How To Invest in Real-Estate Investment Trusts (REITs)
Not everyone can afford to buy a property for investment purposes. Even if they can, property tends to be an ‘illiquid’ asset, meaning it can be difficult to sell a building quickly at a fair price. Real-estate investment trusts (REITs) provide a potentially tax-efficient way to invest in property. Get in touch today to discover more.
Why Invest in Property?
There are several good reasons to invest in property, including:
- Capital Growth: As property prices rise, so the return increases on an initial investment. Should prices fall, however, an investor would lose money if they had to sell when the value of the property was ‘underwater’, i.e., worth less than the original price.
- Rental Income: A tenant paying rent on a property provides would-be landlords with a steady income stream often secured for long periods (potentially several years at a time).
- Diversification: Property tends not to perform in line with other assets such as bonds or stocks and shares. It is said to be ‘non-correlated’ and can therefore complement the performance of an existing basket of assets.
In the UK, a REIT must own a commercial or residential property and rent it out. At least 75% of its profits must come from rental income. Additionally, the REIT must distribute at least 90% of the profits it makes from this business to shareholders.
Tax-Efficient Investments
The companies that qualify as REITs pay no corporation tax on either profits or gains from their UK-qualified property rental businesses, which improves the potential tax efficiency of your investment. Furthermore:
Real-Estate Investment Trust - Tax-Efficient Investments
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REITs leave retail investors free to use their dividend tax allowance (the amount from dividends an investor is allowed to earn tax-free each year) on other investments.
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The UK’s largest REITs are worth billions of pounds.
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If you hold REIT shares in an individual savings account (ISA) or private pension such as a self-invested plan, both of which shelter investments from tax, there will be no income tax to pay on the distributions you receive.
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Investors who pick a property sector on an upward curve will likely benefit from booming demand, soaring property values and competitive rental income
Should I Invest in REITs?
The London Stock Exchange describes REITs as a “way for investors to access the risks and rewards of holding property assets without having to buy the property directly”. To this end, an investor with existing exposure to shares, bonds, and cash looking for extra dive
Since the late 1980s, assisted living accommodation has been commissioned by local authorities and health authorities in the UK as a result of the drive to accelerate the closure of long-stay inpatient hospitals for people with a learning disability and autism.
“Assisted living housing” refers to accommodation that is specifically designed to meet the needs of elderly and disabled residents as well as those living with enduring illnesses, offering a range of support services and amenities to help them live independently.
A lack of such housing can lead to a range of negative outcomes and negatively impact people living with enduring illnesses. For instance, they may become more socially isolated, suffer further health complications, and need more expensive forms of care such as residential nursing homes.
These potential outcomes highlight the need for greater investment in assisted living properties to ensure that these residents are receiving the care and support they need.
Objectives
The objective of the Assisted Living Project is to provide a stable and secure income stream for investors through the acquisition and leasing of properties to reputable housing community benefit societies. The Assisted Living Project acquires properties comprised of multiple units that are leased to reputable housing CBSs and councils over 25 years on lease agreements that are government-funded by the Department for Work and Pensions (DWP) and indexed to pay rental income at 1% above inflation.
The housing community benefit societies fully manage, operate, and occupy the properties on behalf of the Assisted Living Project. Once the properties are leased to a housing CBS, the Assisted Living Project will look to replicate the process and own multiple assisted living properties leased to CBSs for a minimum of 25 years, with a view to then either list on a stock exchange, such as the London Stock Exchange, or sell the properties to large income funds.