IFAs expect rise in UK residential property investments in 2013, says Castle Trust
More than a third (34 per cent) of UK financial advisers are expecting increased interest in UK residential property investment next year, research by housing investment and shared equity mortgage provider Castle Trust shows.
The forecast surge in 2013 builds on growth in 2012 with a quarter of IFAs reporting a rise in clients’ interest in investing in UK residential property other than their home in the past 12 months.
But access to residential property investment in the UK is currently typically only available through buy-to-let with the average maximum loan-to-value available on buy-to-let mortgages at around 75 per cent and average minimum rental cover at 125 per cent over the past three years.
Castle Trust’s investment products enable investors to access UK residential property from GBP1,000 with its Income and Growth HouSAs which outperform the Halifax House Price Index for terms of three, five or 10 years.
Sean Oldfield, chief executive officer, Castle Trust, says: “Residential property has historically been a notoriously inaccessible asset class for investors. Most exposure has come through buy-to-let but investors are increasingly aware of the high risk adjusted returns of a housing index compared to other asset classes, including equities, and the benefits this brings to diversified portfolios.
“Investors should view housing as a medium to long-term commitment and fixed-term investments are ideal as they encourage a longer-term perspective. Even buy-to-let investors need to have a three to 10 year outlook to cover the costs of buying and selling. But the returns on a buy-to-let investment depend not only on the sale price but also on the occupancy rate and the cost of maintenance which on average cost an investor GBP1,532 a year, according to estate agents Northwood.”
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