Connect with us

Wealth Management

IS PROPERTY INVESTMENT STILL AN OPTION FOR YOUR RETIREMENT?

Do you have a retirement plan? I asked myself this question twenty years ago, and back then the answer was NO. When you’re in your twenties this is the last thing you think about, you justify it by say “I’m young, I have enough time to think about my retirement”.

 

Haven’t you notice that as we get older, time seems to be getting shorter, then the next thing you know your in your forties fast approaching your fifties and there it is, you start to think about retirement. WOW!! how age has caught up with you. Now you panic all those questions you should have thought more deeply about in your twenties has just come full circle “what is my plan for retirement? How much do I need to live on? Will I be able to afford my bills when I retire?

 

When I made the decision in my twenties to use property as my vehicle to fund my pension the first thing that I did was research and educate myself, I dug deep into my research and went back to the start of property investment in the UK.

 

To really understand the Buy-to-Let phenomenon we need to go back to the peek in 1996- when mortgage lenders loosen the requirements on borrowing allowing people to buy properties without living in them.

 

This allowed individuals with surplus cash to start investing in property and renting them out, which we know today as the “Buy-to-let market” and generated an income from doing so from the profits after all property expenses were all paid. Although mortgage prices where not as favourable then as they are today this did not discourage the would-be investor as social housing was in high demand much like it is today, so -supply and demand of the private rental market was needed.

 

Let’s be honest here if you think getting into property investment is going to be a walk in the park think again, its hard work, you need a cashflow to start and you have to a strong resilience for all the up-and downs, but if you can hang on in there the rewards are great.

 

Over the years there has be a plethora for landlords in the UK some are genuine and adhere to a standard and guidelines set out by government and keep their properties in great standing, however what has also come out of this is the rogue landlords who are just in it to make a fast buck.

 

This has forced the Government to hit back and over the years they have tighten the rules on the Buy-to-let investor. The truth is the Government has no respect for this type of landlord they keep their properties substandard and are amateur. According to the Economist 2017 “six out of ten landlords own one property” which in fact is more hindrance than helping the economy grow. So many changes start to come into force to try and push these types of landlords out of property investment market.

 

  

Sapphire Gray

The Changes

2015 -Section 24-finance bill abolishment of mortgage tax relief for landlords

2016 -Stamp duty raised by 3% for those who already own a property

HMRC announced the wear and tear allowance is abolished from 6th April

2017 Tougher lending criteria on Buy-to-let mortgages

April 2017, mortgage interest will no longer be deductible when calculating your rental profits.

2018 HMO licensing will be any property occupied by five or more people, forming two or more separate households.

Local authorities have introduced the local licence scheme for landlords

 

The traditional landlord with a portfolio of older properties and with all the different tax changes, they may be feeling the pinch in their profits margins but will still invest. Some advanced property investors are now Building to rent (BTR) going into the space of commercial investment where they see higher returns, also to accommodate the shortfall of social housing, making this quite profitable.

 

Riding the storm

Demand for privately rented properties is on the increase being a savvy investor is the key to weathering the storms that comes with property investing. Three key pieces of advice is to;

  1. Budget carefully
  2. Be hands on
  3. Do your research.

 

According to letting agent Knight Frank “The private rental properties will actually grow to one in four households renting privately by 2021”. According to their figures that’s 579 million properties would be required to meet the demand.

 

Even though there have been great shifts in property investment since 1996 it still remains to be the best asset class you can start when considering a healthy retirement fund.

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Wealth Management

THE END OF YEAR TAX CHECKS THAT COULD SAVE YOU THOUSANDS

Charlie Reading, Founder and MD of Efficient Portfolio

After HMRC’s tax return deadline at the end of January, it can be tempting to drop your guard, believing that your new tax bill is a long way away.

It’s true, you’ve got a whole year until the next bill is due. What most don’t consider, however, is that there is a range of checks that you can do reduce that bill significantly.

Astute investors make use of their tax-free allowances every year and save thousands of pounds in the process. With such massive savings on the line, it’s a strategy to certainly consider.

With that, here are some easy checks and tips from Charlie Reading, Founder and Managing Director of Efficient Portfolio chartered financial planners, that could start you on your way to a much leaner tax bill:

 

Charlie Reading

1. Maximise Your ISA Allowances

Good returns, flexibility, diversity and tax efficiency should be key components in your financial strategy, and the ISA helps to deliver all of these. Historically, ISAs have been at the cornerstone of tax-efficient saving and are often referred to as one of the essential steps in your strategy, as they can help your wealth grow without you being penalised by heavy tax charges. They are an incredibly useful way of saving, and, as such, it is generally encouraged that people take advantage of their benefits. However, the ISA allowance is offered on a ‘use it or lose it’ basis, so if you fail to maximise it, you can’t make up the funds later on.

Up until 5th April 2020, you can contribute up to £20,000 into an ISA, and a further £20,000 from 6th April 2020, thereby sheltering up to £40,000 per person, as long as you’re over 18.

 

2. Top Up Your Pension While You Still Can

At the time of writing, the highest level of State Pension you can receive is £129.20 a week, which is frankly a paltry sum to live on. That’s why saving for the future is so important. It might seem wise to enjoy life now and worry about retirement later, but you’d only be damaging your future quality of life.

Pensions are a highly tax-efficient way of saving and now offer a great deal of flexibility in retirement, as when you retire you can gain access to 25% of your pension pot as a tax-free lump sum, with the remainder taxed at your marginal rate.

The current pension annual allowance is set at £40,000, so if saving for your future is a priority, it is worth investigating which pension is right for you, sooner rather than later.

 

3. Protect Your Estate from Tax

Inheritance Tax (IHT) is a concern for people from all walks of life. If you are hoping to leave a legacy to your loved ones, the last thing you would want is for that legacy to be taxed at 40% and lost to the Government.

One simple way of combatting this is to consider using your annual IHT allowance. During your life, you are allowed to give away £3,000 per year without incurring any IHT charges upon your death. There are of course downsides to this, in that you lose all access and control over the money, but it may be a tax-efficient strategy to consider.

 

4. Don’t Overpay Your Capital Gains Tax

The final tax consideration at this time of year is Capital Gains Tax, which is also given on a ‘use it or lose it’ basis and is currently set at £12,000. The issue of Capital Gains Tax is most acute if you hold investments which have grown above your tax-free allowance.

To ensure you make the most of your Capital Gains Allowance, it is generally recommended to sell down a portion of your portfolio to realise the growth made, but only enough to maximise your allowance, is the most prudent strategy.

These funds can then be used to fund any outstanding allowance on your ISA, for example. The advantage of doing so is that by placing your money from a taxable to non-taxable environment you have the potential for further growth, and you benefit in the longer term by potentially reducing a future bill.

There’s plenty of time left before the taxman comes knocking once again, but there’s no better time than the present to start looking into how you can save you and your business thousands of pounds simply through tax allowances you might not have previously been aware of.

 

Continue Reading

Top Stories

HOW TECHNOLOGY IS FUTUREPROOFING STOCK MARKET TRADING

stock market

Tony Shaw, Executive Director, London Office and Head Sales UK & Ireland at the Swiss Stock Exchange

 

Markets are shifting, there’s no doubt. Amid all the disruption and volatility from the past year, the Swiss Stock Exchange asked traders about what they expected in 2020 and beyond in our industry survey. The findings point to a rise in digital to help traders content with external forces.

 

First and foremost, traders are enthusiastic about what digital assets can offer.

Two thirds of traders polled said they’d had a marked rise in interest from their clients for digital assets and crypto-products. Given the interest, traders are increasingly bullish about the potential of these products – so much so that 80% have predicted an increase in overall demand in the long term. Market users believe these assets will help generate cost synergies and streamlining trading and settlement processes by creating efficiencies and ultimately reducing costs.

Our 2019 results reflect what traders have told us when it comes to digital assets and products. Last year, we saw significantly higher trading volumes from products with crypto currencies as underlyings. Overall volumes grew by +8.5% over 2018, but the increase in crypto products alone was +17%, reaching CHF 518.2 million ($534.54 m). There was a year-on-year increase in the number of transactions, as well (+21%): 19,636 trades in total.

The potential digital assets hold is clear – evidenced by the building of the SIX Digital Exchange (SDX), a fully integrated issuance, trading, settlement and custody infrastructure for digital assets.

According to traders, artificial intelligence (AI) is expected to bring further benefits to market operations.

Two thirds of our survey respondents anticipate AI will create more opportunities for the traditional equities business, while a similar number expect it to reduce the cost of trading. Innovation in AI is already – and will continue to be – a key driver in making our industry more effective at withstanding future risks and challenges both within and beyond the market itself.

In Europe, there is growing momentum behind calls for shorter trading hours – this trend was reflected in our survey as well.

Industry groups such as the Investment Association are advocating for stock market trading hours to be cut from 8.5 to 6.5 hours to open the industry to working parents and women who cannot commit to such long workdays. We found traders were largely supportive of this, with many saying that it could even facilitate operational benefits. The roll of AI is clear here in improving efficiency while minimising time wastage: 36% of traders said the introduction of shorter trading hours would prompt greater market liquidity.

Beyond the market itself, geopolitics continue to shape wider market sentiment.

It comes as no surprise that four fifths of traders said their strategies have been – to some extent – influenced by Donald Trump’s tweets. Interestingly, only 39% of those polled viewed Brexit as an influencing factor in trading activity, while three quarters believe the US election will drive trading activity in 2020 and 65% acknowledged trade wars would also have an impact.

More broadly, traders are split on the state of the global economy – 58% are bracing for a global recession while 42% predict stable macro-economic conditions over the next three years. What seems clear is that whatever happens in the wider economy, traders are making headway with new technologies that can improve their strategy, efficiency, and overall market health.

 

Continue Reading

Magazine

Partner Events

Trending

Wealth Management2 days ago

THE END OF YEAR TAX CHECKS THAT COULD SAVE YOU THOUSANDS

Charlie Reading, Founder and MD of Efficient Portfolio After HMRC’s tax return deadline at the end of January, it can be...

Top Stories2 days ago

RISK VS REWARD: IS AI TAKING OVER?

Xavier Fernandes, Analytics Director at Metapraxis A study by Oxford University academics into “The Future of Employment” in 2013 prompted...

News2 days ago

HALO TRUST USES ADAPTIVE INSIGHTS FOR STRATEGIC BUSINESS PLANNING

Cloud-based financial planning helps HALO Trust deliver greater benefit to communities affected by war   Adaptive Insights, a Workday company,...

News2 days ago

IS DATA PROTECTION AND PRIVACY RELEVANT ACROSS ALL STRATA IN INDIAN SOCIETY?

A Study by Pensaar Design With CGAP Pensaar Design has been working on a research study with CGAP to better...

banks banks
Banking4 days ago

THE RISE OF CHALLENGER BANKS AND HOW LEGACY BANKS ARE TRYING TO KEEP UP

Jean Van Vuuren, Regional VP for UK, Middle East and South Africa at Alfresco   The finance world has been...

ORGANISATIONS ORGANISATIONS
News4 days ago

NEW STUDY: AI HELPS ORGANISATIONS GROW PROFITS 80 PERCENT FASTER

Global research highlights how organisations are capitalising on emerging technologies to enhance finance and operations for competitive advantage   Organisations...

INVESTMENT INVESTMENT
News4 days ago

UK START-UPS MUST MAKE THE MOST OF A SMALL WINDOW TO CAPITALISE ON INVESTMENT OPPORTUNITIES, FOX WILLIAMS WARNS

Despite rising investment, Brexit and growing interest from tech giants could cut off start-ups’ opportunities in 2020   While a...

Open work Open work
News4 days ago

XPEDITION UPGRADES MORE THAN ONE MILLION OPENWORK CLIENTS TO THE DIGITAL AGE

Xpedition, leader in the implementation of cloud-based business applications, has deployed a new system which has digitally transformed the customer...

Microsoft Microsoft
News4 days ago

ORACLE AND MICROSOFT BRING ENTERPRISE CLOUD INTEROPERABILITY TO EUROPEAN CUSTOMERS

Today, Oracle is announcing the continued expansion of its cloud interoperability partnership with Microsoft with a new cloud interconnect location in Amsterdam....

technology technology
Business4 days ago

THE EMOTIONAL AND FINANCIAL COST OF WORKING WITH OUTDATED TECHNOLOGY

Slow Tech Could Waste 24 Hours of Worktime a Year In this digital age, businesses are hugely reliant on technology...

stock market stock market
Top Stories5 days ago

HOW TECHNOLOGY IS FUTUREPROOFING STOCK MARKET TRADING

Tony Shaw, Executive Director, London Office and Head Sales UK & Ireland at the Swiss Stock Exchange   Markets are shifting,...

TOP 10 COUNTRIES TOP 10 COUNTRIES
Wealth Management5 days ago

REVEALED: THE TOP 10 COUNTRIES THAT ARE REDUCING THEIR RELIANCE ON OIL

Ben Lobel, Copywriter at DailyFX New tool charts global commodity trading over the last decade The UK has reduced its...

move fast move fast
Finance5 days ago

‘MOVE FAST BUT DON’T BREAK THINGS’ – WHY FINTECHS WILL COME TO LOVE REGULATION

Alex Johnson, Director of Portfolio Marketing, FICO   The guiding ethos of fintech is move fast and break things. It’s...

Company Company
Business6 days ago

OFFSHORE COMPANY FORMATION TACTICS FOR SMEs

James Turner, Director at company formation specialists, Turner Little   Starting a business brings with it its own set of challenges,...

3DS 3DS
News6 days ago

EMV® 3DS – PAVING THE WAY FOR SEAMLESS AUTHENTICATION

Jean Fang, Product Manager, FIME   The growth of e-commerce, m-commerce and remote commerce transactions is showing no signs of...

Technology6 days ago

WITHOUT C-SUITE COLLABORATION DIGITAL TRANSFORMATION IS UNLIKELY TO BE SUCCESSFUL WITHIN FINANCIAL SERVICES

By Nick Gold, founder and Chief Executive of Speaker’s Corner   A path to digital transformation Mapping a clear path...

payments payments
Business6 days ago

LOOKING BEYOND THE PAYMENTS PRICE TAG

Rob Straathof, CEO, Liberis   In the face of tough competition, cutting costs often seems like the quickest and easiest...

Mitek Mitek
News6 days ago

MITEK SETS NEW IDENTITY VERIFICATION STANDARD WITH ONE STEP LIVENESS DETECTION

Omnichannel Liveness Detection ensures more effective, safe and simple identity verification   Mitek (NASDAQ: MITK, www.miteksystems.com), a global leader in digital identity...

Finances Finances
Finance6 days ago

HOW TO MERGE YOUR FINANCES AS A COUPLE?

By Nelisiwe Ndlovu, Certified Financial Planner at Alexander Forbes   There is never a good time to discuss finances with...

International Banking International Banking
News6 days ago

INTERNATIONAL BANKING NETWORK IBOS ASSOCIATION APPOINTS NEW MANAGING DIRECTOR

International banking network IBOS Association is delighted to announce the appointment of its new Managing Director, Manoj Mistry. Formerly Managing...

Trending