Property Investment For New Entrants
For those looking to invest in residential properties, there is a variety of options available when considering your choice of trading structure. Typically, new investors are individuals or couples looking to plan for their future, and often with some surplus earnings. In our experience, most of those investors are looking to build for the long term rather than to make a ‘fast buck’.
Most new property investors tend to opt for limited company structures for the following reasons:
- The ability to ring fence property investments away from personal assets
- No restriction on the ability to deduct interest from rent
- Salaries paid to low income or non-working spouses or children (subject to certain provisos)
- Flexibility of share structure
- Use of surplus cash to pay pensions or make other investments
- Use of the company as a longer-term family investment vehicle
Limited companies tend to work well for the ambitious investor. However, if you only intend to acquire a couple of properties, we suggest that simplicity via personal ownership may well be preferred.
Notwithstanding recent tax changes, none of which have favoured residential property landlords, property remains a typically strong investment in terms of income yields and potential capital growth. The choice of trading structure is an important one in this context and we’d recommend that professional advice is taken, with particular attention paid to long term objectives balanced by short term flexibility.