The 2017 Brexit PropertyInvestment Guide

A year on, and the Brexit camp is only too keen to point out that the prospect of Britain’s divorce from Europe has barely left an imprint on house price growth or the economy.

House prices are up 5.8% in the year to February 2017, according to latest figures from the Office for National Statistics. Meanwhile, the Bank of England hiked its growth expectations in the most recent Inflation Report, with GDP expected to hit 2% in 2017.

It is clear the UK Property Market continues to go from strength to strength even in times of uncertainty. Just like the UK’s richest 1,000 people have stated “it’s time to keep calm and carry on making billions” amid the Brexit vote of 2016.

The Rise of the UK Property MarketJust 12 months ago, ‘Project Fear’ was in full swing with frontline Remainer, George Osborne, warning Brexit would push the UK into recession and see house prices plummet by 18%.

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Since the triggering of Article 50 by Prime Minister Theresa May, there has been little effect on house prices. In much of the UK, homebuyers are moving because they need to, because of jobs or an expanding family; this means that prices will hold up in much of those areas.

Demand will remain high and due to the shortage of houses being built, the value of property will keep rising in most areas. Barclays Bank has predicted a 6.1% rise in property prices by 2021, meaning the UK Property Market will remain a buoyant investment opportunity.

The Impactof Brexit

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The Strength of the UK EconomyThe United Kingdom is renowned for it’s size and consistent strength of it’s economy. It is the 9th largest export economy in the world, remains a strong investment opportunity with a number of well established brands announcing investment in to the UK including Google and Face-book, meaning the effect of voting to leave the EU has been more mut-ed than economists’ expected.

Since the 2016 Brexit vote;

. Borrowing has dropped by 28% from the previous year in 2017

. Britain’s unemployment rate remained at 4.7%

. Britain’s manufacturing industry remains strong

. The World Bank expects the UK economy to grow by 1.7% this year (2017)

. Britain’s construction industry output jumped to a 17-month high in May 2017

*Figures provided by Daily Telegraph, The Guardian, Sky News and The BBC

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Top Export Markets & Destinations

Machinery: $60.3 billion (this represents 14.7% of total exports)

Vehicles: $51.7 billion (this represents 12.6% of total exports)

Pharmaceuticals: $32.2 billion (this represents 8% of total exports)

Gems & Precious Met-als: $27.5 billion (this represents 6.7% of total exports)

Electrical Machinery: $27.1 billion (this rep-resents 6.6% of total exports)

United States: $54.7 billion

Germany: $39.5 billion

Switzerland: $32.5 billion

China: $27.6 billion

The Netherlands: $23.8 billion

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5*Figures provided by International Monetary Fund’s World Economic Outlook Database

Top Export Products Top Export Destinations

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For many years, property investors have sought the highest returns from the Central London Property Market but as this area continues to stagnate and property prices remain flat, investors and developers are seeking alternative solutions.

Barclays have predicted property hotspots will emerge in the North of England thanks to employment opportunities and business start-up rates.

Additionally, property advisor, JLL have predicted a 18.1% rise in house prices in England’s north-west by 2021. The growth will be fuelled by the area’s imbalance between supply and demand.

And JLL predicts that, as a result of this continuing undersupply, both rents and capital values will continue to increase drastically over the coming years.

Investing in UKProperty

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One of the investment opportunities which allowed you to benefit from a buoyant UK Property Market was Buy-To-Let. But due to Government Policy, Buy-To-Let, a long time favourite with many high net worth and sophisticated investors, has experienced an unfortunate downturn due to the recent tax changes by the UK Government.

Profitability in the private UK Buy-To-Let market will fall by 86% over the next 4 years (The Guardian, 2017). The UK Government is determined to reduce the sector’s attractiveness to investors and tackle the housing crisis all in one.

Recent changes include the reduction of mortgage interest tax relief and an increase in stamp duty on second homes. Until now it has been possible to claim every penny of the interest on a buy-to-let mortgage as a tax-deductible expense. Previously, landlords paid tax on the remaining income after the cost of a mortgage was deducted. However, since the change, landlords pay tax on the total income before the cost of the mortgage is deducted, decreasing the profitability of UK Buy-To-Lets.

In addition, the stamp duty levy has increased the cost of buying a second home by 180% - thus making Buy-To-Let a very, very bad idea.

Traditional Investment Options

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The AlternativeTo invest in the UK Property Market, investors need to be aware of the alternative options. Times have changed and whilst the UK Property Market remains a strong investment opportunity, traditional property investments are becoming more and more unproftiable. The alternative? Loan Notes.

A Loan Note is a professionally structured financial instrument; put simply, just an extended form of an IOU. It is a legal contract that specifies the duration of the loan, when the loan is required to be re-paid and the interest payable. Hunter Jones is a leading introducer of Loan Note opportunities in the UK.

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Why Loan Notes?Traditionally, property developers and construction companies funded property developments with loans from the bank. But after the 2008 recession, banks changed the way they lend money. Heightened caution amongst lenders caused them to deem virtually all development financing too ‘short term’ which has meant that developers have had to seek alternative methods for raising capital.

The gap in the development financing market has been fulfilled in the form of Loan Notes, which allow developers to raise the necessary capital required and also offer high returns to investors in exchange. They were rarely issued by smaller quoted financial companies to private investors, but there has been tremendous growth in the number of individuals moving their funds into Loan Notes due to the enviable yields paid.

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Track RecordLoan Notes are fast becoming the new ‘go-to’ property investment opportunity in the UK and Europe. Hunter Jones are a leading introducer of such opportunities and we introduce certified investors to a range of developers who then use these funds to acquire commercial properties for development into residential accommodation.

Empire Property Holdings is one of the developers which Hunter Jones raises Loan Note funds for. In 2016, Hunter Jones were the lead introducer in raising £6 million in Loan Note finance in less than 6 months. This capital was then used to acquire three commercial properties for development. The details of each development are displayed below.

Empire Property Holdings takes advantage of the recent permanement change in Permitted Development Rights.

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Example #1 of a Successful Loan Note Funded Development

63 Bradshawgate, Bolton

£900,000 - Purchase Price£2,240,000 - Development Costs£3,140,000 - Total Cost

£491,400 - Rental Income£5,310,000 - 2016 Valuation

Expected Annual Return - 13.6%*

Empire Property Holdings was set up by Paul Rothwell, who was recently featured in the Daily Telegraph with a £33 million portfolio.

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King Charles House, Pontefract

£900,000 - Purchase Price£1,860,000 - Development Costs£2,760,000 - Total Cost

£400,000 - Rental Income£4,500,000 - 2016 Valuation

Expected Annual Return - 12.3%*

Example #2 of a Successful Loan Note Funded Development

New Commerce House, Wakefield

£370,000 - Purchase Price£1,280,000 - Development Costs£1,650,000 - Total Cost

£260,000 - Rental Income£3,120,000 - 2016 Valuation

Expected Annual Return - 11%*

Example #3 of a Successful Loan Note Funded Development

*Figures based on management projections based on development’s business plans and official valuations. They are not intended to act as an indication of future performance of any other investment opportunities. Investors may lose all invested capital if the property market or development fails. Hunter Jones only markets to suitably qualified investors. For more information, see our website.

The information contained within this document is intended as a general guide. This information does not constitute an offer or a contract and we (or anyone in our company) do not imply, make or give any representation, guarantee or warranty whatsoever relating to the terms contained within. Any intending investor must satisfy themselves as to the correctness of any of the statements, plans or images contained within. Images are for illustrative purposes only. The content contained within is

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Reasonable care has been taken by us in the preparation of this document but we do not accept any responsibility or liability for the information which has been provided by 3rd parties. We further do not accept responsibility or liability of views or opinions herein provided or provided by us or on our behalf (whether orally or in writing) unless we have expressly confirmed such information and/or views and/or opinions in writing as being such that it should and can be relied upon. The

information provided should not be taken asfinancial advice in relation to the UK property market or property investment advice. We do not warrant the accuracy or completeness of the information and/or

measurements and/or financial returns provided in this document and any intending investor should be aware thatproperty prices can go down as well as up.

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