The UK Property Playbook: Weekly Newsletter

Invest Smart, Grow Fast

Introduction

I'm thrilled to bring you the latest edition of my weekly newsletter, where we dive deep into the dynamic world of property investment across the United Kingdom. Whether you're a seasoned investor or just starting out, my goal is to provide you with actionable insights, the latest market trends, and strategic advice to help you make informed decisions and maximize your investment returns.

This week a closer look at the upcoming changes to Stamp duty (SDLT) that are due to come in from June 1st 2024 and how this might impact you.?

Then we have a closer look at the UK property & rental?market, what the latest figures actually mean and opinions about where the market is heading.?

Finally, a deep dive into our latest investing strategy Serviced Accommodation and what the recent UK budget announcements mean for the sector. To complete this deep dive you will also see our featured article inspired by a recent briefing I attended from the Chairman of PASC?(Professional Association of Self-Caterers UK).

Lots to get through in this edition so let's get to it!

Stamp Duty Deadline Looms for Multiple Dwelling Purchases!

What's Changing?

Effective June 1st, 2024, the Multiple Dwellings Relief (MDR) will be abolished in England and Northern Ireland. This relief previously offered a significant tax benefit for investors purchasing two or more properties in a single transaction.

What Did MDR Do?

Under MDR, investors could calculate SDLT based on the average price per dwelling, rather than the total purchase price. This resulted in potentially substantial tax savings, especially for high-value multi-property purchases.

What Does This Mean for You?

The removal of MDR means investors buying two or more properties after June 1st will likely face higher SDLT bills. The exact amount depends on the total purchase price and the applicable SDLT rates (which are tiered).

If you're considering acquiring multiple dwellings, finalizing the purchase before June 1st could lead to significant cost savings. Analyze your investment strategy and consider accelerating your timeline if necessary.

Need Help Navigating the New Landscape?

Consulting a property tax specialist can be invaluable, especially for complex transactions. They can help you understand the revised SDLT implications and optimise your investment decisions.

Market Overview

UK Housing Market Update for Investors – May 2024

As we navigate through 2024, the UK housing market presents a landscape of both opportunities and challenges. This newsletter distills recent real data to give you a clearer perspective on where the market stands today and where potential investment hotspots lie.

Transactions (sales) are down at levels similar to 2012 / 2013.?For investors, this indicates a more cautious market environment, where thorough due diligence and an understanding of long-term trends will be key in making informed investment decisions.

Market Overview:?As of 2024, the UK property market is experiencing a notable downturn, with house price inflation entering negative territory for the first time in several years. This shift marks a transition to a buyer's market, where investment opportunities might be ripe for those looking to acquire properties at a discount.

Investment Insights for 2024:

• Buyer's Market Dynamics: Current trends indicate greater negotiating power for buyers, with potential to secure properties below previous market rates.
• Strategic Caution Required: The sharp decline in house prices necessitates careful consideration and thorough market analysis to determine the right time and location for investments.
• Long-Term Potential: For investors with a longer horizon, purchasing during this dip could lead to substantial gains as the market recovers.
• Importance of Local Insight: Regional market conditions vary significantly; it’s essential to understand specific local dynamics, which may not align with the national trend.

This period of negative inflation presents both challenges and opportunities. Investors are advised to stay well-informed and strategically cautious to make the most of the current market conditions.

"Observe the masses and do the opposite" - Walt Disney

Rental market?overview?

As of 2024, the UK rental market is experiencing a sharp increase in rent inflation, reaching about 9%. This significant rise indicates strong demand for rental properties, presenting lucrative opportunities for property investors:

• High Rental Growth: This upward trend offers enhanced cash flow and higher yields for investors in rental properties.
• Sustainability Considerations: With rent inflation currently high, investors should be mindful of potential market adjustments or regulatory changes.
• Regional Variations: Explore regional hotspots that might be experiencing even greater increases due to local demand drivers.
• Strategic Investments: Position investments strategically to capitalise on high demand by maintaining high-quality properties in desirable locations.

Overall, 2024 offers robust opportunities for rental income, but careful strategy and market analysis are crucial to capitalize effectively on these conditions.

Due Diligence is Key: It's crucial to conduct thorough research or consult with professionals before making any investment decisions. Understanding the local market dynamics, tenant demand, and economic factors is essential to making informed choices.

Final Thoughts: The UK housing market continues to offer diverse opportunities for savvy investors. By focusing on detailed market analyses and staying informed through updates like this, you can strategically position your investments for both short-term gains and long-term growth.

Want to diver deeper into property investing in the UK? Why not attend a FREE event run by the very same people that trained me??

Click HERE to find out more!

Strategy deep dive

Exploring Serviced Accommodation in 2024

In 2024, there's a lot of talk about serviced accommodation, making it a topic worth exploring for investors. Let's take a closer look at what this means for you.

What Makes Serviced Accommodation Stand Out in 2024?

Serviced accommodation refers to fully furnished properties designed for short to medium stays. A whole property rented out on a nightly basis to guests (not tenants) commonly known as an Airbnb but formally Serviced accommodation (SA) or Furnished holiday lets (FHL).?

They offer the comforts of home combined with the conveniences of a hotel. Think of it as having your own space, complete with amenities like a kitchen and laundry facilities, but with the added benefit of hotel-like services such as housekeeping and concierge.

Why is it Attractive?

I operate SA in my property business and have seen first hand how rewarding the financial returns can be. I have had bookings that run into the multiples of thousands of pounds just for a couple weeks stay. One booking i've had eclipses the whole yearly rental income of a BTL property I had previously. On top of this there are no tenants to deal with. Just guests. Guests do not have the same rights as a tenant and with the potential removal of S21 evictions (which most landlords only use for tenants not paying rent) a lot of landlords and property owners are turning too this strategy.?

On top of this if you own the proeprty that you run an SA business out of then you are able to claim capital allowances and pay less tax.?

Challenges and Opportunities Ahead

Investing in serviced accommodation presents unique challenges and opportunities. While it offers the potential for higher returns compared to traditional rentals, managing properties and ensuring a seamless guest experience require attention to detail and a strategic approach. It's a hospitality business in its own right and you need to treat it as such.?Keeping abreast of regulations, market trends, and technological advancements is crucial for success in this dynamic sector.

What's Driving the Demand?

The demand for serviced accommodation is fueled by various factors, including the increase in business travel, the rise of remote work, and shifting consumer preferences post-pandemic. This trend is expected to continue as more individuals seek flexible and comfortable living arrangements that cater to their unique needs.

Understanding the Rules

Navigating regulations, zoning laws, and tax implications is essential for compliance and smooth business operations. Staying informed about legal requirements such as last October's change to fire safety regs in the sector,?as well as industry standards ensures that investors can mitigate risks and maintain the integrity of their business.

The Financial Side

Conducting thorough financial analyses and considering factors such as occupancy rates and seasonal demand fluctuations can help investors maximise profitability. Done well, profits can be lucrative!

Investing in serviced accommodation in 2024 offers a compelling opportunity for property investors seeking to capitalise on the growing demand for flexible and comfortable living arrangements. By understanding the nuances of this niche market and implementing strategic approaches, investors can unlock the full potential of their investment portfolio.

Want expert training on Serviced accommodation?

Click here to explore this strategy with the very same people who have trained me!

Tune in next week for a closer look at the Tenant Buyer strategy and how you can optimise your cash flow and help solve the housing crisis at the same time.?

Featured Article

Understanding Proposed Changes to Furnished Holiday Let (FHL) Allowances and PASC UK's Response

The UK government is currently considering changes to the tax benefits associated with Furnished Holiday Lets (FHLs), which could have significant implications for our investments. These changes aim to simplify the tax system and address what may be perceived as inequities between holiday lets and long-term residential lettings. Here’s a detailed breakdown of the current benefits, the proposed changes, and how PASC UK is actively responding to these developments.

Current FHL Tax Benefits

FHLs currently enjoy several tax advantages that are not available to other rental property types:

• Capital Allowances: Owners can claim for furniture, equipment, and fixtures.
• Profit & Loss Rules: Profits count as earnings for pension purposes.
• Capital Gains Tax (CGT) Reliefs: Includes Entrepreneurs' Relief, Roll-Over Relief, and Hold-Over Relief, which reduce CGT on property disposal.
• Loss Relief: Allows losses from FHLs to be offset against other income, providing a tax advantage over standard rental properties.

Proposed Changes Explained

The government’s proposed changes to the FHL allowances include:

• Eliminating CGT Reliefs: This would align CGT liabilities of FHLs with other property types, potentially decreasing the sector's investment appeal.
• Restricting Loss Relief: Preventing losses from being set against other income, thereby increasing the tax burden on FHL owners.
• Removing Capital Allowances for FHLs: This would standardise the treatment of FHLs with long-term residential rentals, where such allowances are not available.

Implications for Investors

The abolition of these allowances would likely result in increased operational costs and taxes, diminishing the profitability and attractiveness of investing in FHLs. This could lead to a shift in investment strategies, potentially steering investors towards long-term residential properties or alternative investment options.

PASC UK's Advocacy and Actions

In response to these proposed changes, PASC UK is taking proactive steps to advocate for the interests of FHL owners:

• Engagement with Policymakers: PASC UK is actively engaging in discussions with key government officials to outline the detrimental impacts of these changes. They are presenting data and case studies that highlight the economic benefits of FHLs and arguing for the retention of current allowances.
• Informational Campaigns: PASC UK is organising webinars and informational sessions to keep investors informed about the latest developments and potential impacts of the proposed changes.
• Direct Member Action: PASC UK encourages members to reach out to their MPs to express personal concerns and the broader implications for the sector. They provide templates and guidance on how to effectively communicate these issues.

Staying Informed and Prepared

As these proposals are still under consideration, it is crucial for us to stay informed and prepared for any outcomes. PASC UK is a valuable resource in this regard, offering updates and expert insights that can help us navigate these changes. Additionally, consulting with financial advisors to review and possibly adjust our investment strategies is advisable.

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