Here we are at the end of the week with another email of news and views…
The prime residential property market in Scotland – defined as £400,000+ – is a strong and growing market according to a new report by Savills. Overall, sales activity is up 19 per cent over the year with Edinburgh, Glasgow and Aberdeen leading the way. And prices? Over to Savills.
‘Overall, prime values across Scotland have remained subdued over the last few years due to the high levels of stock available on the market. However, supply in some hotspots in Edinburgh and Glasgow has been falling, resulting in a gentle rise in prices.’
‘The rebalancing of supply and demand has started in the country locations of Scotland, with prices during the last quarter of 2013 beginning to stabilise. We expect a gentle rise in Scottish prime values during 2014 when supply and demand eventually rebalance.’ More to come? You tell us.
We are having another one of our informal get-togethers for property investors looking at Brazil and, in particular, the social housing units offering 15 per cent. The meet is at the Holiday Inn just off the M25 at Brentwood in Essex on Saturday 22 March; I am taking a show of hands now so we can see how many want to come and how many are existing and how many are would-be investors. We can maybe offer two sessions. Let me know?
Those of you at the Investing In 20-14 seminar will recall that I talked on and on for so long that Jeannie only had 10 minutes to speak. I then did much the same when it came to the article on page 8 of this month’s newsletter. Jeannie was cut short. So, let’s put that right now. We are talking due diligence. Over to Jeanie who states, these are the questions we should ask ourselves:
How well do I know this sector – do I know what I’m doing? If not, this isn’t a reason not to proceed but proceed being aware of this and be prepared to do the extra work needed to learn about the investment, the structure and the legal framework etc.
The opposite could also be said to be true sometimes – Do I know this type of investment so well that I assume too much knowledge. Perhaps I am not being through and careful enough?
Have I got experience of similar products/structures/investments? If so, what knowledge/ experience can I transfer in to inform this decision?
Am I comfortable with this project – and this level of investment?
What attracts me to this project? Consider what makes you like a particular project as opposed to the numerous others you’ll no doubt have been sent! Emotions can play a bigger part than we acknowledge in decision making. Perhaps a friend had a ‘bad experience’ in Spain? Possibly, you ‘love’ Florida and would like a property there? You need to be aware of these factors when weighing up whether to invest.
Is it best to stay with what you know and are comfortable with – or might there be equally good and better decisions to be made in new areas of investment?
After you have completed your questions and research and fact finding to your satisfaction, there is an argument for just getting on with it – make your decision and act on it. We have seen too many investors get caught up with the quest for the perfect due diligence – it does not exist. Due diligence is not the holy grail it is sometimes made out to be. It’s a process and an assessment based on the best and most accurate information available at the time. DD should help and not hinder you in making the right investment decision.
We note that Richard Way at The Overseas Property Guide is saying that more and more ex-pats are moving their UK pensions overseas through QROPS schemes. Here’s what he says, ‘A reason for this shift is a growing public perception that pension pots in the UK increasingly are becoming easy targets for stealthy – and not-so-stealthy – government raids, so there are fewer incentives to keep retirement funds in the UK.’
‘As well as QROPS, expats can in some circumstances benefit from SIPPS, which also offer tax and flexibility benefits compared with other types of pension or annuities. Anyone retiring abroad should note the financial landscape has changed in recent years and what once seemed the done thing as regards pensions might not be the best option for them now. Speaking to a financial advisor that specialises in helping expats before leaving the UK could result in a much more comfortable retirement than initially expected.’ That sounds like good advice.
(Yes, I know it’s Oracle really, but bear with me). Picking up on Jeannie’s questions, I had a coffee with former IFA Dave Orrey the other day (Orrey not Orey…see where I’m going?) He told me of the days when he was an IFA and had a client who spent many years saving up money to invest in property.
This fellow waited and waited for ‘the right time’. It was always soon, but never quite yet. He lived at home with Mum and saved £40,000. Eventually, he bought a property and the £40,000 cash he put in became his equity. Sad thing is, if he’d bought in a little earlier, when Dave had suggested, he’d have had more than that in built-up equity by the time he eventually bought in. So, the moral of the story is ‘get on with it.’
LSL Property Services offers a view on the rental market right now. ‘Even with an increase in rental properties available, demand in the private rental sector continues to outstrip supply in many areas, especially in London. In the months ahead, this will enable landlords to push up their rental prices when letting their properties, putting a stop to inflation from eating into their rental income. This is underlined by the fact that covering the cost of inflation is the main reason cited by landlords expecting to increase rents.’
‘Rising rents are delivering strong yields to investors, making a powerful case for the rental market for those in search of a beneficial, long-term investment. However, buy-to-let investment is not a license to print money and it requires the same level of research and planning as any other business investment. The success of the investment depends on the property remaining occupied to deliver ongoing rental income. Before taking the plunge it is important to be aware of factors such as the location of the property, which can determine the level of tenant demand. For instance, those nearest to transport hubs will usually be of the highest demand, especially in larger cities like London.’ More to come.