Property Investor Brexit Strategies

November 6, 2019

During these times of prolonged uncertainty, businesses are spending money on contingency planning and in some instances stockpiling.

What about individual investors?

Some of them are stockpiling money and playing a wait-and-see game with investments.

Consequences of this investment strategy?

Well money can sit in banks, earning a low interest rate. Whilst inflation is currently contained at under 2%, many savings rates of return do not exceed this, or marginally so, particularly for higher rate tax payers.

But if you would like to shake off the early ‘hibernation’ and do something with some of your money, or dip your toe in the market then there are options out there.

Think about this

There are other investors out there who are making the most of this uncertainty and investing in keenly-priced stock. And for overseas investors or expats buying in the UK then the GBP Sterling exchange rate is very favourable currently.

And then there is the Property Cycle

Whether you are an advocate of the cyclical nature of property or not, there has tended to be a bounce back in prices after a period of sluggish house prices in some areas. Whether you think of it as a 10 year or 18 year cycle.

The Brexit-effect depends on the nature of your investments. Whilst we are in unchartered territory, as an investor it could be an optimum time to invest in new properties and spend time refurbishing or developing them. If an upturn is due you could be paving the way to profit once the next phase of the cycle hits.

Either way it makes sense to build in more exit options and greater levels of padding to your financial contingencies, so you are financially prepared to hold that property until the time is right.

An alternative way of investing

Some landlords and property investors are seeking ways of continuing their property businesses in a way that will give some reprieve from the landlord red tape and tax in the UK. It is a way of diversifying and getting exposure to a number of different investment categories; either different geographies, or different types of property, for example commercial vs residential property.

Alternative investing can include Crowdfunding or lending to developers.

So consider a developer who has end user ‘blue chip’ clients lined up, who knows what the end-user demand is before embarking on developments, one who works with big companies like McDonald’s and Starbucks. They also have Build-to-Rent as part of their offering, working with local authorities and sometimes pension funds, to build to demand. They have also bolstered their resources to navigate better the increasingly challenging planning approval process. And have a cross-functional board which evaluates rigorously development opportunities.  

Getting exposure to this type of developer, can be done in a measured way, in bite sized chunks. Some investments start at £5,000 or £10,000, some lower, particularly if part of an IFISA (Innovative Finance Isas), where entry levels can be £1,000. Investing via an IFISA, can be tax-efficient, when used as part of a personal Isa allowance, so returns can be tax free for UK residents.

What are the upsides of alternative investing?

The returns on offer can be inflation-busting and much higher than other forms of investing. They are not always correlated with economic returns, so helps spread risk during different economic cycles. They also usually offer defined timeframes (although there are no guarantees) so this can help with planning.

It is important to note that alternative investing provides an alternative way for entrepreneur investors to get exposure to all that property can offer, but none of these ways of investing are guaranteed. Capital is at risk and returns are projected, not guaranteed. This is why many of these types of investments, whilst being accessible tend to be only available to individuals with a certain asset base or income, or who aren’t investing too much of their money in any one of these investment types.

If you would like to discuss your situation or find out more then please get in contact.

I work with time-strapped Expats and Entrepreneurs who don’t have the time, local presence or have gaps in their know-how to build property portfolios in the right way for them. (Or who are simply stuck with little progress).

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