Perfect Storm or Washout – Is Now a Good Time To Invest In UK Property?

Brexit & Risk

You have to have a certain appetite for risk to be purchasing property in the UK amidst Brexit uncertainty and under the rule of a “weak” government, which does not have a clear majority in the house of commons.  These political factors indicate a potentially rocky future for the UK government, economy and general stability.

There is a real risk to London’s high earning population, as several institutions such as Banks are moving their headquarters elsewhere. The London property market is slowing down as a result and prices are reducing overall in the City Centre[1].
This situation, however, presents certain opportunities that shrewd investors are taking advantage of.

Weak Pound
The Pound Sterling is very low; not historically low, but low nonetheless.  Therefore investing from outside the UK is potentially lucrative due to the potential uplift on the currency value.

Strong North
Unlike the London downturn, prices in the North of the UK are rising fast, whilst remaining relatively low in comparison to the rest of the country.  Occupancy rates are high and a well-selected portfolio could yield very high returns indeed.  Additionally, a timely purchase could lead to attractive future value increases.
Add to this the changes in the mortgage interest relief act (S24 Finance Act 2015) that are causing landlords to offload their portfolios, and you have a unique opportunity to pick up ideal properties from fed-up landlords.

Perfect Storm
We at MPG believe that with the right combination of factors, this could be a rare window of opportunity to invest in one of the world’s most established property markets.  With the experience and know-how to source the right properties, high yield can be achieved.  With the right investment structure, many of the issues that private landlord are experiencing can be overcome.  This might well be the perfect moment to enter the UK property market.

Written by Mark Lloyd, Managing Director of Max Property Group UK and Director of “How to become a Property Investor company – Property Mastery Academy”

Understanding MEES – a guide for landlords

In just a few months the minimum energy efficiency standards (MEES) for commercially rented properties will come into force.

From 1 April 2018, landlords of non-domestic private rented properties (including public sector landlords) may not grant a tenancy to new or existing tenants if their property has an EPC rating of band F or G (shown on a valid Energy Performance Certificate (EPC) for the property).

There is ample guidance on the internet about the legal requirements, allowable exceptions and assessing the risk to property portfolios. This article sets out to explain in non-technical terms the process by which the energy performance of a property is assessed and what the rating on the EPC means.

It will advise on how to interpret the recommendations that accompany the EPC and to develop the business case for making improvements that may be necessary to achieve the minimum energy efficiency rating of E or better in order to comply with the legislation.

Assessing Energy Performance

The legislation governing the energy performance of building in the UK arises for the European Energy Performance of Building Regulations. In the UK the government has implemented the Directive through Part L of the Building Regulations and the National Calculation Method (NCM) for assessing the energy performance of buildings. The government has issued a software tool known as the Simplified Building Energy Model (SBEM) for calculating energy performance ratings, while software vendors have issued their own tools which have been assessed and approved by the government as compliant with the NCM.

Interpreting the EPC

The EPC shows the energy efficiency rating on a linear scale of 0 to 150 divided into bands A to G with A being the most efficient. The numerical rating is a measure of the CO2 emission from the actual building compared to a Standard Emission Rate (SER) based on a reference building of the same type, size and orientation under standardised occupancy, operation and weather conditions. It should be noted it is not based on the actual energy consumption of the building. The rating can be compared to the car manufacturers’ quoted mpg which is much lower than for the car as driven. It is important to be aware of this when considering the business case for making improvements and estimating return on capital invested.

The EPC rating assesses the energy performance of the building fabric and the fixed building services compared to minimum standards defined in the reference building. It does not include other energy uses such as small loads, appliances and office equipment. The EPC is accompanied by a Recommendation Report based on a generic list of improvement measures defined in the NCM. This list is filtered based on the input data. For example if double glazing is entered into the calculation tool then the recommendation to fit double glazing would be omitted. Energy assessor may delete inappropriate recommendations and add others. The recommendations are divided into short payback less than 3 years, medium payback 3 to 7 years and long payback more than 7 years. It should be noted that the software generated paybacks are only indicative and further investigation and calculations will be necessary to make a business case for investment.

Making the business case for improvement measures

Where a commercially rented property currently has an EPC showing an F or G rating, with few exceptions, urgent action is required to improve the energy performance to achieve at least an E rating. As a first step we strongly recommend having the building be re-surveyed taking note of any changes and improvements since the original EPC was produced, taking the time to gather as much detailed information about the building as needed to produce the best EPC rating. Many energy assessors working for low fixed fees use default values when calculating the EPC rating which tends to produce an F or G rating. A re-calculation of the rating with more detailed and more recent data may be the most cost effective way to comply with the MEES legislation.

It will be apparent from what is said above that the EPC and recommendation report are only the starting point for assessing possible improvement measures and ranking them in order of cost effectiveness. Landlords or tenants are interested in the energy they pay for as recorded on the meter which can be substantially higher than that predicted by the NCM. Developing the business case for improvement has much in common with the Energy Saving Opportunities Scheme (ESOS) which large organisations have been required to carry out. Organisations that have completed an ESOS audit should start by looking at the recommendations in their ESOS report. The principle is to first identify the total energy consumption by all end uses and generate an energy profile to show where most energy is used. For example, in the profile below for a modern office, IT equipment and servers account for a significant part of the total while also creating a large cooling load.It can also be seen that other uses of electricity such as desktop equipment, not accounted for in the NCM, are significant.

Estimates based on independent spreadsheet calculations or dynamic simulation software such as DesignBuildercan then be made of the energy savings from a range of improvement measures and these can be ranked in order of payback or other criteria. Where there is significant capital investment a Life Cycle Cost Analysis (LCCA) should be carried out. For example, replacing existing lighting with LEDs which can have a lifetime of up to 50,000 hours achieves a large Net Present Value over the life of the lamps.

If the primary objective is to improve the EPC rating to comply with MEES, then improvements should only be made to those elements of the fabric and fixed services that are included in the NCM. There may be other cost effective improvement measures, such as reducing the set point temperature for heating, that while very cost effective they will not improve the EPC rating because of the limitations of the NCM calculation method. To future proof the building against further tightening of the energy performance legislation it would be prudent to aim for a D rating.

Before starting to consider improvement measures it is important to understand the significance of basing the energy efficiency rating on CO2 emissions. A carbon dioxide emission factor in kg CO2/kWh is applied to each fuel type. Grid supplied electricity has the highest factor 0.519 kgCO2/kWh compared with 0.216 kg CO2/kWh for natural gas. It will be apparent that measures to reduce or displace grid supplied electricity will have the biggest impact on improving EPC ratings.

A further consideration is the impact of the improvement work on the tenants with the possible loss of rental income.

Some low cost least disruptive measures to improve the EPC ratings include:
Provide more information to allow a more details to be entered into calculation of the EPC rating. For example entering lighting data as ‘designed’ rather than ‘unknown’ can significantly improve the EPC rating.
Check for recent improvements
Re-calculate the EPC rating using more detailed and accurate data
Install daylight sensors and occupancy sensors to control the lighting
Install or upgrade heating and cooling controls

Other relatively easy to install measures:
Upgrade older lighting technology with good quality LED lighting. LEDs have high efficiencies and if adequately cooled can have a lifetime of up to 50,000 hours greatly reducing maintenance costs. Life Cycle Cost Analysis shows that the Net Present Value at the end of the lamp’s life in very good.
Consider installing renewable energy sources such as solar panels or wind turbines. Their output displaces grid supplied electricity and may be the least disruptive way to improve the EPC rating.

Other measures such as replacing the HVAC system or improving the fabric of the building will require more capital investment and be more disruptive leading to possible loss of rental income. Older buildings may benefit from improved insulation but given the short time between now and 1 April 2018 and the current concerns about cladding following the Grenfell Tower fire, this is probably a non-starter.

Achieving the most cost effective and least disruptive package of improvement measures

Investigating all possible improvement measures and identifying the most cost effective and least disruptive package of measures requires a level of knowledge and skills that go beyond those required to produce EPCs. For many years the Chartered Institute of Building Service Engineers (CIBSE) have maintained a register of Low Carbon Consultants (LCCs) who have been assessed as having additional competencies beyond those required to produce an EPC. Many LCCs are also registered with CIBSE as Lead ESOS Assessors and have carried out audits of the total energy consumption of large organisations. They are able to advise on all aspects of energy use in buildings, not just those uses of energy included in the NCM to calculate the EPC rating. Colin Lillicrap Associates uses LCCs who are accredited users of approved dynamic simulation software such as DesignBuilder DSM. Dynamic simulation tools create a detailed model of the building and calculate how it performs using local weather data throughout the year (not possible with the more basic SBEM software).Our LCCs skilled in the use of dynamic simulation software can investigate a broader range of improvement measures and advise on the most cost effective package of measures.

Originally posted in:

Author: Dr Colin Lillicrap

Buy-to-let: how many properties do I need to own to set up as a company?

By Sam Meadows  The Telegraph
Several key tax changes have hit buy-to-let investors’ profits.  The additional stamp duty surcharge of 3pc has made buying a property to rent more expensive at the purchasing stage, often to the tune of tens of thousands of pounds. And changes to tax relief, due to be fully phased in by 2020, are forcing many mortgaged landlords to adjust their expectations of returns.
The stamp duty changes were introduced by former chancellor George Osborne last year and mean anyone purchasing an additional house above the value of £40,000, must pay 3pc on top of the stamp duty already levied.
The phasing in of tax relief cuts, meanwhile, began in April. Before then, landlords could offset interest paid on a mortgage from their profits before tax calculations. Now tax relief is only available on 75pc of the interest, and by 2020 it will not be available at all, and will instead be replaced by a tax credit. The effect will be that all mortgaged, higher-rate taxpayers will lose income.
Other landlords might see the changes push them into a higher tax bracket, even though they are not actually experiencing an increased income.
The changes have prompted a cooling of the buy-to-let market, as nervous investors shy away from buying new property.
But, as has been well-publicised, those landlords purchasing through a limited company structure are exempt from these changes. So, at what point would it make financial sense not to own the properties directly, but to set up as a company and own the properties through that instead? Here, mortgage broker Private Finance has crunched some of the numbers.
The financial pros and cons of setting up a company
Director Shaun Church said: “The option to invest through a limited company has come under the spotlight recently as landlords look for ways to offset recent tax changes.  But landlords shouldn’t rush into this assuming it’s a clear route to saving money.
One of the downsides, he points out, is the higher cost of borrowing via a company structure (see below).
“Larger landlords might find the tax benefits associated with limited company ownership outweigh the higher cost of mortgage borrowing. Each investor is different and there’s no one-size-fits-all solution.”
What are the costs of running a limited company?
It costs little to actually register a limited company with the Government. Using an intermediary can be easier as they will deal with all the relevant forms, but will set you back around £100 – whereas doing it yourself costs only £12.
Limited companies are obliged to file annual tax returns. As well as a small charge for actually submitting your returns, it may be necessary to hire an accountant to help.
The main expenses however, can be seen when it comes to borrowing. Limited companies can expect to pay hundreds more in terms of mortgage payments than individual borrowers.
According to Private Finance, a landlord with one property earning the UK average rental income of £11,010 a year on top of a base salary of £35,000 would take home close to £1,400 less each year using a limited company structure.
This landlord would pay a mortgage rate of 3.41pc when borrowing through a company, as opposed to 1.92pc as an individual. Based on a mortgage of 75pc of the property’s purchase price, Private Finance estimates the take-home income would be £1,369 less if owned via a business set-up.
So when does having a limited company structure pay off?
Clearly, higher interest rates mean small-scale property investors remain better off operating on a direct or individual basis – but there is a point when it will be cheaper to run as a company.
According to Private Finance that tipping point is four buy-to-let properties. A landlord renting out that number of properties at the UK average will then make £274 more than an individual counterpart.
This is based on rental income and base salary being £79,040. The annual mortgage costs will then by £19,646 for a company and £11,062 for an individual, but the tax bill will only be £9,435 rather than £18,604.
This makes the company’s net income £49,644, as opposed to the individual’s £49,374.
What if I already have an individually-held property empire?
Unfortunately, whether you only own one buy-to-let property or have a large portfolio as an individual, selling the properties and then “repurchasing” them within a limited company is unlikely to work out for you.
To transfer the properties from your own name to a company you will have to sell them, incurring potential capital gains tax. Stamp duty is likely to be payable when you re-purchase inside a business. This makes this method unfeasible for someone with a small number of properties.
Research by Private Finance suggests even those with a large number of buy-to-lets will be better off staying put. An investor with five rentals earning a £90,050 a year in income would have a take-home pay of £53,768 when acting as an individual.
Ordinarily, operating as a company, they would have a take-home pay of £54,584. But once stamp duty and CGT incurred by the transfer are taken into account this would plummet to just £5,374.
Spreading these one-off payments across ten years, take home pay would be £49,663 – more than £4,000 less per year than operating as an individual.
Originally posted in The Telegraph

April Newsletter Max Property Fund

Max Property UK Launched

We are very pleased to announce the launch of the Max Property fixed rate secured bond in the UK, offering fixed returns of 7.2% p.a.  Max Property invests in UK assets through a corporate structure, so investors can enjoy all the benefits and none of the hassle of buy-to-let property ownership.

The investment is 100% asset backed by UK real estate, and Max Property has partnered with the global leader in corporate and trustee services for investor security.  With over 30 years of experience behind them, the company Directors are highly experienced buy-to-let, tax and investment professionals with unique access to investment properties and industry services.

Additionally, the weakness of the Pound Sterling makes it particularly attractive to those investing in a different currency.

If you would like to receive an investment brochure or the Information Memorandum, do not hesitate to contact us at


Following requests for a more detailed document, a Prospectus for the Max Property Fund Netherlands was finalised during Q1 and is now available.  It is not approved by the AFM, as it is voluntary, but has been reviewed by Confidon and it mostly conforms to AFM guidelines.

In the future we will offer an AFM approved brochure, but this is currently not required. When this has been achieved (towards the end of 2017) we will make a further announcement.  The Prospectus has now been added to the Max Property Fund website ahead of schedule, and is available in Dutch.

If you would prefer to receive a copy by email, please contact us at

Press Release Max Property Launch

UK Company Aims to End Landlord Woes


Industry professionals come together to address the fiscal and regulatory changes affecting UK buy-to-let ownership 

London – April 2017 – A crack team of British professionals have joined forces to “capture the perfect storm” in the UK property market with the launch of their company Max Property Investment Group plc today which pays out 8% p.a. to investors as well as a 30% profit share.  Adopting a corporate bond structure means that money is invested in property but it is the company rather than the investor that deals with the wave of financial, regulatory and practical challenges currently facing existing and aspiring landlords.

Managing Director and property educator, Mark Lloyd, says, “As property investors ourselves, we have been personally affected by the recent changes in the UK property market. We decided to turn a negative into a positive by creating a company that can help others avoid the problems we have been facing.”

The company’s Directors believe that with living costs rising, low interest rates, property prices in the UK fluctuating, as well as the weak Pound, there is an opportunity to be seized. “It’s at perfect storm”, says Mark Lloyd “The market is experiencing a lot of uncertainty and turbulence and that creates opportunities. If you know how to navigate the rapids, the UK property market can still be a very attractive way to generate returns for investors.”

But instead of investors directly investing in UK real estate Max Property is offering a fixed rate bond of 8% p.a. to investors with full management in place so that individuals can enjoy yields derived from UK property without the hassle of tax returns, deposits, repairs, property management, advertising and all other tasks and costs associated with private property ownership. Moreover, the much discussed buy-to-let tax changes coming into effect this month do not apply to properties under the ownership of a company, further influencing buy-to-let profitability.

Mark Lloyd, who owns a property sourcing company and spends his time giving seminars and workshops to aspiring property investors, has unique access to undervalued properties which further boosts the company’s ability to achieve healthy returns.

The company has partnered with Intertrust, the global leader in corporate and trustee services since 1952. Senior tax lawyer, formerly for HMRC, Paula Ruffell, says “We wanted to find a way to safeguard people’s money whilst maximising returns and making their investments tax efficient.”

The launch of Max Property UK follows the success of Max Property Fund in the Netherlands and precedes the launch of an additional property investment structure in Germany.


Co-Founder and Managing Director: Mark Lloyd
Co-founder of Property Mastery Academy

Co- Founder and Director: Paula Ruffell
Lawyer, tax adviser, property investor

Co- Founder and Director: Bruce Rayner
International banker turned philanthropist

PR Contact

Max Property Investment Group Plc

01252 730045

35 Great St. Helen’s
London EC3A 6AP

United Kingdom

Link to Website
Link to Investment Brochure

Buy-to-let Tax Changes Explained

April is just around the corner, with the changes in landlord taxes due to come in.  Buy to let landlords are set for potentially big increases in their tax payments, but what exactly are they, who do they affect and how can they be avoided?

What are the changes?
The amount of Income Tax relief that landlords can claim on residential property finance costs will be restricted to the basic rate of tax.  So rather than paying tax on profits, having deducted mortgage interest payments, landlords will soon pay tax on all their rental income, minus a basic tax credit.
Imagine you are a landlord with a buy to let mortgage.  You have an annual rental income of  £10,000 and annual mortgage interest payments of £8,000. 
As things stand, you can deduct your £8,000 mortgage interest from your rental income and you only have to pay tax on the £2,000 that are left over.  If you are in a high tax bracket, such as 40% for example, that means paying 40% on £2,000 which is £800.
As of April, the changes being introduced mean that you will eventually have to pay 40% on the full £10,000 and you will only be able to deduct 20% of the mortgage interest.  So you will have to pay 40% on the full £10,000 rental income (£4,000) and only be able to deduct 20% of the interest repayment amount (20% of £8,000 = £1,600) resulting in a tax bill of £2,400.   Thats a big difference! 
Who will they affect?
The changes will not affect everyone, and those who are affected will be so to varying degrees. 
The changes are applicable to mortgage interest payments so landlords with no mortgage will not be affected at all.  Those with high interest rates will be most affected. 
Similarly, the changes apply to income tax payments, so those in the higher income brackets will be worst affected by the changes:
Imagine the landlord receiving £10,000 was in the 20% tax bracket.  As things stand, he has to pay 20% on his £2,000 which is £400.  Under the new rules, he will have to pay 20% on £10,000 which is £2,000 minus the 20% tax break which is £1,600 so he will still pay £400. 
Those affected will be people who:
Let residential properties as an individual, or in a partnership or trust
Are UK residents who let residential properties in the UK or overseas
Are non-UK residents who let residential properties in the UK
Are trustees or beneficiaries of trusts liable for Income Tax on the property profits
Have finance costs (mortgage interest, loans, overdrafts, premiums or disguised interest)
Those NOT affected by the introduction of the finance cost restriction will be:
UK resident companies
Non-UK resident companies
Landlords of Furnished Holiday Lettings
Landlords without a mortgage or loan
It is worth noting that there is a transitional period, and landlords will still be able to deduct some of their finance costs during this period. These deductions will be gradually withdrawn and replaced with the basic rate relief tax reduction by 2020.
Other restrictions on reliefs
The tax changes affecting landlords are unfortunately not restricted to mortgage interest.  Tighter restrictions on the wear and tear allowance have meant that landlords can no longer automatically to deduct 10% of rental profits but can only claim tax relief on actual repairs made and for which they have receipts.
All of this in addition to the stamp duty surcharge for landlords announced in the Autumn Statement as well as the requirement for landlords to pay capital gains tax on any profits within 30 days of selling a property from April 2019.
How it can be avoided

Limited companies are not affected by the changes to mortgage interest tax relief.  Landlords could therefore move their assets into a company structure.  However, such a move may incur a capital gains tax payment, and mortgage options for companies might also be limited.  Alternatively, a landlord could transfer property ownership to a spouse or partner who is in a lower tax band, bearing in mind this could also have capital gains tax implications, and/or lift the spouse into a higher tax bracket.