Sales and letting agency Portico has announced the launch of Portico Portfolio, a service that will enable landlords to invest smartly in property in a ‘tax-efficient company structure’.
The service aims to manage bespoke, northern-based property portfolios for clients and is specifically designed to achieve high yields. The tax side of the operation will be handled by London-based accountancy firm, Accounts & Legal.
Portico Portfolio intends to help landlords and investors in up-and-coming locations outside London, which offer lower entry costs and higher yields.
Long-let rental yields in the north west fare well against London
Portico’s Rental Yield Map revealed that long-let rental yields in London range from 1.5-6.7%. The lowest rental yield can be found on Old Bond Street in Mayfair, whilst landlords can expect the highest yield on Yarnton Way in the south east borough of Bexley.
Long-let rental yields up north, however, are much higher. The average long-let rental yield in Liverpool is 8.3%, with the highest standing at an impressive 13.6%. In Manchester, the average long-let rental yield is 6.5% and the highest is 7.6%.
The tourism markets in these respective cities are also booming, with many new developments with serviced apartment planning status presenting opportunities for short-let management.
But it’s not just high yields that investors in Liverpool and Manchester can benefit from. Despite property price growth in London plateauing, it’s predicted that the north-west will boast the strongest levels of capital appreciation in the UK over the next five years.
Using Land Registry data, Portico found that the average property price in Liverpool has increased by 19.34% over the last five years, rising from £108,267 in June 2013 to £129,562 in June 2018. In Manchester, the average property price has increased by a whopping 47.76% - from £119,951 to £177,243 in the same period.
Reports indicate that the north-west will see property price increases of at least 21.6% over the next five years – boosted by supportive government policy, regeneration plans and a surge of companies relocating from London to up north to lower costs.
How will the Portico Portfolio service work?
Once a client determines their investment budget (Portico Portfolio accepts £150,000-plus), Accounts & Legal will set up a special purpose limited company to act as the investment vehicle with the client as the 100% shareholder.
As the properties will be owned within a company structure, interest is tax deductible and income can be taken as dividends or retained in the company for a later tax-efficient exit.
Portico Finance can help to arrange commercial financing – typically 50% loan-to-value – so £500,000 equity will allow a client to purchase a portfolio of approximately £1 million.
Next, Portico Portfolio will source strategically chosen properties in city centre locations and manage the process from sourcing a property to exchange, including finance, surveys and conveyancing, along with expert tax advice from Accounts & Legal.
Once the property is secured, Portico will manage it with Portico Lettings or Portico Host service. The client will be charged at the end of the month.
Clients are free to buy or sell properties whenever they like within the company. They are also able to sell or transfer the shares in the company to someone else at any time.
“With the launch this year of Portico into Liverpool and Manchester, we wanted to create something unique that makes it easy for London landlords to invest in the north west,” Fiona Veitch, marketing and business director of Portico, commented.
“Launching Portico Portfolio allows us to combine our lettings and Portico Host Service with our financial services expertise, to generate impressive and tax efficient yields for property investors.”
She concluded: “We hope Portico Portfolio will allow both seasoned and inexperienced landlords to take advantage of our strategic advice and knowledge of the market to build strong rental portfolios.”