Iain Wallis

Proven Tax Strategies for High Net Worth Individuals

0191 603 0270

Follow Me on FacebookFollow Me on TwitterFollow Me on LinkedInFollow Me on PinterestFollow Me on YouTube
  • Home
  • About Me
  • Property Wealth Builder
    • Property Investor
    • Property Mentor
  • Tax Strategies
  • Keynote Speaker
  • My Books
    • Essential Tips to Avoid Property Taxes
    • Legally Avoid Property Taxes
  • My Blog
  • Contact

Buying Investment Property – What Are the Risks?

January 31, 2012 By IpShineonline

I firmly believe that property investment is a great investment and when you look at the long term trends it’s far from risky, especially when compared with the alternatives.

  • The UK is set to suffer a severe shortage of property and very high demand over the next 20 years
  • There will always be a demand for rental properties
  • Historically property has always delivered great returns over time

The UK has a tradition of home ownership. Between 1971 and 2002 it increased from 49% to 69%.

However, there will always be a need for rental property, due to economic factors, lifestyle and a moveable jobs market. The average age of a first time buyer, who is not given financial help, is now 37.

You can see there will always be a demand  for rental accommodation.

The UK population of 61.4 million today will rise to 71.6 million by 2033. This will put massive pressure on housing stock. The predicted shortage is 750,000 homes by 2025.  Short supply will impact rental values.

With finance much tighter, the banks’ reluctant to lend and house price confidence shaky, it’s never been more important to make your money work when you buy an investment property.

You achieve this by buying Below Market Value (BMV). Get this right and you will have an income producing asset – from a property that historical data from Halifax PLC has shown doubles every 7 – 10 years.

There is no guarantee that such fantastic growth will continue. No one would deny that we have seen an adjustment in the housing market since it overheated in 2007.

But even if the current economic pressures in the UK move this cycle to a longer timeframe, if you have invested wisely you will still benefit from passive income  – which boosts your income.  Plus because you bought BMV you have instant equity in your property.

“But I like my money in the bank. I get a statement each month and I know it’s there.”

Yes that’s very true – but here’s the thing:

  • The best rate paid by a bank to tie up your cash in a two year bond is 4.05%.
  • A simple deposit account pays 3.15%.
  • Inflation is running at a conservative 5.7%  

 So in actual fact you are losing at best 1.7% or at worst 2.6% per cent on your savings. Every year!


Is that a good investment?

Share on Facebook Share
Share on Pinterest Pin it
Share on TwitterTweet
Share on Google Plus Plus
Send To Devices Send

Filed Under: property investment, Uncategorized

Comments

  1. Kathryn says

    February 22, 2012 at 10:10 pm

    Interesting article regarding potential growth in the rental market over the next few years.

    The rental value of property seems to be comparable wherever you live in the UK for like for like property, except London of course. But the purchase price of property seems to vary much more throughout the country.

    Wish property prices were as cheap down south as they are up North!

    • iain says

      February 23, 2012 at 5:47 pm

      Thanks for you comment Kathryn. Yields are usually higher in the north because of the low capital values. Typically we would expect yields of at least 10-12%

Latest Posts

Pot Holes! Does Fiscal Phil build our Wonderland?

Introduction Fiscal Phil in his 2018 Budget provides a few nasty … Read More... about Pot Holes! Does Fiscal Phil build our Wonderland?

What’s the new rent a room relief legislation?

From 6th April 2019, new legislation, and not necessarily for the better, … Read More... about What’s the new rent a room relief legislation?

What’s George up to?

George Osborne delivered a headline grabbing budget and unusually for all … Read More... about What’s George up to?

Why are HMRC so inefficient?

These days HMRC call us customers but alas they’ve yet to discover the … Read More... about Why are HMRC so inefficient?

It’s not always a bunch of Roses

Congratulations to anyone who may be intending to ‘pop the question’ over a … Read More... about It’s not always a bunch of Roses

Copyright © 2025 Iain Wallis | Terms of Use | Privacy Notice | Cookies Policy

Website by Internet Power | Online Portal

MENU
  • Home
  • About Me
  • Property Wealth Builder
    • Property Investor
    • Property Mentor
  • Tax Strategies
  • Keynote Speaker
  • My Books
    • Essential Tips to Avoid Property Taxes
    • Legally Avoid Property Taxes
  • My Blog
  • Contact