Property investors are keeping their money on home shores more regularly, according to Assetz, with holiday homes the new investment fad.
The firm, a group of property investment companies sourcing UK and overseas opportunities, says investors are becoming less interested in chasing high yields across Europe and the rest of the world.
Instead, Assetz says, UK investors are benefiting from capital growth of around 10%, low purchasing costs, small deposits, and a “straightforward” legal system.
According to Assetz, holiday lets in the UK can earn as much in a week as the property would achieve in a month if let on a normal buy-to-let contract.
Professionally-run holiday homes in the UK also benefit from tax advantages. As long as they are available for let for 140 days per year, let for at least 70 of those and are fully furnished, they are classed as a commercial business asset.
Therefore, they attract business asset ‘taper-relief’, meaning an upper-rate taxpayer pays capital gains of just 10% on the uplift in value after a two-year period rather than 40%.
This compares to buy-to-let investors who benefit only from a capital gains tax reduction to 24% after a ten-year period.
Stuart Law, managing director of Assetz, says: “Investors are searching for higher yields in order to continue profiting from their investments in light of rising interest rates, and UK holiday homes present a great opportunity.
“If the investor employs a holiday company to manage the property, they will benefit from a hands-off investment as they will not have to worry about cleaners and maintenance, and with gross yields of 10% they will still make a profit.
“What’s more, they can use the property during the void periods for their own holidays – a nice bonus.”
£1bn business since inception
Considered doing so in 2015
Client communication considerations
Aviva: ‘We are sorry’
FOI from Professional Adviser