New Financial Year: Time To Spring Clean Your Investments
If 2020 has shown us anything it is that property remains resilient as an investment asset, having perhaps taken many of us by surprise by not just withstanding the pandemic, but, on the whole, positively thriving. But it has also shown us how easily the market can shift depending on various economic and social factors. And that, according to leading UK property developer SevenCapital, is why it might be time to give your investments a spring clean.
This time of year, we often go through the traditional ritual of giving our homes a thorough once over. However, with this period also comes a new financial year and given how much can happen in just 12 months – 2020 being a prime example – it means an ideal time to reassess and, if needs be, reset your finances and investments.
Property taxes – key considerations
Understanding your current financial position and future implications based on the last 12 months at this point in the year are paramount - notably the various taxes that you are subjected to as a landlord:
How have your returns fared after tax? You may recently have completed your annual tax returns so if you didn’t before, you should have a good idea now on what position you are in.
Can you maintain your investment, but maybe through a different vehicle – for example, if you invest as an individual, would it now work better for you to invest through a limited company, or vice versa?
Are you maximising returns and can you free up any equity to allow you to make a new investment, to boost your earnings more over time?
These are all key questions that property investors should be asking themselves on a regular yearly basis to make sure that their investments are delivering the optimum returns.
New year, new plan
Those who perhaps hadn’t previously been able to invest but who now - maybe having found themselves amongst the number of ‘lockdown savers’ - have built up enough for a second home or new investment, might want to start thinking about their investment planning. New financial year; new financial plan!
House prices and rents
As a landlord it’s always going to be important to keep abreast of what the market is doing as this is what will dictate your decision to buy and sell a property, along with the success of your returns. Over the past year, for example, those who have invested in emerging markets such as the London commuter belt, might have seen a surprising uplift in their property’s value and/or tenant demand due to their more rural setting and better offering than the Capital in terms of indoor and outdoor space – the three key drivers for home movers during the pandemic.
On the other hand, those who typically invested in the ‘proven’ London market might have found themselves in a less favourable situation, due to the trend for moving out that was prompted by the impact of lockdown periods. If this is the case, then it’s worth looking at whether this has or will affect your finances, however, if the plan is to hold the property over a long period of time and you can afford to weather a bit of uncertainty then it’s certainly worth holding on – and remembering the cyclical patterns that the property market tends to follow. It’s worth noting too that the likes of Savills and JLL have both recently revised their price forecasts to be far rosier than previously expected, in line with the positive vaccine rollout and hopeful emergence from lockdown.
Whilst reviewing, it’s not necessarily to say there is going to be a make or break decision you have to make, but rather a question of how and where you put your money next based on your learnings of the not too distant past.
Look at your finances, including your cash reserves, which are important for covering maintenance costs and void periods in a buy to let. Analyse your current exposure to and appetite for risk. Most importantly, look to the future and where you want to be – does your current investment situation fit in with that? If it does, great, if it doesn’t, what can you do about it?
*Article intended as a guide. Always seeks professional advice from a registered financial advisor.
For more information on SevenCapital visit www.sevencapital.com.
Connect with us: Twitter: @sevencapital Facebook: SevenCapitalPlc LinkedIn: SevenCapital
For further information contact Sarah Morris at SevenCapital:
E: sarah.morris@sevencapital.com
T: 0121 233 4433
SevenCapital is one of the largest privately owned real estate investment and development companies in the UK, operating across residential, commercial and hospitality sectors.
Since launch, the group has built an exciting portfolio of projects with a value in excess of £2 billion, spanning more than 7 million square feet and employing more than 130 dedicated property and construction professionals.
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