When it comes to investing, there are many ways to gain access to a particular asset class, and real estate investment is no exception. Any potential or experienced real estate investor has a confusingly wide range of options to gain exposure to lucrative property markets.
As with most investments, the theory goes that if you own the actual asset, the higher your return, right? Property can be a perfect example of this, but can also be the horrible exception to the rule. One of the biggest questions that can be overlooked is, what is my net return? Not my expected return, what is my net return after all my taxes and expenses?
The UK is one of the safest real estate markets for capital protection, and that is why Berkeley Assets favours UK real estate. In recent years, however, we have seen individual UK buy-to-let investors penalised by changes in UK tax law. A combination of increased upfront purchase taxes and higher taxes on rental income has made net property yields much less attractive.
But what about the capital growth that was expected when you come to sell the property? Well there is never any guarantee and historic rises in property prices are no indication of the future.
Property developers often offer a guaranteed rental scheme, however there’s a fee for that, on top of your service charge. All of these factors can add up to seriously impact your net return. What’s left after you have cleared your mortgage and paid your property fees and taxes? And was it all worth it?
At Berkeley, we don’t put all of our assets in one area. We don’t rely on one type of asset and we don’t rely on anyone to give us yield. We diversify by owning both commercial and residential real estate. On a case by case basis, we decide whether we want to be the real estate developer or whether we want to lend money to developers. We don’t just rely on market uplift and rental yields; we generate additional revenues from managing tangible businesses within the real estate.
Our diverse portfolio of real estate assets and businesses means that even in the toughest of environments we seek alpha (as opposed to beta which sits high on the risk curve) and we pass that onto all our clients. As a retail client, you have exposure to robust and diversified UK and US real estate, without any surprise costs and without the headache of dealing with lettings agents, or the devil himself, the tax man.
Download our brochure to see details of our projects.