Jonathan Stephens, Managing Director of property consultancy Surrenden Invest, believes the move towards alternative investment opportunities has already begun.
He explains: "With interest rates at their lowest since the Bank of England was founded in 1964, investors are abandoning institutional investment products for others that offer more favourable returns on capital. Just last week I received a letter from my bank informing me that my personal current account would no longer attract interest, the letter then when on to say that my savings accounts would also be subject to review next month. So the big question savers face is where to invest their hard earned cash?"
However, for many this change will mean venturing into unknown territory which can be unnerving for those wanting to make the best decision for their future finances. With the property market not faltering as predicted post Brexit, investors are looking to the buy-to-let landscape for a chance to make to most of their money.
Jonathan continues: "We have seen a huge influx of relatively inexperienced investors who in most cases have never considered property for investment before. These clients are what we call 'one time' investors who, in contrast to our large portfolio clients, are unlikely to be in a position to invest the same levels of capital again. These investors are looking for a one-time opportunity to get into property to secure their financial future.
My advice is to tread very carefully as there are companies currently exploiting market conditions, promising colossal returns over a relatively short period of time and these are mainly what we refer to as alternative forms of property investment.
In my experience the best property investments are the simplest ones, if it isn't broken don't fix it. So why invest in something which is trying to re-invent the wheel? Our advice is to buy in the best areas and don't compromise on location, especially when buying outside the Capital."
Jonathan concludes: "If an investor called us today we would set their expectation at around 6% net rental income and 3%-5% capital growth, with an annualised yield over 5 years upwards of 10% net. Surrenden Invest aims to under promise and over perform; our projections are effectively a worst-case scenario.
One of the great things about traditional buy-to-lets is their simplicity, therefore it is possible to request all the fixed costs, for example the ground rent, service charge and management fees, and off set those against equivalent apartments currently available to rent on Rightmove or Zoopla. This is a very easy way to find out how realistic the projected returns are."
