Property

Question 1

What effects property prices (4)

Answer 1

1. Prosperity of an area or an economy.
2. Commercial property values only follow business profitability in very general terms - likely to be different to business cycle.
3. Tenants and void periods
4. Property type

Question 2

Drawbacks of property investments

Answer 2

1. Liquidity
2. Management Issues/ costs
3. Void periods

Question 3

Considerations in choosing residential property

Answer 3

1. Location
2. Tenants
3. Age and condition of property
4. Diversification

Question 4

Expected yield on property (equation)

Answer 4

1. gross rent - expenses / market price + costs of buying

Question 5

Explain rent a room relief

Answer 5

1. Must occupy as your main property
2. Gross rent before expenses below £7,500
3. Split between partner (not double)
4. if over £7,500 can pay tax on excess with no deduction of expenses
   OR
   gross rent less expenses

Question 6

3 sectors of commercial property (lowest to highest yield)

Answer 6

1. Retail
2. Office Buildings
3. Industrial Property

Question 7

Problems with Commercial Property

Answer 7

1. Sale and purchase of commercial property is a relatively slow.
2. Higher SDLT
3. Growth generally inline with periodic rent reviews