It’s Time To Get Real About The Issues of Affordable Property

Property is a perennial hot topic in the UK as is the plight of first-time buyers and lower-income workers, who struggle to get on the proverbial “property ladder” due to the difficulties of saving for a deposit while paying rent and watching house price continue to rise. Various governments have tried various ways to tackle this issue and yet it continues, for one simple reason.

Markets are governed by the laws of supply and demand

That’s the straightforward truth of the matter. Where supply outstrips demand, prices fall and where demand outstrips supply, prices rise. In the UK, there is generally a strong demand for housing because the mainland UK is a densely-populated island, however the extent of the demand can vary hugely depending on the characteristics of different geographic locations. For example, London has long been (in)famous for its exorbitant house prices, with flats, literally the size of cupboards, being put on the market for eye-watering prices and, much of the time at least, a general feeling that just when you thought prices couldn’t go any higher, a property comes along which sets a new record. Meanwhile, in more rural parts of the UK, you can still buy substantial detached properties with land for less than the price of some London studios. As previously mentioned, it’s a simple case of supply and demand.

In the housing market, the issue of demand goes in tandem with the issue of affordability

As the old song goes, you can’t always get what you want and it’s hard to imagine an area where that saying is more true than in the housing market, particularly in housing hot spots such as London. If you can’t afford it, you can’t have it and in terms of housing, for many people “affording it” means getting a mortgage, which requires both a deposit and the ability to demonstrate that the borrower can afford the repayments over the long term, even if interest rates rise. Higher house prices mean that buyers need bigger deposits and higher incomes before they can expect to be even seriously considered for a mortgage. This increases the challenge on people paying rent while saving for a deposit and, of course, the challenge is felt most acutely by those on the lowest incomes, particularly if the proverbial “bank of mum and dad” is unable to help. Over the years, governments of all persuasions have tried various tactics to address this issue, from obliging builders to create a certain percentage of affordable housing to the “Help-to-Buy ISA” to the recent cut in stamp duty for first-time buyers, however, while these measures may put one group of buyers at an advantage when compared to another group of buyers, they do nothing to address the fact that the UK has an acute shortage of housing stock.

Building more homes

Pledges to build more homes have regularly featured in manifestos and budgets for many years and, indeed, featured in the latest budget in which Philip Hammond promised no less than £44bn in overall support for a home building programme, which the government expects to last into the middle of the next decade. This does, however, raise the question of where these homes will be built. Home prices are at their highest in places such as London and the surrounding Thames Valley area precisely because there is such a shortage of land on which to build. The Chancellor has taken some tentative steps towards addressing this, such as by making it possible to issue compulsory purchase orders on land developers have banked for financial reasons and promised a “review” of why requests for planning permission can find themselves subject to delays. If, however, affordable property is to become a reality for the majority of people in the UK, then much more needs to be done to unlock potential building land and to maximize its usefulness for development.

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What Does a Stagnant London Property Market Mean?

London house prices aren’t exactly falling down, but they aren’t exactly rising either.  Statistics vary depending on timescale, source and the exact nature of the data, but overall the consensus of opinion is that, at the very least, the London property market is fraying at the edges.  So what does that mean in practical terms for investors?

Why is London’s property market slowing down?

In order to determine what to make of this situation from an investment standpoint, the first question to ask is: “Why is this happening in the first place?”.  There are several possible reasons and more than one could apply at once.  Let’s take a look at three of them and see what they mean for investors.


Assuming that any slowdown in the economy is due to the prospect of Brexit may already be a cliche (or at least on the point of becoming one) but in this case, it may be a factor.  Home buying is a long-term commitment and if people are unsure of what is going to be happening in their lives over the next few years, they are more likely to put off major purchases such as houses.  Admittedly this applies across the country (and indeed the world) but London is arguably more exposed to Brexit than anywhere else in the UK due to it being the de facto headquarters of the UK’s financial services industry.

From an investment perspective – the population of London is over 8 million, the population of the UK is around 65 million.  In other words, about an eighth of the people who live in the UK make their home in London.  Barring any major shocks, it’s hard to see how this could change enough to sink the property market, which means that, over the long term, London almost certainly still has good long-term prospects.  It is up to individual investors to decide whether or not they want to commit to London for the long term or look elsewhere.

Competition from other parts of the UK

Back in the 1980s London had Margaret Thatcher, yuppies and power dressing, while the north of England had Boys from the Blackstuff, Educating Rita and Bread.  While this disparity made great fodder for comedy, it created tensions in real life and long before George Osborne formally kickstarted the Northern Powerhouse initiative, the government was using its influence to try to boost the northern economy.  Around 10 years previously, in 2004, the licence-fee-funded BBC announced its intention to move part of its production to Salford.  Fast forward to today and not only is the north of England going full steam ahead, it still has lower house prices than London, making it a very attractive destination for new companies, existing companies wishing to set up new operations and anyone for whom work is an activity rather than a place.

From an investment perspective – forget the “grim up north” jokes and take the north of England seriously as an investment destination, but remember to check any proposed investment thoroughly on its own merits before parting with your cash.

The “Olympic effect” is coming to an end

The 2012 Olympics fired the starting gun on a massive programme of regeneration in London, particularly east London and led to a huge rise in house values in certain parts of the city.  That was then, this is now.  The Olympic magic dust has settled and has become the new normal.

From an investment perspective – this is par for the course with any new infrastructure improvements, which is why astute investors tend to be interested in properties where infrastructure development is likely, but has not yet been factored into house prices.

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Why Developers Need to Prioritise Affordable Property

Mention the word “affordable housing” in the context of property development and the chances are that many people will automatically (and understandably) think of the requirement for (most) new developments to include a certain percentage of what is officially considered to be affordable housing. Let’s set this aside for one moment and focus on what the term “affordable housing” actually means, which is exactly what it says, houses people can realistically afford and the reason developers need to start prioritising this is because it’s the only way for them to maintain sustainable businesses.

Why the internet could put UK-based property developers out of business

Terms like “digital nomad” and “coffee-shop professional” may sound pretentious, but they reflect the way the nature of business is changing. There have been “home workers” throughout history, but as the world industrialised, the idea of “work” came to refer to a place as much as an activity. Now not only is it increasingly possible for people to work from home, but it is increasingly possible for that home to be far away from where their clients are based, even in another country. The digital economy, for example, is arguably truly global. Set against this backdrop, it is hardly surprising that digital workers and skilled professionals, particularly young ones, the famous millennials, will be looking at their options and asking themselves if they really want to stay in a location where they will be forever renters or move overseas to somewhere they can afford to buy. An exodus of young adults will ultimately be felt not just in the first-time-buyers market but later on in the market for family homes and then retirement properties. This may seem like a far-fetched scenario, particularly since Brexit may make it far more difficult to emigrate to another European country, but the reality is that many countries actually want to attract skilled talent, particularly younger adults.

Developers need to concentrate on delivering value rather than up-selling

Up-selling is key to many sales strategies and it’s everywhere, from online retailers who suggest purchases based on your browsing history to supermarkets placing “treat” purchases at strategic locations (particularly next to the tills). It’s also, often, part of the strategy for selling homes. Developers can add desirable features, anything from luxury finishes to steam showers and put a mark-up on them. This may actually deliver genuine value to the purchaser in the sense that even though the developer makes a profit on these items, the developer’s bulk-buying power can mean that it is still possible for them to deliver these niceties to the customer at a much lower price than the customer would have paid buying retail. At this point, however, the problem is that land values in the UK have driven house prices up to such an extent that potential buyers, especially younger ones, are being driven out of the market and, as previously mentioned, there is a strong possibility that this will result in some of them at least choosing to move overseas instead of staying in the UK.

Time for a radical rethink of the UK property market?

Sometimes when you appear to be up against a rock and a hard place (rising land values and other costs versus stretched buyers), the solution is to try something entirely different. For example, co-living spaces are popping up across the world and are currently making their mark in London. These are essentially spaces where residents have very limited private space, which is compensated by access to communal spaces and communal facilities. At current time, these are focused on the rental market, however in principle there is nothing to stop the idea being adopted for the sales market or adjusted to make it more suitable for families as well as those pre- post- or without children.

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4 Things About Interest Rates

Although it may not seem like it at first, interest rates really are interesting. High rates are great news for savers but bad news for borrowers and vice versa. Regardless of whether you’re a saver or a borrower, it’s important to understand 4 key points about interest rates.

For savers interest rates are in a race against inflation

Life is often a balancing act between conflicting goals and possibilities. In financial terms, this generally boils down to risk versus reward and/or cost versus benefit. Higher-risk investments can offer the possibility of great returns but, pretty much by definition, there is also the possibility of losing your initial investment. Cash savings can be viewed as safe in the sense that there is a relatively low risk of the saver losing their deposit, but if inflation (the cost of living) outpaces interest rates (the return on investment), savers can find their nest egg losing its value in real terms. This can be particularly challenging for older people on fixed incomes (pensioners) who do not necessarily have the long-term investment horizon of the younger generation but who do have a need for a reliable source of income to maintain themselves.

The interest rates available to consumers may be completely different to central-bank rates

About once a month, the press reports on the activities of the Monetary Policy Committee of the Bank of England, which sets the Bank of England’s interest rates. These are the rates charged (or paid) to banks which borrow from or deposit with the Bank of England. These rates may then feed through into consumer products such as savings accounts, mortgages and credit cards, some of which track this base rate. Some products, however, are fixed-rate and hence are unaffected any changes to the interest rates set by the Bank of England for the life of the fixed-rate deal. The key point to understand is that the interest rates offered to consumers are influenced by a number of factors as well as the base rate. Some of these are generic, such as what the banks think of the economy in general. Some, however, are specific to each individual, such as their credit history. Then, of course, there is the simple fact that banks need to pay their own bills and make a profit for their shareholders.

How do interest rates affect the market?

It’s usually considered that rising interest rates are bad news for stock markets. Reduced spending on goods as businesses and consumers borrow can cause stocks to drop. This is only a part of it though as different types of investments see rate rises differently. For instance gold may appears less shiny when interest rates are high as it doesn’t pay interest and can be less attractive to store.

The impact on property investment is found when combined with mortgages and higher interest rates. Mortgages become more expensive making buy to let less profitable. Savvy developers however will watch the economy and know when to hold back on new build. This can then increase a demand for property in that area meaning that the returns in development can still be high.

As with all investments, there is no hard and fast rule and you can lose as well as win.

Interest can be simple or compound

With simple interest, the interest payments are calculated purely on the basis of the initial sum deposited or lent. So, for example, if you deposit £100 then the interest you receive will always be based on that initial £100. With compound interest, however, interest is calculated on a rolling basis. Hence for example, if, after the first year you had received a total of £10 in interest payments, your next year’s interest payment would be calculated on the whole £110 rather than just the £100 you initially deposited. This is great news for savers but, of course, terrible news for borrowers and is part of the reason why those who take out high-interest credit can wind up paying more in interest than they borrowed to begin with.

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Landlords Vs Limited Companies

Napoleon is said to have described the English as a nation of shopkeepers. If he were around today, he might describe it as a nation of small-scale landlords. In the near future, however, people might refer to the UK as a nation of corporate landlords as changes to the financial and legal landscape impact both the cost-effectiveness of being a private landlord and the level of personal risk involved.

Investment is about numbers

You buy a home to live in, but you buy an investment property to make you an income. In the most basic of terms, you work out the gross income you can generate from your property, you estimate your expenses, and you decide if the difference between these two figures leaves you with enough profit to be worth the effort involved. If circumstances change, you do your sums again and decide whether or not your investment is still worthwhile. Recent, well-publicised, changes to the tax system have the potential to be seriously detrimental to the net income generated by investment properties held by private landlords, i.e. landlords letting out property outside the framework of a limited company. The announcement of these changes led to a slew of articles both online and in mainstream publications, discussing the possible use of the so-called “landlord loophole”, i.e. the possibility of converting a property portfolio from a private holding to an asset belonging to a limited company. While this might be a good idea in theory, in reality, setting up a limited company can be an expensive and complex undertaking, so much so that small-scale landlords may find it more appropriate simply to sell up and find another investment vehicle.

Risk is also a factor

All landlords have to deal with three main forms of risk:

  • the risk of property being damaged
  • the risk of being sued for compensation for negligence
  • the risk of letting a property to a tenant without the “right to rent”

Even though the risks may be the same, how they affect landlords can be very different. While dealing with a damaged property may be the most obvious risk of being a landlord, it’s arguably the one which should cause the least degree of concern since it can usually be mitigated through a combination of tenant selection, deposits and insurance. The risk of being sued for compensation for negligence may be much smaller and again there are steps landlords can take to mitigate it (the obvious example of this being to take good care of their property), but in a world of “no win no fee” lawyers and adverts making people aware of the possibility of them claiming compensation for an accident which wasn’t their fault, the reality is that even the best landlords can find themselves on the receiving end of a claim from a tenant who has nothing to lose. If a private landlord is found negligent, they are personally liable for the damages, whereas a limited companies can only be sued to the extent of their assets. Likewise, while the “right to rent” scheme applies equally to both private and corporate landlords, the former may find it much harder to navigate the complexities of the scheme in a non-discriminatory manner.

The end for private landlords?

While it’s still relatively early days and the attraction of owning property in the UK should never be underestimated, it is fair to say that the government’s actions have the potential to push private landlords out of the market. Smaller private landlords may well just liquidate their portfolio and move on, while larger ones may become limited companies. What’s more, the government has committed to abolishing letting agent fees for tenants, which presumably means that letting agents will charge landlords instead. While, in theory, this should be a situation which is six to one and half a dozen of the other, private landlords who are already seeing their returns dwindle and their risks increase (due to the right to rent scheme) may decide that enough is enough.

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Housing Needs For The Forthcoming Year

The snap election seems to have taken many people by surprise, including, it would appear, the Prime Minister who called it. Having been deprived of her last minister for housing, Gavin Barwell, who lost his seat, she has recently appointed a replacement in the form of Alok Sharma. Given that he is the 6th housing minister to be appointed in roughly as many years (since 2010), it is an open question as to how long he will stay in post, but assuming he makes it to this time next year, what are his priorities likely to be?

Housing refurbishment

While many newspaper headlines have been devoted to the overall shortage of housing and the corresponding difficulty of “getting on the housing ladder”, the tragic events at Grenfell Tower have brutally highlighted the fact that some of the UK’s existing housing stock is in drastic need of refurbishment. What form this will take will depend on just how bad its condition is. In some cases, it may be possible simply to update and upgrade existing buildings. In other cases, the only realistic option may be to demolish the existing structure and start again.   In either case, it is very possible that the high-profile nature of the Grenfell Tower fire will mean that the refurbishment of existing properties goes to the top of the political agenda.


The Conservative manifesto promise was to build a total of 1.5 million new homes by 2022, of which 1 million were to be delivered by 2020 (this total including houses built as a result of actions taken by the last parliament). It will be interesting to see whether or not the Conservatives will be able to make good on this pledge. The simple fact of the matter is that government support for home building is dependant upon tax revenues and the uncertainty around Brexit may make it rather difficult to forecast how many people are going to be in the UK to pay taxes, let alone how many of them will be in work and what level of tax they will pay. Added to this, there is a large question mark hanging over the availability of labour for the construction industry, which has long relied on trades people from eastern Europe, which makes it difficult to predict the cost and schedule of housing projects and that is without taking into account the fact that the weakness of Sterling may well continue for the foreseeable future and while this is good news for exporters (and inbound tourism), it is bad news for anyone who needs to import either materials or labour (or encourage labourers already in the country to stay here instead of taking their skills elsewhere). Notwithstanding all this, it is to be hoped that the government will do all it can to support home building as the UK has long suffered from a shortage of housing stock.

Improving the situation for renters

Previous housing minister Gavin Barwell pledged to ban lettings agencies charging fees to tenants. This change has yet to be implemented, although given the amount of press coverage it received, it would probably be politically-challenging for the Conservatives to reverse the decision. While this pledge was welcomed by tenants, landlords and lettings agencies commented that any fees charged to landlords would have to be passed on to tenants. Those in favour of the change, countered that this does not appear to have been the case in Scotland. This, however, is a bit of an open question. Rents have risen in Scotland since the ban on letting agent fees (to tenants) was introduced in 2012 and although a 2013 study found that only 2% of landlords raised rents specifically because of this, it is still entirely possible that the change factored into the calculations of the other 98%. Ultimately the issues in the rental market reflect overall lack of supply and the only meaningful way to address this is to improve the supply, for example by encouraging build-to-rent schemes.

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It’s Not Grim Up North

Data from peer-to-peer lender Kuflink shows that rental yields in the North of England and Scotland have been comfortably beating rental yields in London at 4.3% and 3.2% respectively. While this is, of course, interesting news for (potential) buy-to-let investors, it’s still useful market intelligence for those who prefer to avoid the politics of buy-to-let and invest in the property market through other channels, for example property development.

Takeaway point 1 – There’s a difference between price and value

London and the South East is an expensive place and hence landlords are likely to be able to charge higher rents than they would for equivalent properties in other parts of the country. The flip side of this, however, is that buying the rental property is likely to have cost them more than an equivalent property in another part of the country. There are still plenty of reasons why the Thames Valley area could be a good place to invest in property in some way, but it’s worth remembering that there is strong demand for property in other parts of the UK as well and hence opportunities for investors.

Takeaway point 2 – It’s always worth looking out for up-and-coming areas

According to Kuflink, Manchester and Salford provided rental yields of 6.7% and 6.6% respectively whereas Cambridge was a mere 2.7%. The data did not analyse why this was so, but one very feasible explanation is that Manchester and its neighbour Salford have both been in a process of regeneration over recent years, with the BBC making news itself by moving some of its production to Salford back in 2012. The availability of work attracts people to an area, particularly young adults, for whom renting is likely to be the most appropriate option, even if they have the funds to buy. The combination of relatively low house prices (compared to London) and increased demand for rental properties makes for good rental yield. It also offers good opportunities for other forms of property investment since many of the people who arrive as renters will ultimately settle down and buy property in the area. Cambridge, by contrast, is a mature market. As a University town, it has a pretty much guaranteed market for rental properties and as a research centre it also has a demand for property to buy, but there is nothing new about any of this and so the opportunity to invest at the start of an upward trend is really long gone. The North of England and Scotland have both been benefitting from improved infrastructure (particularly transport links and broadband internet) and as they are outside the “city” zone, they have less reason to be concerned about the prospect of some financial service roles being moved out of the UK due to Brexit.

Takeaway point 3 – Quality matters

The fact that in the UK there is always a strong demand for housing is hardly a secret and a quick scan of a newspaper website will probably reveal plenty of articles about landlords and home builders taking advantage of desperate renters or buyers. While there is certainly an element of truth in this, the simple fact is that the fundamentals of business also apply to the property market, even though it generally moves at a slower pace. Companies (or individuals) who supply shoddy goods and/or poor customer service may make a quick short-term profit, but over the long term they tend to get found out and weeded out. Because of this, anyone looking to make meaningful, long-term returns from property, whether that’s as a landlord or as an investor in property development, is well advised to be very selective about their purchases and only put money into high-quality builds.

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How Will Stamp Duty Affect Buy To Let?

April 2016 saw the introduction of a 3% stamp duty levy charged on purchases where the purchaser already owned a property. There were a few exceptions to this and certain circumstances in which the levy could be refunded (e.g. if people were moving from one property to another and only had two properties temporarily). Buy-to-let landlords, however, essentially pay 3% more for a property than a first-time buyer would.

The Theory

Home buyers and buy-to-let landlords are in direct competition for properties. Competition increases prices and higher-priced houses require larger mortgages and hence higher incomes and bigger deposits. If higher house prices mean that people are unable to afford to buy, then these people are, effectively, forced to rent and as renters they have to pay their landlord while saving for a deposit. This puts them at a disadvantage in the property market. The 3% surcharge is, therefore, intended to level the playing field.

The Reality

Given that the 3% surcharge was introduced just a few months before the Brexit vote, with all the turbulence that has caused, it is difficult to impossible to determine what specific impact the surcharge has had by itself. What is, however, possible, is to look at recent history and see what indicators it may give for the future. Home ownership has long been a central plank of government strategy (at least since the days of Margaret Thatcher). Over recent years, various governments have introduced a range of schemes to make it easier for first-time buyers to get on the housing ladder. These have included: shared ownership, equity loan, mortgage guarantee and the help-to-buy ISA. For want of a better term, these schemes can be seen as carrots to help home buyers. The government’s new stamp duty surcharge, therefore, can be seen as a stick with which to beat BTL landlords. The fact that the government is now using sticks as well as carrots raises the question of what other action might be taken to make life more difficult for BTL investors if the current measures fail to have the desired effect.

Moving Forward

The BTL market, for the moment, still seems very much alive and well and there has already been extensive discussion about the action(s) landlords could take to minimise (or eliminate) the effect of these charges. Suggestions have varied from passing the costs on to tenants to moving properties into a limited company, whereupon different tax rules apply. The challenge facing BTL investors is that if they find themselves locked into a battle with government policy any move they make, even if it is legal at the time, can be rendered ineffective at a later point through a change in the law or the tax system. On the one hand, there are many reasons why the BTL market could and should offer attractive returns in a country like the UK, on the other hand some investors may be feeling uncomfortable about the prospect of being in the government spotlight and may be looking for alternative ways to profit from the UK’s thriving property market.

Is property development the new BTL?

One point on which there is broad consensus is that building new homes is crucial to the UK’s future, partly because the population is increasing and partly because existing, lower-grade housing stock needs to be replaced. Because of this, high-quality property development is actively encouraged, for example, the 2016 autumn statement included a specific commitment to building new homes. Hence investors who want to enjoy the returns from property without the risk (and effort) involved in buy-to-let, might find investing in property development is the perfect solution.

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New Build Concerns

Cowboy builders have long been fodder for the press (as well as various industry bodies and occasionally the police), but a quick look at press headlines about new build properties (and by extension, the companies which build them), could leave some home buyers with serious concerns about buying one.

What the headlines say

Some headlines point to developments which do have serious flaws in workmanship ranging from structural issues to problems with facilities such as heating or windows to more significant cosmetic flaws such as badly applied plaster. In many cases, however, the issues with new builds ultimately boil down to a mismatch between the buyer’s expectations and the reality of what they have been sold, which may have been brought about by some degree of misrepresentation. For example, a purchase contract may specify the exact dimensions of a room, but if the buyer takes a trip around a show home to help them to translate these figures into practical terms, the unwary may well find themselves caught out by the use of cut-down versions of standard household furniture, which gives the impression that the rooms are more spacious than the actually are. In fact space and the way it is used is a key issue with many new build homes.

The reality

The UK needs more new build homes. In addition to a growing population, existing low-grade housing needs to be removed and updated to meet modern requirements. This means that home builders know that there is generally an eager market waiting for any new development and, once that is sold, plenty more home buyers desperate for them to complete their next project. It’s therefore an unfortunate fact of life that some builders will look to maximise their profits by completing developments as quickly as possible and to the minimum acceptable standard. They may further resort to “tricks of the trade” to mislead buyers into thinking they are getting a higher-quality property than is actually the case.

Making a successful new build purchase


Understand the law

At present time, property is excluded from the Sale of Goods Act. Instead, there is an industry watchdog called the National House Building Council (NHBC). If the home owner identifies a defect within the first two years after purchase, the builder will be obliged to rectify it. After this period, structural issues will be covered for a further 8 years (making 10 years in total).

Check the credentials of your developer

In addition to speaking to the developers themselves, see what other people are saying about them. Go on to relevant internet forums and see where their name has come up in threads and what has been said about them. Be aware that even the best developers can trigger some complaints, but overall the comments should be far more positive than negative. Ask around the neighbourhood to see if you can find anyone who has already bought a property in the development which interests you. See what they have to say about their experience. If you can’t find anyone in person, try heading back online and seeing what you can learn there. Look up previous developments by that developer and either visit them in person or head back to the net to see what kind of reputation they have and how people feel about living in them now. Remember to be clear about the difference between issues which may have been caused by the developer (e.g. misrepresenting the amount of available space) and issues outside of their control (such as general changes in the local area). Check the developer’s promotional material against outside sources. For example, you could use a design tool such as SketchUp to see whether standard-size furniture will fit in a room in the same way as you saw in the show home. In other words, do thorough research on your developer before you commit to a purchase so that you can be confident that you are buying into the best that new build homes have to offer.

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5 Ways to Invest £50,000

It’s been a long time since savings offered any sort of meaningful return, which means that those who wish to grow their cash need to look at alternatives. With that in mind, here’s a look at where you could put a £50K investment.

The Stock Market

The stock market is a big place and the companies in it perform very differently, which is understandable given that the term “the stock market” includes everything from high-tech start ups to established blue-chip companies with little in the way of growth in their share prices but great dividends. This is why there is generally at least one stock-market investment to suit anyone of any age, appetite for risk or preference for capital growth versus income yield. The stock market can provide good returns, investors just have to place their money with care and accept the fact that both individual companies and the market in general can go down as well as up.

The Property Market

The property market has long been popular with investors seeking good returns on their money with minimal risk. There are some places where £50K could buy you a feasible buy-to-let property although you might need to budget a little extra on top for sales costs, e.g. surveys, but realistically in most parts of the country and for most properties, £50K is a deposit, albeit a very substantial one in some locations. On the other hand, buy to let has become something of a contentious topic over recent years and landlords have become an easy target for government revenue collecting, with changes to stamp duty and mortgage tax relief both benefiting the exchequer at the expense of landlords. Little wonder, then, that even though BTL remains popular, some investors are looking at alternative options.

For example that same £50K could be invested in a property development thereby benefiting from property without the hassle of managing tenants and properties within the law. Obviously this is an area in which we may seem to be biased but the ROI specks for itself and with a UK investment you can literally see your investment developing..

Invest in Companies Which Qualify for Business Property Relief

This is an option which may have particular appeal to older investors, since these investments are excluded from inheritance tax calculations after two years of ownership, whereas gifts need to be given at least 7 years prior to the individual’s death to qualify for full IHT exemption. In addition to this, the holder can continue to benefit from their interest in the company up to the point of their death, whereas they must give up any and all beneficial interest in any gift they give for it to be exempt from IHT. At the same time, however, it is usually best if the investment in question actually makes sense as an investment rather than simply, or even, primarily being a means to reduce IHT liability.

Given that companies which qualify for BPR are, by definition, small and are particularly likely to be family-run firms or start-ups, finding the right vehicle for your money can be complex. You also have to remember that as firms grow, they can stop qualifying for BPR although in this case, you may seal in a profit by selling your investment (or indeed choose to hold on to it anyway).

The State Pension Top Up Scheme

If you have already reached state pension age, you have until 5th April 2017 to make a lump-sum contribution to get as much state pension as you possibly can for the rest of your life. How much this will costs depends on various factors, particularly your age and the amount of extra pension you want to receive. The clock is now ticking on this one, so you’ll need to make a quick decision as to whether this option is for you.

As with all investments it’s best to seek financial advice and always bear in mind the caveat that investments can go down as well as up!

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