Hands-off investments – A growing trend in the UK property industry.
The UK property investment market is evolving. In an industry once made up almost entirely of residential ‘second homes’ managed and maintained by landlords, things have shifted significantly in recent years.
A significant contributor to this shift has been the introduction of the lease-back model of investment, in which property developers sell an asset to a private investor, then lease back that same asset; paying rental returns generated through the operation of the development.
This model is currently being implemented within the buy-to-let, hotel and care home investment markets; and allows developers to offer investors an entirely passive, or ‘hands-off’ income-generating asset. The investor is not responsible for the management or maintenance of their property; paying a fixed one-off purchase price, then receiving regular financial returns with no additional effort or input.
Benefits of passive property investment.
No ongoing costs
One of the most obvious benefits of passive property investment is that investors are free from the ongoing costs associated with managing and maintaining their property. These costs are typically factored in to the purchase price meaning that, following their initial capital outlay, the investor has nothing more to pay throughout the life of their investment.
This is a significant shift from the traditional buy-to-let market; in which investors have to regularly contribute to the ongoing maintenance and management of the property, plus any ad hoc repair costs that may unexpectedly arise.
No management headaches
In addition to the ongoing financial costs of their property, landlords must also deal with the management ‘headaches’ associated with dealing with tenants and/or unforeseen issues with the property. For non-professional landlords this can also mean having to take time off work, which could result in a loss of earnings.
With hands-free property investments these issues are all dealt with by the operator; meaning the investor can sit back, relax and simply enjoy their returns.
Speaking of returns; with our passive property investments, the operator will often offer investors a fixed return for a set number of years.
These fixed rental yields ensure investors do not need to concern themselves with finding tenants, void periods or collecting rents.
For ease and knowledge of a market, many individual property investors may persist with investing in their local towns and cities – thus preventing the need to travel to deal with issues, or having to reduce their rental yields by employing an agency to fully manage their property.
With passive property investments the investor is not responsible for dealing with these issues, meaning investments can be made anywhere in the world. In recent years this has contributed to a considerable increase in overseas investors purchasing property in the UK. With many Chinese, Russians, Swiss and others investing in property they’ve never seen – and possibly never will see, yet are content in the knowledge that their property is in the capable hands of specialist operators.
If you’re looking for a completely passive, hands-free, hassle-free, income-generating property asset, contact a member of our team today on +44 (0)1202 765011 or email [email protected] for more information on our available opportunities.