54 commercial property Planning to buy
James Matthews, an associate in the real estate team at Penningtons Manches LLP, reflects on changing property investment trends
With much talk in the media as to the difficulties young people face in getting on the property ladder, recent research by Prudential has shown an entirely different story for those aged 55 and over. Almost two in five homeowners within this age group are planning at least one further property purchase.
It is predicted that this demographic will spend in excess of £775 billion, spanning more than three million property transactions. Approximately 18% of such transactions will not be ‘homes to live in’, rather second homes as well as development and investment properties.
Prudential’s poll also concluded that the average maximum purchase price will be more than £250,000, with one in five commenting that they would be likely to invest £350,000 or more.
Given the age of the demographic, one would be forgiven for considering these investors to be ‘last-time buyers’. However, one in 10 said they would consider purchasing further investment property in the future.
So what has fuelled the drive for this particular age group to purchase property? Property investment has always been seen as security for investors; protecting against currency fluctuations and the erratic nature
of the stock market and commodities. In addition, the new pension rule changes have motivated over 55s to invest in buy- to-let property as a way of securing income throughout retirement. However, the increase in property purchases within this group isn’t solely down to investment acquisitions – two in five have stated that they are planning a property purchase in order to downsize.
Overall, Prudential’s survey confirmed a
balance between those wishing to purchase investment property and those wishing to purchase a property which was less expensive than their current home in order to liquidise funds.
It is also predicted that with the Government cutting corporation tax to 19% in 2017 and 18% in 2020, higher rate taxpayers may increasingly be looking to invest in property through companies set up for that purpose. Of course, the reduction in corporation tax is not the only advantage; costs may also be offset against rental income, leading to increased profits. Income to directors may only be paid out in the form of a dividend and from April 2016, each director will be able to receive up to £5,000 each year, tax free.
It should be said that withdrawing cash from a pension fund, or setting up a company with a view to purchasing investment property is undoubtedly a complex process and could result in varying tax implications. We would advise anyone considering such options to first consult with their financial and legal advisers.
Details: James Matthews 01483-791800
james.matthews@
penningtons.co.uk www.penningtons.co.uk
The Henley Practice team, Henley-on-Thames,
www.henleypractice.com www.angusthomas.com studio@angusthomas.com Environmental portraiture whatever your talent
www.businessmag.co.uk THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2015
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