IMB Blog

Alternative Property Investment Market

The Covid-19 pandemic has changed the UK property market by a significant margin. The traditional BTL investments are being challenged by alternative property investors. If you are planning a property investment in the UK, it would be a good time to consider the diversification in the alternative property investment market.

Information from the HM revenue indicates that property investments in the UK are booming due to the rise of alternative strategies. In comparison with conventional BTL investments, alternative property investments bring in higher projected returns in the long run. Further, it is hassle-free in the way they are set up. It has made many traditional BTL investors consider the alternative property investment market.

Is this a good time to invest in the alternative property market?

Since the pandemic, landlords have been struggling to maintain regular rental income from the BTL properties. Tenants’ income has been affected and the revenue streams for landlords are not constant as they used to be.  

On top of the impact on rental income profits, BTL property investors have not been able to generate adequate year-on-year returns from the investment. The recent changes in the tax legislation have caused a significant dip in the annual profits for the landlords.

If you are a new investor in the UK property market, you might notice that a reasonable amount of traditional BTL investors have started re-investing in the alternative property market after the pandemic. It is a positive signal for new investors to make an informative decision and an appointment with an experienced mortgage adviser would provide more insights on the alternative strategies.

Alternative property developments currently under construction have some shield from the current financial impact of Covid-19. The developments closer to completion can be priced at market value or refinanced for sale. It has increased the level of investor protection. They usually have an agreed fixed rate of return which is a huge blessing under the current financial circumstances.

Are the asset-backed investments hassle-free?

Alternative property investment is also known as property bonds. It gives a vital opportunity for modern investors to become part and parcel of the UK property industry, without going through the hassle of owning the property. In other words, it is a debt arrangement between a property developer and an investor.

On the other hand, asset-backed property investors do not go through the hassle of managing tenants, maintaining the BTL properties with regular maintenance. The rental income is subject to income tax and investors need to have a thorough understanding of allowable expenses and allowances. It makes life difficult for traditional BTL investors and they are now moving to asset-backed investments.

Is it important to diversify the investment portfolio?

The pandemic has completely changed many investment strategies in addition to buy-to-let, with the stock market taking a serious hit. However, the modern investor has been circumventing volatile markets for years, particularly following the Brexit decision several years ago together with political uncertainties overseas.

Although Covid-19 has taken investment challenges to a new level, it is these periods of uncertainty that force investors to think differently and to diversify their portfolio and investment decisions to make viable returns.

The alternative property investments are such one route where the developments are not heavily affected by the pandemic. Yes, the initial stage of the pandemic caused few troubles for the developers. However, now things are settled down and developments are processing at a rapid pace.

It indicates that more investors would consider a shift towards the alternative property market as it provides them with more space to diversify their investments. Diversification is essential to reduce the risk of the investments and savvy investors are making full use of it by investing in alternative property markets.

How to benefit from the permitted development rights in the UK

“Permitted development rights” can be defined as certain types of work the homeowners can do without needing to apply for planning permission.

They derive from general planning permission granted not by the local authority but by Government. It is important to highlight that the permitted development rights which apply to many common projects for houses do not apply to flats, marionettes, or other buildings. Similarly, commercial properties have different permitted development rights to dwellings.

If you are converting office premises to flats under permitted development, no prior planning permission would be required. However, it is important to note that building regulation standards are still required. It is possible to raise funding with the help of an experienced adviser to help with conversion costs. Then the property can be refinanced against the end value, or the property can be sold at a profit.

In conclusion, alternative property investments are booming in the UK due to their hassle-free nature and high growth potential. If you are new to this space, this would be the perfect time to meet an experienced adviser to seek guidance on alternative property investments.

 As a mortgage is secured against your home, it could be repossessed if you do not keep up with the mortgage repayments.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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