Interest in UK residential property investment will increase next year, if a third of financial advisers are correct in their predictions.
Research from housing investment and shared equity mortgage provider, Castle Trust, shows that 34 per cent of IFA’s forecast a surge in 2013, based on 2012 growth, and a quarter saw a rise in clients’ interest in investing in UK residential property in the past 12 months.
But access to residential property investment in the UK is currently typically only available through buy-to-let with the average maximum loan-to-value available on buy-to-let mortgages at around 75 per cent and average minimum rental cover at 125 per cent over the past three years.
Castle Trust’s investment products enable investors to access UK residential property from £1,000 with its Income and Growth HouSAs which outperform the Halifax House Price Index for terms of three, five or 10 years.
Sean Oldfield, chief executive officer, Castle Trust said: “Residential property has historically been a notoriously inaccessible asset class for investors. Most exposure has come through buy-to-let but investors are increasingly aware of the high risk adjusted returns of a housing index compared to other asset classes, including equities, and the benefits this brings to diversified portfolios.
“Investors should view housing as a medium to long-term commitment and fixed-term investments are ideal as they encourage a longer-term perspective. Even buy-to-let investors need to have a three to 10 year outlook to cover the costs of buying and selling. But the returns on a buy-to-let investment depend not only on the sale price but also on the occupancy rate and the cost of maintenance which on average cost an investor £1,532 a year, according to estate agents Northwood.”
The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between 2 per cent and 3 per cent, depending on the term of the investment.
The Castle Trust Growth HouSA offers a gain of between 1.25 times and 1.7 times any increase on the Halifax House Price Index, or a loss of between 0.75 times and 0.3 times any decline.
The benefits of HouSAs are:
- Returns are better than the Halifax House Price Index
- Some protection against a fall in the Halifax House Price Index
- Tax free investment options
- You can invest from as little as £1,000
- An alternative to a buy-to-let investment without the hassle or ongoing costs
- Open up the housing market for investors without the need to buy a property
- Qualify for inclusion in ISAs, Junior ISAs and SIPPs
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