3 Top Investment Picks for an Alternative Property Portfolio

Britain’s buy-to-let market has slumped since 2016 — thanks to the introduction of a three per cent stamp duty charge for second home owners, stricter affordability checks on landlords and a reduction in interest payments tax deductibility.

According to the Telegraph, the value of mortgages taken out by landlords in March 2018 was 20 per cent lower than in March 2017 — so forecasting diminishing returns from their investments, many landlords are selling up in order to cut their losses.

However, a move to an entirely new investment sector might not be necessary — unconventional real estate is still potentially lucrative.

If you want to keep your iron in the property fire, forge ahead with these three top investment picks for an alternative property portfolio.

Student property

Student properties are still classed as buy-to-let — but higher rents from multiple-occupancy flats and lower house prices in regional cities means that they might be more profitable.

Purpose-built student accommodation has sprung up in many towns over the past few years, but this tends to be more expensive, so many students still prefer living in older properties — presenting a prime opportunity for landlords.

The right location is crucial, but risks from fallow seasons during summer breaks are mitigated by higher returns from several tenants paying simultaneously — and it’s not always necessary to take out an entire mortgage personally.

For example, investing in student property in Manchester directly as part of a consortium, or indirectly through shares in property companies, are two ways to secure an income stream without a large capital outlay.

Care homes

Major estate agents Knight Frank recently reported that investor interest in British care homes is at a record high.

85 per cent of care home stock is over 40 years old and over half of all beds arent fit for purpose — with demand for suitable properties outstripping supply, there’s an excellent opportunity for anyone with the wherewithal to build properties that meet strict sector regulations.

Knight Frank also points out that major care providers currently only account for 25 per cent of the market — so there’s a definite gap for dynamic smaller players to fill.

Bankrolling a care home in Scotland might be a good bet if you’re looking outwith England and Wales — consultants CBRE confirm they’re currently outperforming traditional types of property.

Getting involved in care property provision is more hands-on than dealing with the domestic or student market because you’ll have to navigate the relevant regulatory framework — but the potential profits are significant.

Car parks

You won’t see many car parks in the glossy pages of high-end real estate brochures — but that doesn’t mean they’re not a great investment.

British Parking Association statistics present 17,000 car parks currently in use across the country, between eight and 11 million spaces and an average annual household spend on non-residential parking of £47 — so there’s ready-made market demand.

Airports provide some of the best opportunities for investment, but there’s no need to focus solely on giants like Heathrow and Gatwick — providing convenient parking at Luton Airport is being prioritised because of a new a new £200 million transit link.

Meanwhile, another investment niche can be found in the park and ride facilities being built on the edges of large urban areas to ease city centre traffic congestion.

So if you’re moving away from mainstream buy-to-let or dipping your toes into property for the first time, these three investment picks for an alternative property portfolio are well worth a second look.

Have you invested in alternative property? Share your thoughts in the comments section.

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