The Ultimate Investment

UK property shortage: What can we learn from other countries?

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The property crisis isn’t exclusively a UK phenomenon, but other countries are dealing with it in different ways. We take a look at what the UK can learn from these solutions.

The UK isn’t the only country facing a housing shortage. Here we have a look at the solutions other countries have found to fix the same problem.

Across the globe from Canada to Australia and even closer to home in Denmark, France and Switzerland, governments are coming up with schemes to try and ease the housing squeeze, from taxing empty properties, to blocking foreign investment.

Vancouver’s ‘Empty Homes’ tax

The Canadian city of Vancouver will be imposing a tax on empty properties in a bid to tackle its housing problem and enable more people to find rental properties in the city.

The ‘Empty Homes Tax’ was introduced in January and will be levied on homes that aren’t main residences and sit empty for over six months of the year.

[Read more: What’s really going on in the UK property market]

When it comes to the nuts and bolts of how the scheme works; it means every residential property owner has to make a ‘Property Status Declaration’ each year.

Homes that are then deemed to be ‘empty’ will be subject to a 1% tax on the property value.  Exceptions include properties that are undergoing renovations or those with rental restrictions.

Revenue generated from this tax will then be invested in affordable housing initiatives.  However, the scheme is very much in its infancy as homeowners have to wait until December for instructions on how to make their ‘property status declaration’ for this year.

And closer to home, Paris has recently increased the annual surcharge for owners who leave properties sitting empty, so could schemes like this work over here.

Buying agent and TV property expert Henry Pryor argues that we’ve already got something similar in place.

“We already have penalties for people owning unoccupied homes in this country as they pay 50% more council tax if property is unoccupied”.

This ‘Empty Homes Premium’ in England was introduced back in April 2013 for owners of properties left empty for two or more years; however, critics of the scheme say it can be hard to enforce.

Australia is hiking up Stamp Duty

In Australia, a raft of measures to ease the property situation has been introduced including a Stamp Duty surcharge for foreign investors along with an empty homes tax.

The state of New South Wales, which includes Sydney, introduced a ‘Foreign Investor Surcharge Duty, (or Stamp Duty surcharge), of an additional 4% for foreign buyers last year which has since doubled to 8% on 1 July.

And the state of Victoria, which includes Melbourne, has introduced a 1% tax multiplied by the capital improved value of the property on homes that have been empty for six months which will take effect from January.

Foreign investors buying up chunks of property, which can then sit empty for months on end, is not an isolated problem.  A political think tank, the Bow Group, warned back in 2015 that unless things change, Britain could be building new homes forever without making a dent in the shortage of homes for residents, because ‘investment buying’ would just keep on happening.

However, property expert Henry Pryor says restricting ownership doesn’t sit well with him.

“I’m not a fan of rationing homes; if someone has enough money to persuade someone else to sell, then why not”.

And rather than, “ripping off ideas”, Pryor says he says he’d like to see our government “provide examples to other parts of the world”, citing a “removal of the Capital Gains Tax exemption on main principle residences and Stamp Duty abolished on the back of it”.

[Read more: 3 important things to consider before investing in holiday lets]

Denmark and Switzerland restrict foreign investment

Both Denmark and Switzerland impose restrictions on foreign buyers.

In Denmark, the basic rule is that anyone from outside the EU must have lived in the country for five years or more or need to get permission from the Danish Ministry of Justice before buying.

And with Switzerland, non-residents can only buy residential property in certain areas; which excludes cities including Geneva, Basel and Zurich as these areas are for primary residences; not holiday homes.

However penalising foreign investors may not work in the UK according to former Royal Institution of Chartered Surveyors (RICS) Residential Chair Jeremy Leaf.

He says many new residential developments in the UK actually rely on ‘financial underpinning’ from overseas cash buyers for long-term projects.

“If a developer markets the idea to the Far East, people will come forward to buy ‘off plan’ and they may buy say twenty apartments as a form of ‘forward funding”.   He points out that by contrast; if you’re buying with a mortgage offer, this is usually only valid for no more than three to six months”.

But treading the line between encouraging foreign investment and knowing when to stop can be a fine balancing act according to Mr. Leaf.

“Most developers don’t want to sell more than 20-25% of properties this way to foreign investors as they may have to offer a discount in order to get the much-needed funding”.

Read more on… HomeBT

Does crowdfunding really offer attractive returns for investors?

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Research shows that investors are putting more money than ever into crowdfunded businesses. But does the sector really offer attractive returns, asks Ben Lobel

If a business needs finance to expand, improve facilities or purchase new equipment, it can either seek to borrow money or ask for capital investment in return for equity, i.e. shares.

But while sources of equity finance used to be restricted to the likes of angel investors and venture capital trusts, today equity crowdfunding operators such as Crowdcube, Seedrs and Angels Den have emerged to enable businesses to raise money online from large numbers of individuals, each making relatively small investments in the hope of scoring a healthy return in the event of an IPO, merger or exit.

As an investor, the process is usually straightforward. Often it’s as simple as signing up to a website, browsing the video and written pitches available, and then choosing what to invest in and how much. Once the legal documentation is completed, you will become a shareholder in that business, be sent a share certificate and appear on the business’s share register at Companies House.

It’s a formula that is proving popular. Today, there are 235 live crowdfunding platforms in the UK, according to data from finance analyst TAB, and investors’ appetite for crowdfunding businesses has grown considerably since 2015, statistics from Businessagent.com reveal. So far in 2017, the average monthly cash injection from all investors across all equity crowdfunding platforms is £13.5 million, compared with £7.4 million in 2015, with a monthly high of 11,202 investors contributing to 93 projects in May this year.

Jon Medved, CEO of crowdfunding platform OurCrowd, says the advent of such organisations has disrupted the way that start-up companies are funded, democratising both sides of the marketplace, meaning investors and entrepreneurs. ‘By opening up opportunities to investors from around the world, the phenomenon is breaking down the geographical barriers that plague many start-ups, particularly those in areas where VC funding is not plentiful,’ Medved says.

For businesses, crowdfunding can represent a welcome source of free publicity in addition to funds. But to what extent does it present an opportunity for investors in 2017?

Read more on...  What Investment

Airbnb boosts property values in the UK as they are ‘ideal’ for renting out

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HOMES ideal for renting out via the website Airbnb are fetching premiums of tens of thousands of pounds when they come up for sale.

The increasing popularity of the website could also threaten affordable accommodation for ordinary renters.

An estate agent in Tunbridge Wells in Kent has seen homes in desirable areas selling for £30,000 more because of the holiday let potential, which offers landlords more than £100 a week above conventional renting.

As many as 135,000 properties across England and Wales are now owned by so-called Airbnb landlords, according to a survey by the Residential Landlords Association.

It revealed a 57 per cent increase in the number of landlords who intend to bypass conventional letting agencies in favour of online sites such as Airbnb as a business model.

Seven per cent of all property owners who let now intend to use Airbnb and similar companies.

Fifty-five per cent said it was because they could get much higher rental yields through Airbnb, 36 per cent said it was because of Government changes to mortgage interest relief and 33 per cent said it was because of increasing Government regulation, such as buy-to-let clampdowns.

Read more on… Express

Introducing

Returning British expats face property black hole

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British expatriates considering returning home in the face of uncertainty over their status as EU residents following Brexit could be in for a nasty shock. Research by Retirement Advantage Equity Release shows that since 2010, the combination of sustained price rises in the UK housing market and falls in many popular EU destinations could leave them facing a substantial shortfall if they come back to the UK.

The UK has seen average real house prices rise by 12 per cent since 2010, according to OECD data; in contrast, prices in France have fallen by 3.8 per cent on average, and in Portugal they’re down 6 per cent, while in Italy they have lost 20 per cent.

Read more on Money Observer

Government considers new investment fund to support start-ups post-Brexit

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The government is considering launching a new investment fund to support the growth of start-ups in the UK, fearing a loss in access to funds from the European Investment Fund (EIF) after its exit from the European Union.

EIF-backed funds have participated in around £1 billion per year of private equity investment into UK firms between 2014  and 2016.

According to a new consultation released by the Treasury, UK start-ups struggle to reach their potential in the latter stages of investment and growth, falling well short of what is seen in the US and China. The government wants to set up a National Investment Fund to help more young, innovative firms in the UK reach Unicorn status (valued at over $1 billion).

Read more on Diginomica

Buyers flocking to coastal markets

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COASTAL property markets have taken off with new figures revealing a surge in auctions and sales numbers.

Auction activity on the Gold Coast was booming, according to the latest CoreLogic RP Data Quarterly Auction Market Review, with more homes going under the hammer there than in any other non-capital city market in the country.

At the same time the Sunshine Coast was revealed as the top region in Queensland for property sales with predictions it will lead to future price growth.

The latest Hotspotting Price Predictor report found the Sunshine Coast had more suburbs than any other region in the state where sales numbers were rising steadily.

 

Read more on Weekly Times Now

Making the most of early equity investment opportunities

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By Matthew Cushen

Equity investing in early stage start-up businesses is becoming an increasingly common component of a diversified portfolio.  Part of the attraction of funding start-ups continues to be a highly attractive tax regime that encourages investment into seed enterprises – with generous tax reliefs that mitigate much of the risk of investing in a high-risk asset class.

In their 2017 manifesto, the Tories described two incentives for investors as ‘world leading’: “We will help innovators and start-ups, by encouraging early stage investment and considering further incentives under our world-leading Enterprise Investment Scheme and Seed Enterprise Investment Scheme.” Page 77, Conservative Party 2017 Manifesto.

The Enterprise Investment Scheme (EIS) was set up in 1994 and continued to be supported through Labour governments. It has since been made more attractive by the Conservative government, and has established itself as a part of tax legislation that neither of the main parties would be likely to compromise. The Seed Enterprise Investment Scheme (SEIS), established in 2012, is an extension of EIS and offers even more generous reliefs.

Read more on Dof Online

UK housing market shrugs off concerns of Brexit slowdown

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The UK housing market is shrugging off concerns in the wider economy following the Brexit vote, compounding problems for many first-time buyers still wrestling with the strongest year-on-year price rises in the market.

There are more buyers and sellers in the wider market compared with the period around the referendum a year ago, with the number of sales agreed up by 4.6% in June 2017 compared with June 2016, the latest survey by property website Rightmove found.

The company added that prospective buyers are “seeing a lot of sold boards on properties they would like to buy themselves” – with over 45% of estate agents’ property stock now being sold subject to contract.

Read more The Guardian