Sales and letting agency Portico has launched Portico Portfolio, a service that will allow landlords to invest in property in a tax-efficient company structure.
The service will see Portico use its lettings expertise to create and manage bespoke, northern-based property portfolios for clients, which will be specifically designed to achieve high yields.
Fiona Veitch, Portico’s marketing and business director, said: “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.
“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.
“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.”
The agent has partnered with London based accountancy firm, Accounts and Legal, to handle the tax side of the operation.
Clients will determine their investment budget, Portico Portfolio accepts those with £150,000 plus, then Accounts and 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.
The service can help to arrange commercial financing, typically 50% loan-to-value (LTV), so £500,000 equity will allow a client to purchase a portfolio of approximately £1m.
The Portico Portfolio team will then source strategically chosen properties in city centre locations in Liverpool and Manchester.
The service will also manage the process from sourcing a property to exchange, including sourcing finance, survey, conveyancing along with expert tax advice from partnering Accountancy firm, Accounts & Legal.
Once a property/properties are secured, Portico will manage the property with Portico Lettings, or Portico Host services where applicable; the client is then charged at the end of the month.
Clients are also free to buy or sell properties whenever they like within the company, or can sell or transfer the shares in the company to someone else at any time.
The service is intended to help landlords or those sitting on savings invest in up-and-coming locations outside London, which offer lower entry costs and higher yields.
Data from the Portico Rental Yield Map shows that long-let rental yields in London range from 1.5% – 6.7%.
The lowest rental yield of 1.5% can be found on prestigious Old Bond Street in Mayfair, whereas landlords can find the highest yield near the Sewage Works on Yarnton Way, in between Abbey Wood and Belvedere in the south east borough of Bexley.
Compared to London, long-let rental yields up north are staggeringly higher. Portico’s research shows that the average long-let rental yield in Liverpool is 8.3%, with the highest yield long-let rental yield in the city standing at an impressive 13.6%.
In Manchester, the average long-let rental yield is 6.5% and the highest long-let rental yield is 7.6%.
Liverpool and Manchester’s tourism markets are also booming. There are many new developments with serviced apartment planning status which open up the opportunity for short let management. These can provide even higher yields, managed through Portico Host.
But it’s not just high yields that Liverpool and Manchester landlords can benefit from. Despite property price growth in London plateauing, forecasts show that the North West and its key cities boast the strongest levels of capital appreciation in the UK over the next five years.
From analysing Land Registry data, Portico has found that the average property price in Liverpool has increased by 19.34% over the last five years, growing from £108,267 in June 2013, to £129,562 in June 2018.
In Manchester, the average property price has actually increased by a huge 47.76%, jumping from an average of £119,951 in June 2013, to £177,243 in June 2018.