There are many ways to invest in property, and many types of bricks and mortar in which to invest.
You could, for instance, simply invest in a buy to let property and collect the equity to boost your pension a couple of decades down the line. Then again, perhaps you fancy the idea of becoming a full-time landlord and relish the idea of running a House of Multiple Occupation (HMO).
Serviced apartments are also becoming very popular, we have noted here at Property Loop. These tend to be in upmarket blocks with amenities. They have many similarities to hotel accommodation but can be used as long term lets and corporate accommodation.
Further into your property investing career you may even feel ready to start looking at having a share in a development.
Which property investing route you choose depends on how much time you have available, what your cash situation is like and why you are investing in the first place. Are you looking for quick returns to reinvest, for instance, or are you focussed on more of a long-term strategy and capital accumulation?
When it comes to the financials these have to be worked out in fine details. Consider every little expense. For instance, will you hand over the marketing and maintenance of your buy to let to an online letting agency like ourselves here at Property Loop? If so, then you’ll have to add that fee into your considerations. A big financial consideration is tax, as we explain here:
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Property investment can be taxing – quite literally. By that we mean there are certain taxes that you need to look out for and include in your financial calculations. These are: Stamp Duty, Income Tax, Capital Gains Tax and Inheritance Tax.
Buy to let investors and those who have a second home are charged a residential rate, with an addition 3% on top. From April next year overseas buyers will have to pay Stamp Duty and a 2% surcharge.
Rental income is taxable. HMRC will also look at other income, including your salary and combine both. In some cases, this can push landlords into a higher tax band – so it’s certainly worth taking into consideration.
This is the tax you’ll pay on selling a property. The good news is it’s only applicable to the profits you have made on that house or apartment. At present this is 18% or 28%, depending on which tax bracket you fall in to.
This is what your family will have to pay if you die and leave property worth more than £325,000. At present it’s at 40%.
Should you invest in a property near where you live so that you can check on it without any problems. You’ll also have a pretty good idea of the market ie what you can expect to typically pay for a property and where the areas are that you’re target market will want to live. You will also be familiar with any regeneration happening locally.
Also look at infrastructure ie there should be good transport links, as well as amenities (cafes, pubs and parks nearby).
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