New ISA let’s you invest in property and benefit from tax savings
If you have investments, such as stocks, shares, and ISAs there is a new way to benefit.
Invest up to 20k in a new ISA for Property and benefit from savings.
If you have investments, such as stocks, shares, and ISAs there is a new way to benefit from the tax relief but now invest in bricks and mortar.
With inflation at 2.7% and banks paying 0.5% per year, then the chances are, you’re losing money every day in your current Cash ISA.
The Innovative Finance ISA (IFISA) lets you invest in lending platforms and receive interest tax-free. You can now transfer any existing ISA and invest up to £20,000 in the 2018/19 tax and benefit from tax savings on any returns you receive.
Investing through IFISAs is a great way of diversifying your investment strategy and taking advantage of tax incentives which helps you grow your capital.
EVERYTHING YOU KNOW ABOUT PROPERTY HAS CHANGED…
When it comes to investing in property, everything you know has changed.
Whereas at one time, buying property to let would allow you to generate a passive income, whilst enjoying capital appreciation and tax efficiency, in today’s market, property is not appreciating as well as it used to and, over the next few years, it is set to continue to be a subdued market.
What’s more, in today’s market, the rent generated from a buy to let property hardly even covers the mortgage, let alone providing an additional income. Tax changes are also making it harder to make a profit from buying your own property.
The introduction of new regulations has also meant that owning property is no longer sustainable unless you do it on a large scale. Legislation has very much turned against accidental landlords.
And, where property was once a great legacy to pass on to younger generations, today inheritance tax means it is better to sell the property and put it in an IHT wrapper so that your family is not left to deal with the necessary regulations.
WHAT ARE THE CURRENT OPPORTUNITIES?
Despite the points discussed above, property remains a great investment – you simply need to find the right opportunities.
In the current market, property investment opportunities lie in:
First Time Buyers – Those who graduated in 2007 have been unable to get on the property ladder. In response to this, the Government has stepped in with a Help to Buy scheme, providing up to 80% of the equity required for a property. This opens up ample opportunities.
Downsizing – As the population ages, many of them are starting to downsize and are struggling to find the right properties in the right areas.
Assisted Living – With an aging population and people living longer and longer, more and more people are turning to Assisted Living to meet their needs.
HMO/Co-Living – These specialist properties are designed to meet the needs of students and young professionals.
Private Rental Schemes – These blocks of flats owned by one landlord are popular with the younger and renting generation.
Student Accommodation – The student population is growing, increasing the demand for student accommodation close to universities and towns.
Offices – As many office buildings have been converted into residential properties, there is now a need for more office spaces.
Warehouses – With high street stores moving online, there is an increasing demand for warehouse space where stock can be stored.
INVESTMENT ACROSS THE SPECTRUM
Crowdfunding is an increasingly popular form of investment and fundraising.
The process is simple – there is a borrower who needs money and an investor who has money. A crowdfunding company then sits in the middle of the parties, acting as a broker. However, in some cases, the investor doesn’t truly understand the investment and, if anything goes wrong, is left disillusioned. Under this model, no one is looking out for the investor and it is their responsibility to carry out due diligence before making an investment.
Shojin Property Partners is the newest entrant into the property crowdfunding space. The London based, FCA regulated crowdfunding platform was officially opened on 27th September 2017.
Shojin has created a new type of Crowdfunding – Property Crowdfunding 2.0. Working on the same principle as traditional Crowdfunding, they connect a borrower who needs funding and the property investor who is looking to invest their money but instead of just connecting with both parties with partners with each they align their interests with both parties.
On the Shojin platform, investors may invest as little as £5,000 alongside other investors and achieve returns similar to those of a developer.
When a borrower approaches them with a project, they run all of the numbers and due diligence. If they are happy with the project, they put their own money into the project and put in onto their platform for investors. Under this model, they oversee the entire project, ensuring it stays on track. They don’t take any fees upfront but rather co-invest their own money into the project, only taking it out once the project has been successfully delivered.
Crowdfunding offers a number of opportunities when it comes to property investment, including:
Minimal upfront investment
Access to more opportunities
Diversify your risk
Hands off investment
Income and capital growth opportunities
Tax efficient investment
Create a diverse portfolio
THE TYPES OF INVESTMENT ACROSS THE PROPERTY SPECTRUM
There are a wide variety of property investments available, each offering different levels of risk and return. Traditional buy to let investment, for example is relatively low risk but offers low returns.
Crowdfunding allows you to invest in products that provide income or capital growth and, as your life cycle changes, you can move across the risk profile in line with your needs.
Key investments include:
After reading this article you can see that what has worked in the past does not necessarily work anymore going forward. Property investors need to stay ahead of the curb if they want to make money in property. In this ever-changing market, it is important that you know when you put your money to ensure good returns. To find out how Shojin Property Partners can help you, download their investment brochure here.