Property... the canny way to turn a profit
WITH the Bank of England base rate now having been at a historic low of a quarter of a per cent since the summer – after seven years of it being at half a per cent – the road back to high returns on bank savings is looking increasingly long. But low rates mean that borrowing money to buy property is relatively inexpensive, and there are a burgeoning number of ways to see a profit on an investment.
Property consultant Flambard Williams is one company that is championing the purchase of what it calls PBSAs. These are purpose-built student properties and they can be bought for as little as £70,000. They are self-contained studios with their own kitchen and bathroom, and Flambard Williams sees its clients receiving eight per cent net returns.
The company also finds that new apartments in cities in northern England such as Manchester, Liverpool and Leeds are good buy-to-let investments – prices start at £98,000, with net profits from seven per cent.
But returns are available on properties you can stay in too. The Dream Lodge Group has lodges in its parks in Devon, Cornwall, Cambridgeshire, Berkshire, Essex, Norfolk, Suffolk and East Sussex. Owners can use their lodges for up to four weeks a year, while they are let out for other weeks. Also, Dream Lodge purchases incur zero stamp duty, start-up costs or solicitor fees. You can own a lodge from £99,000.
Businessman Charles Sayer, from Chiswick, West London, has opted for a completely different type of property investment – dementia care home suites, through Elite Investor Club.
You invest in a suite in a care home for about £50,000 to £75,000 and receive a 125-year lease. You then lease the room back to the care-home operator, who can pay you an eight per cent yield for anything from ten to 25 years. At the end of the leaseback, the developer buys the suite back from you for up to 125 per cent of your original investment.
‘I bought my first suites three years ago,’ says Charles. ‘I’ve received all my payments to date and have just bought two more. I prefer it to residential buy-to-let because it’s completely hands-free. No midnight calls to say the boiler’s broken!’
Meanwhile, investor Jesal Patel tends to focus on ‘mixed-use’ properties – shops with flats above – partly because the commercial element of the property changes the stamp duty payable. He also favours auctions for purchases, often going to ones run by Allsops. He says you can see what competition you’re up against at an auction, as opposed to a private sale. He also says you get to see a lot of stock, adding: ‘I can get details of 400 properties a month.’ Moving abroad, Lisbon is attracting a lot of attention because of its EU-backed multi-million-euro urban regeneration plan. The Baixa Santa Justa development is an example of the buy-to-let opportunities available. The block comprises eight fully furnished and refurbished twobedroom apartments in a pedestrianised street near the River Tagus. Apartments cost from €645,000 through international property consultants Athena Advisers.
And France is currently recording the lowest mortgage rates in its history – with fixed rates at below two per cent. Athena Advisers also have a new-build development in Paris, Campagne Première. Prices are from €500,000.
Julian Walker, director at Skiingproperty.com, thinks the low mortgage rates in France might particularly appeal to American investors now that the US has a new President in Donald Trump – which could lead to prices for prime French property being pushed up. ‘They may have concerns about the US economy and feel having a euro-based immovable asset makes sense,’ he said, adding that the dollar is currently very strong against the euro.
However, Briton David Baker chose to make his property investment in Malta, buying a house in the south of the island through Frank Salt estate agents, and reasoning that the country’s ties with Britain and its use of the English language, combined with Malta’s low cost of living, would always make it appealing.
He found it was so appealing that he and his wife Sara ended up living there permanently. ‘We just fell in love with the life here,’ he says.