Is it Better to Invest in Property or Shares For UAE Investors?

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Understandably, investors in the UAE want to get the most value for their money. When considering making an investment, we often get asked, is it better to invest in property or shares?

It is important to remember there is no right or wrong answer. The question you should ask yourself is, “What am I looking to achieve in the medium to long term and what path should I take to minimise my risk vs reward.”

As with all investments, timing will be one of the leading contributing factors to the success of your investment. We explore why property remains the leading asset class for investors worldwide.

The UK Property Market is Strong & Historically Easier to Predictinvoice-report

The UK has one of the most stable property markets in the world. Historically speaking, house prices in the country double between every 10-15 years, which can make property an excellent source for capital growth.

Investors based in the UAE can also capitalise on the weak pound rate in the UK to get more value from their dirhams. When the pound rate drops, other currencies — such as the UAE’s — tend to increase. In turn, the amount of capital growth a Dubai-based investor could see from UK property, may be even greater than first thought once the currency exchange rate has been calculated. 

Experts predict that house price growth in the UK will increase on average by 15% by the year 2024. If you want to know where the best places to invest in property are in the UK, areas such as Manchester, the Midlands and Wales are on track to far surpass the national average growth rate. As a prime example of this, capital growth in Manchester is predicted to reach as high as 24%. Check out our article, Why Invest in UK Property, for more details.

While there are no guarantees with any investment, it’s much easier to predict how the property market will look over a 10 year period than it is to predict the stock market. For example, no one could have guessed that shares in toilet paper, hand sanitiser or PPE would increase by significant margins if they were looking for an investment back in 2019.

Shares can be volatile, and there are many factors that can influence your returns. Politics, the economy and even a global pandemic could mean you make a great return or potentially lose your full investment. When looking at long term financial security, property has continued to be a firm investment option.

Leveragingusing-leveraging-to-buy-property

One of the main reasons why investors choose property over shares is that you don’t have to use all your cash reserves to get started. Property investors in Dubai and across the world can use leveraging in the form of a mortgage to build a strong and stable portfolio, enhancing returns on investment. 

By using a mortgage to invest, you greatly reduce the amount of money you need upfront to make a purchase, investing as little as 25% of the purchase price. 

Historically, over a medium to long term period, the value of your property can increase, which can lead to excellent returns on investment when you decide to sell. And while the capital growth steadily rises, you will be generating consistent returns through rental income.

Property Gives You Greater Controluk-property-on-waterfront

When asked is it better to invest in property or shares, we remind our clients that you are in full control of your property. When you purchase a property, you can manage it in the way you want to, as long as you keep up with your mortgage payments and adhere to the local council guidelines.

This means you have more opportunities to increase the value of your investment. You may decide to refurbish your property and make changes to floor plans, bringing the property additional value to potential new tenants and buyers. You are in full control.

With shares, you will have limited if any control of  how a business is run, unless you are the majority shareholder. This means if you don’t agree with the way a company conducts business, you will not be able to make any changes. 

Property is a Physical Assetproperty-is-stable-asset

As a physical asset, property will always have a value, regardless of any market changes. Unlike shares, this level of security is not there. Businesses can fail and shareholders can lose all the capital they have invested. Shares are a more speculative investment option, so you have to have full confidence & knowledge before making a purchase, and you will need an extremely good exit plan in place to ensure you don’t take too much of a loss.

Is it Better to Invest in Property or Shares for Dubai Investors?

When investing in shares and property, there are pros and cons. Historically though, the UK property market has proven to be a stable investment option for many. History shows the property market has doubled every 10 to 15 years, making it one of the better long-term investment choices.

At Treo Investments, we provide our clients with a full 360 bespoke service. This means we will take the time to understand what goals you want to achieve as an investor, we’ll find you the right property, cover every step of the purchase process, through to renting and managing the property. 

To learn more about the benefits of investing in property over shares, or for information on any of our latest opportunities, get in contact with the Treo Investments team today.

Should You Be Buying a Property Through a Limited Company?

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Many investors choose to purchase property in the UK, and it’s easy to see why. There is a huge demand for high quality accommodation as the country struggles to construct enough property to satisfy the market. In 2019 alone, 300,000 new properties were needed, but there was a nationwide shortfall of 130,000.

While property investments can create a healthy stream of revenue, buying a property through a limited company can potentially help maximise your returns even further. Before 2017, the amount of investors purchasing through a company was minimal, but changes to tax relief has seen the numbers grow substantially.

Working with our friends at GetGround, we have put together this comprehensive article, explaining how purchasing through a limited company will benefit you, how the process works, and the key considerations you need to keep in mind.

What are the Benefits of Buying a Property Through a Limited Company?listing-benefits-of-buying-property-through-limited-company

Tax

One of main advantages you’ll see is the significant tax benefits. If you own a property in your own name, the profit you make will be considered personal earnings, and you will have to pay Income tax.

However, properties in the name of a limited company will be subject to Corporation tax instead. The rate of Corporation tax is approximately half of the higher rate of Income tax, meaning there is potential to make a significant saving.

If the property is held by a company, you will also be able to deduct the mortgage interest from your tax bill, which can save you a large sum of money.

Property held in a limited company name also gives you more options when planning for Inheritance tax, as giving away shares in your company allows for greater flexibility.

For example, there is a mechanic where you can gift value to another individual, and Inheritance tax liability will reduce to 0% after seven years. With shares, you can:

  • Slowly gift value away every year
  • Provide financial gifts to beneficiaries while still retaining control of the asset

Limited Personal Liability

All companies set up by GetGround are private limited companies incorporated in England and Wales. This means your business assets and your personal assets are separate from one another. As such, you won’t be subject to personal liability if your property investments run into difficulties.

Your personal assets will be protected by the “corporate veil,” meaning debts, losses and legal claims are the responsibility of the company and not the individual shareholders.

Easily Buy and Sell With Others

GetGround can set up your limited company to allow a maximum of eight shareholders, making it simple to gift value to multiple beneficiaries.

You can also buy and sell shares without having to pay Stamp Duty Land Tax and without having to instruct conveyancing solicitors. With GetGround’s services, you can transfer shares to your beneficiaries in one day. By comparison, property conveyancing normally takes between six and eight weeks.

If you decide to sell your property, you will also benefit from lower Capital Gains tax. Through personal ownership, you would have to pay either 18% or 28% subject to the sale price. With a limited company, you would pay either 10% or 20% for the sale of the shares.

How Does Buying Property Through a Limited Company Work?working-out-how-buying-property-through-ltd-company-works

It’s a misconception that buying a property through a limited company is time-consuming. The whole process can be finished in as little as 30 minutes, and everything can be done online. Here are the steps involved:

  1. You choose a buy-to-let property to purchase, and GetGround will set up a company for you to purchase it with. This will include providing all the legal documents and structuring the company with the optimal mix of share capital and owner loans.
  2. You will receive your company bank account with a UK sort code and account number. You should use this account to purchase the property, and to handle rental income and ongoing expenses.
  3. That’s all you need to do. The bookkeeping, accounting, tax returns, registered office and secretarial services will all be handled for you.

While it is possible to purchase a property through a limited company at the post-exchange and completion stages, it does become more of a challenge due to additional legal fees, Stamp Duty Land Tax and Capital Gains Tax. This is why GetGround recommends making your purchase through a company at the pre-exchange stage.

Is Buying a Property Through a Limited Company Right For Me?is-buying-property-through-limited-company-right-for-me

While there are plenty of benefits to purchasing a property through a limited company, it’s not for everyone, and you should talk through your options with a professional advisor, such as Treo Investments, first.

There is the matter of how you retrieve your money. If you want to reinvest your profits to add to your portfolio, you may find buying through a limited company is the right option.

However, if you prefer to buy and sell your properties as a trader as opposed to being an investor, you could end up paying more Capital Gains Tax from each property you sell.

Helping You Make the Right Decision

We pride ourselves on transparency, and we will always make sure that buying a property through a limited company is right for you before we suggest it.

We understand there are many variables that need to be taken into consideration first, so if you have any questions, you can contact the Treo Investments team for honest and impartial advice.

For more details on buying a property through a limited company, make sure to visit GetGround’s Learning Center where you will find FAQs, downloadable guides and educational videos.

 

*Treo Investments would like to thank our friends at GetGround for their assistance with this article. GetGround specialise in setting up and running UK Limited companies to purchase UK buy-to-let properties. All companies have high quality legal documents, and are designed to be tax efficient and work with mortgage lenders.

How to Find Off Market Properties For Sale

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Off market properties can create unique investment opportunities. This is because the property up for sale can’t be purchased in the traditional fashion. It won’t be showcased on property portals and high-street agents won’t be advertising through their normal marketing channels. As the sale of the property is kept out of public knowledge, it can be difficult sourcing off market deals.

This is exactly what the seller of the property wants. The seller will have their own reasons for taking their property off market, such as wanting a discreet quick sale or simply looking to save money on selling costs. Depending on your needs as an investor, this can work either to your advantage or against it. You may secure a new property for your portfolio in a short space of time, however it is worth keeping in mind, these off market deals can also command a premium price.

It’s worth considering off market properties, as there are some great deals to be done, however it is also important to evaluate if you’re paying the right price for the property. Finding off market properties for sale can be difficult, but this article will highlight the best way to source these unique opportunities.

Build Your Networkman-and-two-women-at-networking-event

In order to find the best off market deals, a strong network is essential. As these opportunities are kept quiet, you need to have reliable connections within the industry. These may include:

  • Investment agents
  • Estate agents
  • Building operators
  • Property developers

These industry professionals are more likely to be kept up to date with the latest deals on the property market, and if you nurture your relationships with them, they will feel more inclined to part with their insider information.

By gaining access to this knowledge before other investors, it gives you more time to consider your options. If you decide that the investment is right for your needs, you may be able to make the first bid, which is crucial if the seller wants a quick sale.

An investment agent will be invaluable if you’re searching for a specific property. A great agent will already have the connections in place in order to find the best deals, and they proactively stay on top of the latest developments.

Do Your Researchman-on-laptop-making-notes

As with any investment, it’s important to do your research before making a commitment. When a seller decides to go down the off market route, there’s usually a specific reason why. In many cases, the seller simply doesn’t have the time to go through the traditional method, and going off market means they don’t have to schedule viewings or spend time and effort marketing the property.

However, off market property deals in many cases are completed very quickly, which can put investors in a predicament; do you complete the purchase with the small amount of information you have, or do you conduct thorough due diligence first?

Even without details on the off market property for sale, you should at least take some time to research the average rental returns in the area and the type of tenant the property is likely to attract. Regeneration projects in the area also point towards healthy growth figures, making your investment suitable for the long-term.

If you’re unfamiliar with the location, an expert investment agent will conduct due diligence for you. Their priority is to ensure you get the best deal possible, and if they can’t put together a strong case as to why you should invest, they will advise you against making a purchase.

Don’t Assume Off Market Properties Provide the Best Dealsoff-market-property-deal

Off market deals have a reputation in the UK for providing some excellent deals for investors. From our own experience, we know this isn’t necessarily the case. It is true that off market properties for sale can save investors money, but the exclusive bidding nature can actually cause the purchase price to rise.

The term “off market” makes a deal feel more prestigious than it is. If you’re sure you want to invest in a certain type of property or in a specific area of the UK, it’s worth researching the opportunities that have been made available on the open market first.

Not only are these opportunities more readily available, you can use the information the seller provides to your advantage.

It’s rare that off market deals will allow viewings, particularly if the property in question is tenanted; buying a property on the market means your agent will have a good opportunity to assess the condition first, and you will also be able to request structural reports on the property.

Off market deals can be lucrative to investors, but your agent needs to be sure nothing is wrong with the property first. If the agent’s instinct tells them something isn’t right with the deal, you should walk away and continue your search.

Finding the Best Off Market Properties

As with all investments, there are two main elements you need to have in place before considering an off market property:

  1. An experienced property agent
  2. Extensive research

Without an agent who will support you through the entire process, you can’t be sure you’re getting the best deal for you. Without the right knowledge, you could miss out on better opportunities.

At Treo Investments, we pride ourselves on being experts in the UK property market. We specialise in finding our clients the right investments for them and we will always look to provide an honest opinion, if we feel the opportunity is not a right match.

For more information on how we can help you, speak to a member of our team today.

What to Look For in Property Investment Agents

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Selecting the right property investment agent from day one can be an invaluable resource for any investor. They act as your eyes and ears to ensure you don’t miss out on the latest opportunities, and they do the hard work behind the scenes so you don’t have to.

There are several key traits you should look for when working with an agent. Many agents mean well and carry out their roles to the best of their ability, but when it comes to investing your hard earned money, we believe a hard working agent is not enough. Your agent should have expert knowledge of the market combined with certain skills and characteristics, which we will highlight in this article.

Expertise & Knowledgeproperty-agent-explaining-investment

The major difference between a good property investment agent and great one will be their ability not just to put an opportunity in front of you, but to have the knowledge to explain why you should consider the investment for your portfolio.

A prime example of this is having good knowledge of the area where the property is located. A property agent should be able to present a strong investment case including:

  • local regeneration projects which will benefit the property for years to come
  • rental figures
  • comparable property prices
  • infrastructure
  • tenant profiles
  • growth figures
  • an exit strategy 

The answer to these questions can determine the success of any property purchase. If an agent is able to provide you with the answers, this is always a positive sign that they have put in the extra effort with their due diligence. 

Honesty & Transparencyagent-on-the-phone-with-earphones

A major factor when choosing your agent is identifying if they have your best interests at heart. The opportunity presented to you has to work in your best interests, and no agent should try to persuade you into making a deal you’re not 100% comfortable with. 

Taking the time to discuss your investment goals should be the number one priority. An experienced agent will listen carefully to your needs, so they can identify the right path to go down. By having this open discussion first, you are unlikely to be offered deals that do not match your requirements.

If property investment agents immediately starts discussing products and prices without taking this first step, they’re clearly putting their own welfare over yours. In some cases, you may have an investment in mind that could turn out to be unsuitable for you in the long-term. Instead of proceeding with the deal, a credible consultant will highlight the potential pitfalls. They may even be able to find you a similar yet more stable investment opportunity, ensuring your finances are better cared for.

Track Recordinvestment-discussion

When you decide to work with property investment agents, it is important to consider the experience they have. Asking them about their experience and track record, might sound a little intrusive, but this information will help set them apart from the rest. You want to know when you make an investment, you are in safe hands. Many agents can sell you a property; that’s the easy part, but finding an agent who will stay around and provide you with extra customer service is not as easy to find.  

Agents should be able to confidently talk about previous developments they have sold, and highlight how they helped clients in the past. If they have done a good job, they should already have a number of repeat buyers, who will be happy to share testimonials. If they are unable to provide you with the basics , then you must question if they are a right match for you. 

If you’re considering investing, you want some reassurance on who you are working with. Knowledge and customer service can only go so far, and it’s the experience factor the agent brings to the table that ensures you invest in the most profitable properties.

Quality Connectionsproperty-agents-with-client

An agent’s connection and network goes a long way in this industry. If an agent is well connected, they are more likely to be up to date with the latest developments in the market, sometimes even before they come to market. Having the inside knowledge before the rest, can put you ahead and in many cases giving you the opportunity to secure the best options.

It is also important, a property investment agent is proactive and not reactive. They should be able to give you up-to-date industry news, knowing where the latest emerging buy to let hotspots are and any market changes.  

Go with your instincts; they are normally right. If you feel comfortable and confident your agent will go the extra mile, then there is no reason not to work together.

Where to Find the Best Property Investment Agents

If you are considering making your first property investment in the UK or Dubai property market, Treo Investments is a highly trained team of experienced property professionals. We have a consultative approach to the market and have established a market leading property service, covering every part of the purchase process.   

With our experienced team, we have access to some of the very best property deals, creating property portfolios for clients around the world.  

Speak to a member of the Treo Investments team today to start your new property venture. We specialise in helping international investors find success in the UK and Dubai property market, and we have many exciting opportunities available to discuss with you.

For more information on the UK property market, make sure to read the articles available now on the Treo Investments news page.