How doctors care for their own families' futures
03-14-2016
Two doctors explain how funds focusing on Central London property have helped them to successfully invest in the buy-to-let market
Just what the doctor ordered: Central London properties make sound investments
Buy-to-let property has been the go-to investment for many hardworking people over the years, whether it’s bolstering their retirement savings or securing their children’s future.
Prime Central London (PCL) has been a particularly attractive choice, with long-term growth averaging a consistent 9.3 per cent a year since 1996. However, the high entry price of property has made this market inaccessible to many investors.
Now, new tax changes are also causing concern. Buy-to-lets will attract an additional 3 per cent Stamp Duty from April and mortgage interest relief will be reduced from 2017. This means the more affordable buy-to-lets in the UK’s cheaper regions are suddenly looking far less affordable.
But there appears to be a solution to all this, according to two of the UK’s most eminent doctors. They have both chosen Central London property funds as a way to care for their family’s futures.
Jonathan Waxman is a Professor of Oncology at Imperial College and an honorary consultant at Hammersmith Hospital. He founded the national charity Prostate Cancer UK to raise awareness of prostate cancer and to fund much-needed patient support. He also established an All-Party Parliamentary Group to improve standards of cancer treatment throughout the country.
Why did you choose a fund focusing on Central London property?
It is a great investment market that has outperformed almost anything else. I have always been keen to access it but didn’t have the necessary capital to set aside until property funds came along.
With the funds, which aim to return over 10 per cent per annum, I know my investment will keep pace with the market. Here was a chance of me getting a foot on the property investment ladder for my kids and be confident that they will eventually have an adequate deposit for their own homes, anywhere in the country.
Why did you invest through a fund structure, rather buying your own buy to let?
The funds are professionally managed, hassle free and with lots more buying power than I would ever have, leaving me free to concentrate on my ‘real job’.
They are also incredibly versatile, because I’ve been able to invest on behalf of my children, use my SIPP and take advantage of tax-efficient ISAs. And now the funds are also exempted from the new rise in SDLT and the forthcoming reduction in mortgage interest relief, so it seems a win-win proposition.
What do you look for by way of returns?
I have never been an aggressive investor chasing high yields in risky and volatile asset classes, but with base rates at a historic low, leaving cash in the bank was completely unattractive.
I was looking for options which provided good and stable capital growth, and London Central Portfolio (LCP), the fund manager, has a great investment track record.
Have you been pleased with the results?
Absolutely ecstatic, because the investment has done exactly what it says it will do.
Do you have any other property/property investments?
My own home.
What about your other investments? Do you invest in shares?
I have in the past, but now I am much more likely to continue to put money into property funds. The returns that LCP provided have been exactly what was projected, whereas if I had put my money on the stock market, my investment would have gone down. If I had left the money in the bank, it wouldn’t have kept up with inflation.
Would you invest in LCP’s latest fund, London Central Apartments III (LCA III)?
I remain absolutely positive about the future for Central London property – after all, it remains the global capital – so I would certainly consider it. The new tax benefits are very attractive, too, and with a fund I can choose my own ticket size to match my wallet.
Maurice Slevin has had a prestigious career, working in the Department of Medical Oncology at London’s St Bartholomew’s Hospital for almost 30 years. He left to found Leaders in Oncology Care, which has established a highly successful model of providing totally integrated cancer care from diagnosis to treatment and patient support.
Why did you invest in Prime Central London (PCL) as an asset class?
My investment was mainly for retirement savings. I was looking for an asset class with reliable returns and Central London is a market which has historically, and consistently, outperformed most others. It is a market which seems to have been robust in the face of global crisis, when other asset classes have failed, and which continues to have global appeal.
My gut feeling is that the economic and political instability worldwide is going to make it an even more important player on the global stage.
What are the benefits and disadvantages for buy-to-let investors through funds?
Many people think they can “go-it-alone” in the property market. However, just like any other investment, you need the relevant expertise to really make your money work. Most people would use a skilled investment manager for equity investments and it should be the same for buy to lets.
And then there is the hassle factor. I don’t believe I could have done the same on my own, unless I put in an enormous amount of time and effort, which I don’t have, and even then, I don’t feel I would have the expertise.
Would you be interested in investing your pension (SIPP) or your ISAs in a property fund (LCA III)?
I have made all my investments in the LCP property funds through my SIPP. Not only has it enabled me to be extremely tax efficient, but it also provided a rare opportunity, because very few property funds are accessible through these means and, of course, you cannot invest directly into residential property through your SIPP.
The lock-up time of five years for your capital may be off-putting for some investors, but I was not interested in income returns because I am still working, and the structure is perfect for long-term retirement planning.
To my mind, there is no comparison with other general proprietary SIPP products on the market. At best, you will stand still – and that is probably optimistic now.
Have you been pleased with the results you have achieved through property funds?
I have been surprised and delighted by how my investments through LCP have done. They have done much better than the average rise in properties in London
London Central Portfolio are specialist residential investment advisors focusing on Prime Central London. They have an extensive private client practice and have successfully brought multiple funds to market, capitalising on this sector. Their latest, Sharia-compliant London Central Apartments III, will be open for subscriptions until March 2016. For more information, visit London Central Portfolio.