New Year Treasures

With the New Year upon us there are likely to be some rich pickings coming up for the avid property investor. The reality of life is such that many people go into debt for Christmas and then regret it for the next year as they try to pay off their loans. It only takes one unforeseen circumstance to throw even the most astute money manager into complete disarray. When debts mount many peoples only fall back is the property they own or think they own, to stop the creditors hammering on their door. The fact is no owns a property until every penny is paid off against it as someone, somewhere will have a claim on it. Empty properties  are now seeing claims staked against them by savvy people who know the legalities of claim law to be able to seize a house when the owner is absent for a certain period. In America properties can be purchased quite legally for the amount of tax due against them, here in Britain it’s not quite so simple but none the less there are ways.

There is a lot of empty property though and these recessionary times don’t help improve the housing stock at all. There are suggestions to bulldoze massive amounts of Irish property to stop the devaluation of other property. That’s not necessarily a good thing. There are better ways to weather the economic storm. It should actually be a prime time for landlords with interest rates staying so low for so long. Tenant demand is on the up so voids should be down. There are plenty of bargains out there with more likely this year.  It’s all about planning really, being organised, being systematic and trying not to be emotional about selling to clear debts. Your tenants might struggle if they lose their jobs or fall into arrears for some other reason but as a landlord you need to keep in contact with them as early warning of problems will help you to help them to help themselves.

As the Green Deal takes effect over the next couple of years, many property owners may find they have to spend more on their properties to get the same returns even though the Government initiative is to work as a loan scheme linked to utility payments. Poor heating systems or insufficient insulation will have to be brought up to standard to help reduce the carbon footprint.Savvy landlords have a program of improvements across all their properties so there are less expensive repair costs, happier tenants and less void time between tenants. Few properties last longer than twenty years without a significant refurbishment but it’s a cost that can be built into the long term strategy plan for the portfolio. Often this can be financed by releasing equity from the properties and can be seen as a good exit strategy to refurbish and then sell depending on your personal situation. Aforethought is more valuable than hindsight and saves a ton of regret.

It could be that we’re at the bottom of the recessionary hole as far as property is concerned; there are some signs of improvement which for this time of year could be a good thing but invariably so much depends on so many other factors both locally and worldwide. We all know it’s going to be a long hard haul before we reach anything like those crazy headed bygone days of cash-backs and same day re-mortgaging and that’s probably not a bad thing. The end of 2012 saw some benefits for those that have managed to stay in the game. This year could see even greater opportunities for those that can see them and seize them. When we see how easily the likes of Paragon sold off their securitization packages last October, it shows how much investor confidence is coming back into the buy-to let market. This doesn’t mean that money is easy to come by and paying down debt must still be seen as the sensible way forward but it does give us minnows some hope for the year ahead.

The best way of safeguarding your hard earned treasure could be to make sure you reduce what you have to give Her Majesty’s treasury.

By looking at the ways of mitigating tax in the years to come you may be able to save a substantial sum. There’s certainly no tax advice here as everyone’s case is individual and like most things it’s a specialist field where you should get the best advice you can afford but areas that can be looked at include putting property into trust if you can stump up the cost. Married couples should use both sets of Capital Gains Tax personal allowances. The way you buy and hold your property whether personally or within a company can make a huge difference to your coffers when you look at your exit strategy. Whichever way you go forward you want to reduce your taxable income and that means keeping impeccable records, getting all receipts and invoices for everything and handling your affairs in a business-like manner. This year could see us landlords and property people finding our best deals ever. Make sure you have your goals set for never ending improvement in everything you do.

Always seek the treasure but avoid the pressure by planning ahead.



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