Your questions answered about property

6th August 2021

By Will Leyland

One thing we’ve found recently is that we’re speaking to more and more first time property investors, and certainly our client base has been getting younger following the pandemic.

One thing to have emerged from the economy post-pandemic is that those who were lucky enough to stay in work have managed to increase their wealth by saving, and now that things are moving again and there are opportunities to put those savings to work we’re seeing more people than ever interested in property.

Our team of specialist advisors field questions and queries every day, but we’ve tried to put together some of the most common. It’s not exhaustive and will vary depending on your circumstances, so if you’re looking for more specific advice just get in touch.

How easy is it to get into property?

That depends on what sort of deposit you’ve got. If you’ve managed to put together a decent enough sized deposit, then you’ll find it much easier than if you don’t have much to put forward as security.

It also depends on your credit rating and history as to whether you’ll qualify for lending or a mortgage to be able to get into the market if you can’t afford the full price of the property you’re interested in.

That’s not to say that you can’t qualify for lending with adverse credit, but the likelihood is that you’ll find it much harder and will be required to put down a larger deposit.

There is also the problem that you may find it difficult to find a mortgage when investing in off-plan property as it could be considered as riskier than an existing property. That’s not to say it’s impossible, there are many lenders willing to arrange a mortgage, but it may take a little longer, but this is something you can discuss with the seller.

What happens if I need my money back quickly?

If you’ve bought a property or invested, then unless you’ve got a buyer who can move quickly, then property is a famously illiquid asset which means it’s not easy to get access to your money quickly.

Typically speaking, if you want to sell your property or any shared equity it should take anywhere between 8 weeks and 6 months, and sometimes longer depending on the market. Property is a long term investment.

How much could I make?

Well, again, that depends on the type of property you’re investing in and where it is. If we consider that the UK housing market grew by 10% last year that gives you an idea of how quickly the value of property is growing on a yearly basis.

Beyond that, however, most popular property markets across the UK are seeing about 7% yields per year, which means they’re earning 7% of the value of the property per year.

If we were to take this as an example of a typical property that cost £100,000 in 2020, then your property would likely be worth £110,000 today, as well as having earned £7,000 in rental income across the year.

Can I make a business out of it?

Yes, absolutely, and many people do make a business of it. You’re not restricted to just one property investment and many of our clients run a ‘portfolio’ of properties that they manage full time.

Many will start out with one property and wait for it to increase in value before releasing the equity and using it as security to secure a second, third property, and so on.

Of course, there are tax implications and it can be stressful, but when it’s done well the rewards are good.

Can I use this for retirement?

Most people in the UK consider property to be a good investment for the future and their retirement investment.

Now, it’s important to say that property prices can go down as well as up, and that has happened over the years.

If we take any 10 year period over the past 40 then you’ll see property prices rising over that period, and there’s a very good chance that your property will be worth much more than you bought it for by the time you retire.

There’s risk with property as there is with any investment, but the risk compared to other retirement investments really is quite low.

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Your questions answered about property

06 August 2021

One thing we’ve found recently is that we’re speaking to more and more first time property investors, and certainly our client base has been getting younger following the pandemic.

One thing to have emerged from the economy post-pandemic is that those who were lucky enough to stay in work have managed to increase their wealth by saving, and now that things are moving again and there are opportunities to put those savings to work we’re seeing more people than ever interested in property.

Our team of specialist advisors field questions and queries every day, but we’ve tried to put together some of the most common. It’s not exhaustive and will vary depending on your circumstances, so if you’re looking for more specific advice just get in touch.

How easy is it to get into property?

That depends on what sort of deposit you’ve got. If you’ve managed to put together a decent enough sized deposit, then you’ll find it much easier than if you don’t have much to put forward as security.

It also depends on your credit rating and history as to whether you’ll qualify for lending or a mortgage to be able to get into the market if you can’t afford the full price of the property you’re interested in.

That’s not to say that you can’t qualify for lending with adverse credit, but the likelihood is that you’ll find it much harder and will be required to put down a larger deposit.

There is also the problem that you may find it difficult to find a mortgage when investing in off-plan property as it could be considered as riskier than an existing property. That’s not to say it’s impossible, there are many lenders willing to arrange a mortgage, but it may take a little longer, but this is something you can discuss with the seller.

What happens if I need my money back quickly?

If you’ve bought a property or invested, then unless you’ve got a buyer who can move quickly, then property is a famously illiquid asset which means it’s not easy to get access to your money quickly.

Typically speaking, if you want to sell your property or any shared equity it should take anywhere between 8 weeks and 6 months, and sometimes longer depending on the market. Property is a long term investment.

How much could I make?

Well, again, that depends on the type of property you’re investing in and where it is. If we consider that the UK housing market grew by 10% last year that gives you an idea of how quickly the value of property is growing on a yearly basis.

Beyond that, however, most popular property markets across the UK are seeing about 7% yields per year, which means they’re earning 7% of the value of the property per year.

If we were to take this as an example of a typical property that cost £100,000 in 2020, then your property would likely be worth £110,000 today, as well as having earned £7,000 in rental income across the year.

Can I make a business out of it?

Yes, absolutely, and many people do make a business of it. You’re not restricted to just one property investment and many of our clients run a ‘portfolio’ of properties that they manage full time.

Many will start out with one property and wait for it to increase in value before releasing the equity and using it as security to secure a second, third property, and so on.

Of course, there are tax implications and it can be stressful, but when it’s done well the rewards are good.

Can I use this for retirement?

Most people in the UK consider property to be a good investment for the future and their retirement investment.

Now, it’s important to say that property prices can go down as well as up, and that has happened over the years.

If we take any 10 year period over the past 40 then you’ll see property prices rising over that period, and there’s a very good chance that your property will be worth much more than you bought it for by the time you retire.

There’s risk with property as there is with any investment, but the risk compared to other retirement investments really is quite low.

Will Leyland

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