Property can be one of the most obvious asset classes for an investor to consider when thinking about how their wealth could benefit their wider family. Property prices have performed well for many years, although this is in no way guaranteed, and some careful investors have grown their wealth by buying and selling residential property throughout their adult lives.
The unpredictable nature of all markets means that there is inevitably risk associated with any investment. However, residential property has tended to outperform a number of other asset classes. Whilst the Office of National Statistics reports house prices have risen 7.9% in the 12 months to June 2016 1, over shorter time periods property has proved to be a more volatile choice. That said, for a longer-term family investment residential property could still prove to be an attractive option.
Interested buyers should nevertheless consult a financial adviser or tax expert before making a purchase because of the tax implications around property investment. They can provide direction on structuring the investment so that it is both tax-efficient and managed effectively as part of your estate.
One reason you may consider property as part of a family portfolio is because, as homeowners themselves, family members are likely to have previous experience. This could prove valuable as family-members may be managing these same assets themselves one day. Also, if family members are willing to invest their own time and effort into improving a property, they are likely to add further value to the initial investment. If undertaking a buy-to-let strategy, they may benefit from rental yields on the property as well as from any potential uplift in the property’s value.
Property can be a worthwhile investment, as part of a balanced investment portfolio, particularly for those looking for long-term return potential. However, as with all financial decisions, it is worth doing your homework in advance and seeking expert advice.
This article has been provided to Lloyds Bank plc by external/third party contributors and contains their views as at October 2016 and should not be relied upon as fact and could be proved wrong. The information and opinions may not be accurate after this date. The views expressed may not reflect the view of Lloyds Bank plc.
Past performance is not a guide to future performance. Investors may not receive back the full amount originally invested and the value of investments and the income from them may fall as well as rise.
Tax treatment depends on individual circumstances and may be subject to change in the future.
Deciding your property investment mix
As part of a balanced portfolio, bricks and mortar can appear an attractive investment when people are looking to secure their family’s wealth.
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