Half of UK cash ISA investors eye residential property investment opportunities
With residential property now available in UK ISAs this tax year (2012/13), half of cash ISA holders and 45 per cent of equity ISA investors would be interested in including it in their investments, according to research from Hearthstone.
Data analysis by the specialist residential property fund manager shows that this interest is well founded, as if investors had been able to regularly put their full cash ISA allowance (GBP47,800) into a residential property fund instead (since ISAs launched in April 1999) they would have seen the value of their investments increase by 47.26 per cent.
This is substantially more than the increase that would have been delivered by cash ISAs (+25.59 per cent) and equity ISAs (+22.35 per cent) over the same period and highlights the potential for investors to access the stable, long-term returns from this asset class.
Not only does this asset class offer potentially excellent returns but it correlates well with what consumers are looking for from their investments. The top three considerations for investors this tax year are stable long-term returns (56 per cent), easy access (36 per cent) and strong fund performance (31 per cent).
However, some consumers may be missing out on this new opportunity as just 39 per cent of people fully review the market before they invest in an ISA and only 13 per cent speak to their financial adviser. Instead, 28 per cent speak to their friends and family, 26 per cent go to their bank or building society and 12 per cent simply go to the company they already own an ISA with.
As a Property Authorised Investment Fund (PAIF) the Hearthstone Fund is eligible for tax-efficient wrappers such as ISAs and SIPPs and has share classes that are suitable to both retail and institutional investors. Individual investors can both switch their existing portfolio to the fund and also make use of their full yearly ISA allowance of GBP11,280 or Junior ISA allowance of GBP3,600.
This contrasts positively with cash ISAs where a lower limit of GBP5,640 applies.
Christopher Down, founder and chief executive of Hearthstone, says: “While 2012/13 is the first year that people can put residential property into their ISA portfolio, there is clearly a substantial amount of interest from investors who may have previously selected cash or equities. Indeed, residential property is an asset class which has performed substantially better than average cash or equity returns since ISAs were first launched.
“Buy-to-let has long been of interest to UK private investors and now they can gain exposure to the sector in a tax efficient, diversified and professionally managed fund.”
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