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Exciting times to be investing in UK property

There have been a number of tax changes since 2013  that have effected the UK property market. The negative forecasts that have followed in the media have had an impact on people’s  sentiments about the market and ultimately slowed activity.

Infact there is a lot of good news for  medium & long term investors.

None of the changes have had a negative effect on serious investment from overseas and  local holding companies with property assets.

Overseas institutional investors pay no CGT; rental investors and bonified developers who buy  property in company names still pay the lower stamp duty  that individuals pay; companies that hold rental investments do not pay the annual property tax.

Furthermore if you buy more than 6 dwellings in a single transaction or there is a commercial element to what you buy – say a block of flats with a commercial unit on the ground floor – then the SDLT rate is not more than 4%.

You may also be able to take advantage of “multiple dwellings relief” if you buy several residential units in one transaction – this essentially operates so that each purchase is taxed separately (so that the higher rates for linked transactions are not brought into play); if the relief does not produce a more favorable result than would otherwise apply then you need not claim it.

The government is very keen to attract more institutional investors in the UK to provide good quality, well managed and long term options for rent.  Currently only 1 percent of the rental stock is owned by institutions, with 67 percent owned by individual investors who have between 1-4 properties to rent.

There is also a shortage of housing. To address this the government launched the “Build to Rent fund”  in 2012, this is a fully recoverable investment where the government shares risk or bridges finance to help schemes to build, manage and let.

There is a process of applying to the fund based on set criteria, then a shortlist of applications are made and funds allocated to the ones that are chosen, bidding is open until all the funds have been allocated.

Most recently in February 2015 , Essential Living received £51.6m to build 290 homes around Greater London and Renaker received £55m to build 779 new homes in and around Manchester.

The UK has enormous global appeal for many reasons such as;  its educational system, health, financial sector, legal system and favorable tax regimes for investment.

These are all reasons that make the UK property market  a  very appealing and unique asset class.

The questions is not – “to invest or not to invest” – the question is, how to invest.

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