Property investment
Commercial Property Investment Risk Warning
This warning notice draws your attention to the risks associated with some investments in Commercial Property, in particular most Limited Partnerships.
Full details of any commercial property investment are contained within the memoranda, which you should read carefully. The sums and any tax calculations are for guidance purposes only and will depend on individual circumstances. Any reliefs quoted are estimates according to the rules and practices currently applying. Hoyland Financial Management LLP can accept responsibility if tax reliefs are not available or are withdrawn at a later date. These are often Private Investments for selected high net worth clients and by definition may be non-readily realisable investments and you could lose all of your initial cash input less any net rental income distributed to investors. Many of these investments do NOT fall under the Financial Services Act and any reference to regulation by the FSA should be ignored. The Investors Compensation Scheme as established by the Securities and Investment Board (SIB) is not available for claims relating to many of these deals.
As with property in general, the value of the property in these schemes can go down as well as up.
It may also be difficult to obtain reliable information about the following;
1) the extent of the risks to which it is exposed.
2) the value of land and buildings: as it is generally a matter of a valuer’s opinion rather than fact.
Commercial Property Investments are normally established to be held as an investment for a very long period. Although mechanisms may be available to enable the underlying property to be realised during this period, you may have difficulty in selling your investment before realisation of the underlying property and therefore, you should not invest in Commercial Property if you may need to sell your investment prematurely.
For Pension Investors Only
In relation to investments by a SIPP/SSAS, if applicable, you should fully understand that these investments may not be readily realisable and that this could impact on your ability to take pension benefits if there are not sufficient other liquid assets held by your plan.
You should also fully understand that in the event of your death, the pension trustees may need to encash the investment to pay death benefit to your beneficiaries and that the price they obtain may not reflect the full value of the plan’s share of the underlying investment.
Investments will frequently be geared with finance arranged usually with a limited recourse loan. The loan is normally limited in recourse to the property and its income stream only. Loan to value covenants may apply. Gearing increases the potential upside and downside of an investment and in certain cases may leave you exposed to long term liabilities.
Accordingly, you should carefully consider whether such investments are suitable for you in the light of your personal circumstances and the financial resources available to you.