Posts Tagged ‘roc investments’

ROC explains Self Invested Pension Plans (SIPP’s)

June 4th, 2011 Posted by admin | Posted in News | Tags: , , , , ,

Overseas hotel rooms classed as Commercial PropertyRetirement planning can be complex and inflexible with a lack of control and personal choice. The required contributions to build a fund in order to provide the desired level of income in retirement can be unaffordable and the performance of traditional equity (stocks and shares based) funds provided by insurance companies hasn’t been great along with the volatility of those funds.

Although most people have heard of the term SIPP there has been much confusion about what can or cannot be invested in a Self Invested Pension Plan and who can benefit from such a scheme.

A SIPP essentially can help you take control of your existing and future pension provision. A SIPP can buy property. It can borrow up to 50% of its net assets in order to fund a property purchase regardless of the investor’s status. You can start a new plan and consolidate your existing pension arrangements in to a new SIPP. There are a number of specialist SIPP providers whom accept overseas property as an acceptable asset.

Not just any overseas property can be purchase with a SIPP – only “Hotel Based” property which, has been deemed by Her Majesties Revenue & Customs (HMRC) as commercial. SIPP investors are not allowed to use their property personally. The property is deemed a “pure investment” and not a holiday home or lifestyle purchase.

An investor using a SIPP can make further contributions ongoing into their SIPP and is entitled to full tax relief which means that if a 40% tax payer paid in £100,000 it could only cost him £60,000. It is also possible to increase the amount of funds available in a SIPP by borrowing up to a further 50% of the value of the SIPP. For example if a SIPP has funds of £200,000, it can borrow another £100,000 making available £300,000 to invest.

Since pension rules were simplified in April 2006 the benefits of SIPP’s have become accessible to the wider , further still since October 2008 when HMRC allowed contracted out/SERPS monies to be accessible unlocked an estimated £50million in pension funds to the UK public that otherwise remained locked in until retirement.

So what are the benefits of investing in property with a SIPP?

  • No requirement for cash investment, so no effect on your current expenditure
  • Tax Relief on eligible contributions at your highest rate, max 40%
  • No Capital Gains Tax on property investments within a SIPP
  • No Income Tax on property investments within a SIPP
  • No dividends to be taxed on property investments in a SIPP
  • Potential Inheritance Tax benefits
  • Pre-agreed limited liability lending
  • A SIPP can be syndicated so two or more people can pool their pension funds to invest in overseas property – ideal for a husband and wife or group investment.

Any type of pension can be transferred into a SIPP, for instance many people have several ‘frozen’ pensions from previous employment or businesses and/or personal pensions that they can transfer into a SIPP. Two or more people can create a group SIPP known as a Family Pension Trust (FPT) which could be ideal for husband and wife investment.

SIPPs are allowed to invest in the following.

  • Stocks and shares listed or dealt on an Inland Revenue recognised stock exchange, including AIM
  • Unit trusts, open ended investment companies (OEICs)
  • Warrants, covered warrants
  • Government stock and fixed interest stock 
  • Un-quoted shares
  • Commercial property
  • Overseas Hotel Rooms
  • Property funds

Initially, the Government was going to allow personal pension funds to invest in residential property and this created considerable interest from investors. However in December 2005, the Chancellor announced a U-turn and the government backtracked. This has lead to confusion on the subject and it is apparent that some people do not know that they can in fact hold overseas property (hotel rooms) within a SIPP.

Hotel rooms are classed as commercial property, whilst most people don’t have a fund big enough to buy commercial units such as an office building or a warehouse. Hotel rooms however offer a different option:-

Hotel units are usually categorized as SIPP compliant if they adhere to the following statements:

  1. The investment is clearly a hotel room.
  2. The buyer has no personal usage of their room or any other room. (Unless they pay normal market rates). 
  3. The investor gains no personal benefit other than from room rental back into their pension fund i.e. no income share from hotel bar or restaurant.
  4. The investment is in no way a residential property.
  5. The unit does not have a kitchen.

It is advisable to take advice from a financial adviser when considering purchasing through a SIPP. ROC can introduce you to an independent pension specialist for this purpose.

Purchasing property maybe something you have not previously considered but the ability to now access investments using pension funds could now be an option for you without the requirement for ANY further cash investment. To discuss our SIPP approved projects contact us.

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Five reasons why to invest in buy to let hotel rooms

May 12th, 2010 Posted by admin | Posted in News | Tags: , ,

buy to let hotel rooms from roc investmentsThere are plenty of options when it comes to property purchase and investment but in today’s market there is one option that is holding its own – buy to let hotel rooms.

Hotel and resort developers offer individual investors the chance to buy hotel rooms within high-end resort developments. The investor will benefit from the annual income from room rentals, benefit from capital growth and can use their room typically for up to 30 days a year. 

If you are considering a property investment a buy to let hotel room could be the right option for you. Here are five reasons why:-

1. Buy to let hotel rooms reduce your exposure to risk

When you invest in a buy to let hotel room, the return on your investment is based less on the room but in the success of the hotel as a whole. Generally, buy to let suites and hotel rooms are pooled together so that you earn a percentage of the room rates across the hotel, not just on your own room. A single investment property may lie empty for months at a time, meaning lost revenues, but hotel rooms attract guests all year round.

2. Buy to let hotel rooms offer a low initial investment – and a high return

When it comes to investing in any property, current markets can make it incredibly difficult to access the finance you need. These problems are only compounded when the property you want to invest in is overseas. When it comes to buying a hotel room, the developers and agents will likely have negotiated with a bank in advance to help prospective buyers along – the banks are often more willing to invest in the security of these types of developments run by experienced developers and management teams.

Indeed, the current troubles in the housing markets can actually be an advantage to savvy investors considering whether or not to buy hotel rooms. A buyers market often means help from the developer with fees and other out of pocket expenses. ROC Investments offer the opportunity to purchase buy to let hotel rooms with 100% finance available.

3. When you buy hotel rooms, you benefit from capital appreciation and a regular income

Like any buy to let property investment, buy to let hotel rooms offer both a regular income and the potential for capital growth. Unlike buying a single, one-off property, buying hotel rooms can generally provide a greater degree of security. Whereas your property might lie vacant while you search for tenants or holidaymakers, high-end hotel rooms will always be popular with everything from overseas tourists to ‘locals’ on a weekend break. Traditionally, high-end hotel rooms will also generate a higher rental per night than stand-alone holiday lets or buy to let options. That means returns in the region of 10% or more can be achieved at even 50% occupancy. How much would you earn if your buy to let property were vacant 26 weeks of the year?

4. When you buy hotel rooms, someone else manages all the day-to-day hassle

Perhaps the biggest attraction of buy to let hotel rooms is the fact that an experienced and professional team is in charge of everything from the finish and furnishings of the rooms to fixing the broken toilets. Buy to let owners will happily pay management companies a hefty percentage to look after the day to day needs of their properties – when you buy hotel rooms that service is built in.

Experienced hotel management means existing contacts with travel agents and tour operators, it means tried and tested marketing methods and extensive marketing budgets. It also means as an investor you’ll never get a call from an irate neighbour or disgruntled tenant. If fact, it’s the perfect option for hands off investors who’d prefer to enjoy the benefits and leave the hard work to someone else. ROC Investments work with some of the world’s largest and well respected hotel groups in the world such as Oasis Hotels, West Paces Hotels and Sol Melia.

5. Your investment can be tax efficient

Individuals can use pensions to purchase a buy to let hotel room using a Self Invested Personal Pension (SIPP) which can be highly tax efficient. Buy to let hotel rooms are permitted by HM Revenue & Customs (HMRC) to be held within a SIPP because the properties are classed as commercial property assets. HMRC stipulate that owners buying with a SIPP are not permitted to use their properties. Tax benefits of purchasing a buy to let hotel room with a SIPP are:-

  • No Income Tax on rental income generated by your hotel room
  • No Capital Gains Tax on the resale of your hotel room   
  • Any eligible contributions you make into your SIPP will attract tax relief at your highest rate of relief. Contributions will benefit from 20% tax relief at source – as soon as a contribution is made 

More information: Contact ROC Investments about buy to let hotel rooms, by emailing invest@rocinvestments.co.uk or calling +44(0) 1902 722 930

 

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