There are several real estate investment strategies that allow one to take part without the need to own property. One of the better approaches is investing in a real estate property fund. Because of recent governmental changes in the UK, this option has improved even more.
Depending on one’s investment strategy, real estate or property funds allow a more diversified investment vehicle than UK Real Estate Investment Trusts (UK REITs). Real estate funds provide a guaranteed minimum dividend income and the potential for capital appreciation wanted by medium- to long-term investors. These investments are usually for either the savvy investor or a High Net Worth individual wishing to invest their wealth into a passive income program.
A new announcement at the beginning of August 2020 by the UK government in the wake of the COVID pandemic has increased the profit potential significantly for London properties and, therefore, also does the same for real estate funds that have a London focus. Writing in the Sunday Telegraph, UK Housing Secretary Robert Jenrick said that, “under the new rules, land will be designated in one of three categories: for growth, for renewal, and for protection.” New homes will be granted “automatic” permission to be built as part of a strategy for sweeping planning reforms in England.
The planning process is often a huge barrier for real estate to pass, and when land planning is granted, the land’s value can go up tenfold. The secretary stated that “We are cutting red tape, but not standards.” And, “I am completely overhauling the system so we can build more good quality, attractive and affordable homes faster.” Mr Jenrick added.
In his telegraph article Secretary Jenrick also said that these changes result, in a “once in a generation” chance to build the homes and amenities families need, “outdated and cumbersome” planning rules, in which it takes on average five years to approve a new housing development, are fuelling a “generational divide” between older homeowners and young people struggling to get on the property ladder. These are now problems of the past.
This change in the governmental planning process is positive for property funds with a central London focus. HULT Private Capital is one investment company that does just that. They invest in Prime Central London, Greater London, and Home Counties, and are already positioned to take full advantage of these changes.
This change in the governmental planning process is positive for property funds with a central London focus. HULT Private Capital is one investment company that does just that. They invest in Prime Central London, Greater London, and Home Counties, and are already positioned to take full advantage of these changes.
This announcement comes after the Boris Johnson’s pledge of £5bn to “build, build, build” in order to help soften the economic impact of coronavirus.
With this additional access to capital for building, the real estate sector will heat up, and those already in it should see significant profits. These governmental moves are focused on renewal areas, mostly existing urban areas, which directly benefits a fund in that market, Secretary Jenrick said, will see plans get “permission in principle,” making the process faster while allowing for appropriate checks, in order to regenerate high streets and allow new housing developments.
Property funds are a particularly useful investment vehicle, while all physical real estate investment is seen as a solid addition to any portfolio. Property funds provide unique advantages. The first is low cost investing. HULT, for example, has a minimum investment of only £20,000 (though some funds start at £250,000), allowing investors to take advantage of these government changes without the requirement of a substantial down payment that buying a single London property would require.
Property funds allow for passive investment and are professionally managed. Rather than finding a property and going through the purchase process, a fund such as one offered by HULT Private Capital is managed by professional real estate investors. They have experience in finding and recognising the best deals and have an 8% guaranteed return with up to12%+ per annum without the investor having to lift a finger.
The last two advantages that a property fund offers are diversification and liquidity. Property funds invest in multiple properties, which reduces their investment risk by portfolio diversification. A single property is not at all diversified. It runs the risk of an outside circumstance having an impact on that property’s profits, such as a nonpaying tenant, a zoning order, or a change in that housing market bringing prices down. Finally, a real estate fund allows for liquidity. A single property may not be sold for the desired price for years. With property funds horizons are known, HULT Private Capital, for example, has between 3 to 5 year investment options, allowing accurate planning of the investment horizon. Investors can also choose compound interest reinvestment options to increase returns as well.
Because of the governmental changes regarding the planning process in the UK, it is now the perfect time to invest with a property fund. The opportunity for consistent yearly gains is available, with funds like the ones backed with prestige class bank guaranteed capital assets, available through HULT Private Capital. These property funds are both Sharia-compliant, and for some potentially tax-free, investors can add to their portfolio and take full advantage with all of the benefits now available.
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