Developers, and those with a portfolio of properties, meanwhile, will be able to invest in houses with more attractive postcodes. However, even if it’s just a case of a quick lick of paint, a new kitchen and a new bathroom, thousands of pounds can easily be added to the value of your home in a matter of a few months.

Article Source: http://www.financial-news.co.uk/16900/2013/08/financial-reasons-to-invest-in-london-property/

FREE Webinar with John Lee: "5 Instant Ways to Raise Finance for Your Property Deals"

FREE Webinar with John Lee: "5 Instant Ways to Raise Finance for Your Property Deals"

Tuesday 20th at 7.30pm (BST): Register here: http://bit.ly/fb-johnlee

Hi guys, I hope you’ve all had a great summer break. I’m really excited to announce that  my guest speaker for this months webinar is John Lee; (International Speaker, Best Selling , Author and Mentor in Entrepreneurship and Property Investment in the UK).

He’ll be discussing the top ways to raise finance and use leverage so you can buy DOZENS of properties with NONE of your own money. Only limited spaces, secure your spot here: http://bit.ly/fb-johnlee

Management No Longer Main Hurdle to Institutional Resi Investment

IP Real Estate published this article on August 6, 2013 by Richard Lowe showing that management issues are no longer concern of the investors in the residential sector, but rather low income returns according to the research from IPF.

UK – The latest research from the Investment Property Forum (IPF) suggests that 'management issues' are no longer seen as the main obstacle to institutional investment in UK housing.

The IPF has published its latest survey of institutional investors on the topic and found that low income yields were the principal concern for investors considering the residential sector.

The study also highlighted the four main reasons to invest: the 'return profile', 'development potential', 'stability of income' and 'low correlation with other asset classes'.

UK pension funds, insurers, property companies, local authorities and other institutions took part in the survey, and it has been estimated that the 44 institutions could generate net investment of £3.39bn in the sector over the next three years.

Pam Craddock, research director at IPF, said the findings were "hugely encouraging" and evidence of the early signs of a maturing market.

When the IPF launched the survey in 2012, management difficulties were highlighted as the main obstacle, but this year only two survey respondents cited the issue.

When asked whether the change could be attributed to a change in perception that better reflected reality, Craddock speculated that it could be a "reflection of the fact that [institutional investors] are beginning to look more closely at it".

Robin Martin, research director at Legal & General Property, recently told a property conference that "management intensity" had been "rather overestimated", and that the two major challenges were low yields and a lack of suitable stock. He argued that the issue round income yields could be mitigated through development.
 
David Skinner, CIO for real estate at Aviva Investors, told IP Real Estate today that the issue of low income yields could be "mitigated" through the construction of "residential investments that can be managed efficiently".

He explained: "If you have large-scale residential holdings that can be managed efficiently then you are obviously going to have a higher income yield than if the holdings are difficult to manage or inefficient. So in one sense they are two sides of the same coin, in my opinion."

Skinner highlighted the factor of 'low correlation with other assets' as the main attraction of residential investments for institutions.

"Because of the low correlation there is quite a lot of value to adding it to a commercial property portfolio or a multi-asset portfolio, in terms of the diversification benefits and the reduction in risk," he said.

"I think that does come through in the survey. But it means that investors shouldn't necessarily be seeking the same return that they seek from commercial property."
The London Pension Fund Authority (LPFA) is one UK institution considering moving into the residential sector.

CIO Alex Gracian told IP Real Estate that the LPFA was "currently looking at residential property, particularly within London, as one of the ways of capturing the illiquidity premium and maximising its ability as a long-term investor."

Article Source:  http://www.ipe.com/realestate/management-no-longer-main-hurdle-to-institutional-resi-investment_55354.php#.UgHTpW3tYh8

Property Investment 101 for Rookies

If you consider getting into a property or move up to the next rung of the property ladder, here's some words of advice by Michael Yardney. This article was posted on July 31, 2013 on Yahoo Finance.

Property investment is not something you should enter into lightly. But for some reason, that’s what a lot of people who have dreams of making millions with real estate do.

They think, "I can go out, buy a house somewhere, stick in some tenants to pay the mortgage and make a killing! How hard can it be?"

Fact is most property investors fail. Stats show that around 50 per cent of people who buy an investment property sell up in the first five years, and of those who stay in the game, 90 per cent never get past owning one or two properties.

So if you're looking to get into property or move up to the next rung of the property ladder, here are some words of advice:

Knowledge is property investment power

Firstly you need to understand what makes a good property investment and recognise that not just any old digs will do.

You can profit from real estate in one of four ways, and if you get the combination right you’ll make money from bricks and mortar. They are;

1. Capital Growth – to build yourself a sound asset base your properties will need to appreciate in value at wealth building rates (in other words above average capital growth.) This will come from strong demand from owner occupiers (who push up property values) and tenants (who help you pay your mortgage.)

2. Cash Flow – in other words your rent.

3. Tax benefits – while you should never invest solely for this reason; a good tax strategy can help you manage your cash flow, decrease your tax obligations and increase your bottom line.

4. Accelerated Growth – getting your hands a little dirty (metaphorically speaking) by investing in a property that needs a bit of cosmetic TLC through renovations or a major facelift through property development, is a great way to manufacture capital growth.

Cycles

While timing the market is not the be all and end all, it certainly helps to understand how the property market moves in cycles.

Following the herd and buying when everyone else is on the property bandwagon doesn’t always work. That’s often when the market is near its peak.

On the other hand you have more chance of nabbing a good deal in a buyer’s market, when property is out of favour. That’s why Warren Buffet said “Be fearful when others are greedy and be greedy when others are fearful."

Currently many of the property markets in Australia are in the early upturn stage of their cycles, creating good medium term investment opportunities.

Location

Location can make or break a property investment. But what is the right location?

I look for areas that will have strong ongoing demand from a wealthy demographic of owner occupiers who can afford to and are prepared to pay a premium to live in good locations.

Some of the major drivers of this type of capital growth are:

• Proximity to the city


• Proximity to the sea

• Adjacent to a prime suburb

• Amenities such as proximity to a train station, large shopping centre, and within the zone of a highly sought-after public high school.

• Suburbs that contain period style homes e.g. Californian bungalows, Federation, Victorian, Edwardian style homes.

I also like buying in areas going through gentrification – a suburb that is relatively cheap now but has the potential for capital growth in the future as a wealthy demographic of people move in.

One way to find this type of location is to drive through the streets and look for some of the obvious indicators that people with money are moving in:

• Are people spending large amounts of money on renovating/extending their homes?

• Are there small black (or maybe now it's white - the new black) BMWs and Audis parked in the driveways or are they old Ford Falcons and Holden utes?

• Is the nature of the shops changing – more cafés and deli and lifestyle shops.

Money, money, money

A sound financial strategy is as important as a sound investment strategy when it comes to property.

Without a well rounded understanding of how to maximise your borrowing power, use equity as a leverage to build your portfolio and maintain a financial buffer to see you through the difficult times that we all ultimately face, you are setting yourself up to fail financially.

It's important to set aside a cash flow buffer in a facility such as an offset account or Line of Credit, to cover you for a rainy day.

Financial fluency

While you could make lots of money in through property investment you could also easily lose it.

If you are financially illiterate when it comes to managing money, budgeting and even balancing the books at home, how do you think you’ll go when it comes to a multi-million dollar property portfolio?

You may need to learn the ins and outs of taxation and the financial advantages you can enjoy as an investor, as well as the best structures to own your investments in, such as personal, company and trust set ups.

Rather than trying to learn it all yourself and wear numerous hats, it's worth surrounding yourself with a good team of professionals who can guide you with their knowledge and expertise.

An independent property strategist, a finance broker and an accountant should all be people you rely on to support you in the journey to real estate riches.

If you’re the smartest person on your team, you’re in trouble!

Some final words of advice (or warning) for investors

1. Formulate a plan – understand what you want to achieve and then make investment decisions accordingly.

2. Be cautious – You’ll find everyone is happy to give you advice. Rather than listening to well meaning friends, it’s important to only listen to people who have achieved the financial independence you’re looking for and who have maintained it for a period of time.

3. Understand the difference between a sales person and an advisor. Many sales people are cloaked as advisors and suggest they are representing you the buyer when in fact they are representing the seller or a property developer.

4. Be prepared to pay for advice – it’s much cheaper than learning from your mistakes.

5. Not everything that glitters is gold – often when you start out it can be tempting to see opportunities everywhere. The problem is you don’t yet have the perspective to decide what is a good investment and what is not.

Property doesn’t discriminate; it doesn’t care who owns it. Today the residential property market is worth 4.68 trillion dollars (according to RPData) and over the next decade it will increase in value by billions and billions of dollars.

If you get it right, you can have your share.

Michael Yardney is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia's leading experts in wealth creation through property and writes the Property Update blog. Subscribe today and you'll receive a free video training - The Golden Rules of Property Investment.

Article Source: http://au.pfinance.yahoo.com/our-experts/michael-yardney/article/-/18221863/property-investment-101-for-rookies/

International Investors Target UK Property Market

This is good news for the UK property market being one of the target market for international investors as stated in this July 22, 2013  issue of Select Property.

The UK property market is particularly appealing for international investors.

Summary:

• International investment in UK property reached £4.15 billion for the first half of the year

• This is 75% of the entire market

• Investment from the Far East rose by 166%

Investors from around the world are increasingly looking at the UK for their next property purchase, according to recent figures from BNP Paribas.

Its findings revealed London’s property market was dominated by international investors for the first six months of 2013.

Investment from overseas buyers reached £4.15 billion, accounting for 75% of the sector.

Richard Garside, Senior Director of London Investment at the firm, said: “All parties are attracted to London by the high quality of investment stock and the mature and transparent nature of our market.”

He stated that London appeals to both seasoned investors and those who are new to the industry from emerging economies.

BNP Paribas revealed investment from the Far East in London property grew by 166% during the second quarter of the year, totalling £1.04 billion.

Earlier this month, the organisation revealed the central London office market was faring particularly well, with take up of office space in the city rising to 1.71 million sq ft during the second quarter of the year, which is the highest level since the final three months of 2010.

Article by: Natasha Al-Atassi

Article Source: http://www.selectproperty.com/2013/07/international-investors-target-uk-property-market/

FREE WEBINAR and Q&A session: "The 10 Biggest Mistakes Property Investors Make When Dealing with Builder's"

FREE WEBINAR and Q&A session: "The 10 Biggest Mistakes Property Investors Make When Dealing with Builder's" (Builder of 41 Years reveals all) Thursday, 18th July, at 8pm (BST). Claim your FREE ticket here http://tiny.cc/10Mistakes

Our speaker will be LaVern Brown and he's really kindly agreed to give a free webinar and Q&A session. He's been an NVQ Assessor for many years and is the author of 'How to Win When Dealing with Builder's', so there's not much this guy doesn't know on the subject. There's only limited spaces so if you're interested register here; http://tiny.cc/10Mistakes

Who is Juswant Rai?

Juswant runs the Berkshire Property Meet, the UKs Leading Property Networking event. He is well known or infamous on the property circuit because of his easy going manner and the BPM. http://pinterest.com/juswantrai/

In this video Juswant Rai Introduces the Berkshire Property Meet on June 2013.

Owner: Juswant Sylvia Rai
Video Source: http://www.youtube.com/watch?v=krWQgl1cJWo

HMO Daddy - Jim Halliburton

Jim Halliburton (The HMO Daddy) talks about his property journey and success.

 

Credit to: Aziz Patel
Video Source: http://www.youtube.com/watch?v=WNTWjCmx1Ng