The Landlord Slide

The new decade is set to bring a number of important changes to the property industry that could impact landlords and their livelihoods.

Factors such as legislation, tax, costs, and ongoing political uncertainty pose a threat to these individuals, which is why they are moving in increasing numbers away from traditional buy-to-let mortgages and towards alternative forms of investment, like property bonds.

For those new to the term, ‘Property Bonds’ are corporate bonds issued by developers that enable investors to reap the rewards of investing in bricks and mortar without dealing with issues associated with tenants and ownership.

A bond is purchased by the investor, who receives a certificate and security in return for the property they are helping to fund. They are then paid a fixed annual interest lasting typically between two and five years, after which the bond matures, and the principle is returned to them.

Crash course complete, why exactly should Landlords consider switching from buy-to-let to the alternative property investment sector?

REASONS TO SWITCH

There are many reasons as to why property bonds are becoming more appealing to investors instead of conventional buy-to-lets.

Firstly, property bonds come with security, meaning there are always underlying assets to generate the returns required by investors, and they allow them to begin investing with relatively low amounts of capital.

There is no need to obtain a mortgage or loan, or save up to pay a deposit, and property bonds offer some of the most attractive returns currently available, with many returning around 10%.

In densely populated student areas, they are also helping landlords to generate considerably higher yields than would otherwise be possible through buy-to-let, whilst completely eliminating problems with tenants such as repairs, late payment and lease terms.

CONCLUSION

Taking these factors into account, it is clear that investing in property bonds offers a smarter alternative to buy-to-let.

With property bonds, landlords can avoid maintenance fees, Stamp Duty, council tax, insurance payments, tenancy issues, alongside all the laborious issues involved with managing tenants, whilst generating considerably higher returns.

What’s more, these bonds give the investor freedom to invest in the property market without the hassles associated with development or property management, which is one of the most crucial reasons why this type of investment has gained such traction in recent times, with growth forecast to continue throughout 2020 and beyond.

The investments referred to are not suitable for all investors and there are risks investing in unregulated, non-readily realisable, non -transferable securities. All prospective investors are advised to seek independent financial advice. Your capital is at risk and investors should be aware that past performance is not a reliable guide to future performance or returns and you may not get back all of your original investment.

Reece Mennie,

CEO of leading UK investment introducing firm, Hunter Jones

www.hjinvest.com