As long as cash saving rates remain stagnant, informed investors will look for ways to find a good return on their investments. Some investors now are looking at the advantages of placing property funds into their ISA portfolio.
This trend is being backed up by property funds who are looking promote a higher return for ISA holders. For funds that feature UK property ISA investors can expect to be charged around a 1 per cent annual management fee and up to a 6 per cent return (Figures vary between ISA’s).
The new maximum initial ISA allowance is £15,000 and some of these property funds are seeing spectacular annual returns of 12 per cent based on projected property growth and rental income. This would mean that canny investors would see a tax free pay-out of £12,150 at the end of a five-year term.
This sort of return is unheard of on a cash Nisa. It also gives investors a chance to take part in the London property boom without having to deal with tenants or have the headaches associated with owning bricks and motor stock.
Investors should always be cautious before making any investments, savers should only be looking to sign up to regulated financial products and seek advice from an Independent Financial Advisor before making a decision.
Recent figures from HMRC show a record amount of ISA cash has flowed into stocks and shares in the last year as people wanted to avoid the low returns that cash currently offers.
The Central London property market is an area of continued growth and investors looking for a low cost way of tapping into this market are doing this via the ISA investment route. If you add this to the tax saving advantages of ISAs it’s no wonder than a new generation of investors are looking seriously at property funds.
Simon Morris is a London-based property expert who uses his specialist knowledge of the commercial property sector, to advise UK property investment funds on how to maximise profitability.
For more information on property investments please read Simon’s Guide to Property Investment Options.