If you want to grow your money but don’t think a REIT investment is right for you, there are various alternatives available. Here are just some of the options you might want to consider, although if you’re in any doubt, speak to a financial advisor before taking action.
Stocks
Investing in the stock market can be an effective way to grow your wealth over the long term. However, as with REITs, there are risks involved and you could potentially lose some or all of your original investment. If you are considering this option, our guide to the stock market covers everything you need to know to get started.
Another question you could well be asking yourself is, “which is a better investment, REITs or stocks?”
In terms of inflation and interest rates, it could be argued that stocks are a riskier option. This is because when interest rates rise, share prices fall, causing stock traders to short sell their stocks out of worry that prices won’t rise again in the future.
REITs, on the other hand, react in the opposite way. Their prices rise with interest rates, rather than fall. Economic growth helps boost the value of REITs, and, in turn, your earnings.
Bonds
Investing in bonds works in a similar way to taking out a loan. When you buy bonds, an institution, such as the government, or company is effectively borrowing money from you with an obligation to pay it back with interest. Buying bonds is generally considered safer than investing in REITs or stocks and shares, however, the returns tend to be much lower.
Property
You could choose to invest in property using other methods which come with lower risks. For example, if you have a large lump sum to invest, you may want to consider buying a property and then renting it out to secure a regular monthly income.
Alternatively, if you have a spare room in your existing home, you could take in a lodger. The rent-a-room scheme allows you to earn up to £7,500 a year tax-free (£3,750 if you share the income with someone else), making it a tax-efficient way of generating some extra income.
Fixed rate savings accounts
Fixed rate bonds (also known as fixed term deposit accounts) can be a great way to grow your wealth if you have a lump sum to invest. A fixed rate bond is a type of savings account that locks your money in at a fixed rate of interest for a specified amount of time, typically one year, two years, three years or five years.
In return for tying up your cash, you’ll earn a highly competitive interest rate for a set period (the best interest rates are usually available on longer terms). This makes them an attractive option if you want to earn a guaranteed return and would rather not put your money at risk.
Grow your wealth with Raisin UK
Although we don’t currently offer REIT investments, you’ll find a wide range of high-interest savings accounts in the Raisin UK marketplace.
Our fixed rate bonds offer competitive interest rates that don’t change from the day you open the account until the end of your term. Plus, all of the savings accounts in our marketplace are covered by the Financial Services Compensation Scheme (or European equivalent), giving you peace of mind that your money’s safe and secure.
To quickly and easily open a savings account with one of our partner banks, simply register for a free Raisin UK Account and apply for your chosen account today.
FAQs
REITs are investment trusts that own or finance income-generating properties. They are traded on the London Stock Exchange, meaning that they are easy to invest in and highly liquid.
Is there a UK REIT index? ›
The FTSE EPRA Nareit UK REITs and Non- REITs Indices are a subset of the FTSE EPRA Nareit UK Index, separating constituents into both REITs and Non-REITs indices.
Are REITs taxed in the UK? ›
Tax status of a REIT
A REIT is exempt from corporation tax on both rental income and gains on sales of investment properties (and shares in property investment companies) used in a property rental business carried on in the UK.
Which UK REITs pay the highest dividend? ›
Which UK REIT pays the highest dividends?
| Name | Market Cap (£m) | Dividend Yield (%) |
|---|
| NewRiver | 305.38 | 16.25 |
| AEW UK | 129.59 | 9.78 |
| Regional | 330.97 | 8.34 |
| Real Estate Investors | 60.09 | 7.46 |
42 more rowsThe main things you can invest in are direct securities like stocks and shares, and US domiciled funds that have received HMRC reporting rights. This can be a complex area, so it's worth seeking out a professional who can make sure you're keeping both HMRC and the IRS happy.
Can foreigners invest in UK real estate? ›
Yes, foreigners can buy property in the UK without any legal impediments. However, specific processes and regulations must be followed, such as providing necessary documentation and understanding the UK property market's nuances.
Does Vanguard offer REITs in the UK? ›
Vanguard REIT ETF
If you find it hard to select the best REIT in the UK, a US-focused REIT ETF may be right for you. The Vanguard REIT ETF looks beyond the UK to track the MSCI US Investable Market Real Estate 25/50 Index.
Who is the largest REIT in London? ›
Derwent London is the largest London office-focused real estate investment trust (REIT) and owns a 5.4 million sq ft portfolio of mainly commercial real estate in 13 'villages' across central London.
Where are UK REITs listed? ›
List of the UK Real Estate Investment Trusts (REITS) on the LSE
| UK REIT | Price | Market Cap |
|---|
| SEGRO PLC | 848.6 | £11.36 bn |
| SHAFTESBURY CAPITAL PLC | 133.2 | £2.60 bn |
| SIRIUS REAL ESTATE LD | 93.35 | £1.26 bn |
| SUPERMARKET INCOME REIT PLC | 71.9 | £0.90 bn |
44 more rows(iii) With respect to property that consists of land or improvements, the REIT has held the property for not less than two years for the production of rental income.
As a US citizen or Green Card Holder, receiving dividends in the UK is a unique situation. There is a capital gains tax allowance, that for 2020-21 is £12,300 – an increase from £12,000 in 2019-20. This allowance is the amount before any tax is payable. Any capital gains exceeding this amount will be subject to US tax.
Do non-UK residents pay tax on dividends? ›
Individuals who are non resident in the UK are not taxable in the UK on UK interest or dividends received. However, if tax is deducted at source from the interest and/ or dividends, then some or all of the tax may not be refundable ( this is known as disregarded income).
Why are UK REITs falling? ›
On the other hand, if the private equity companies buying now represent a turnaround in valuations, Reits risk losing out. High interest rates, higher loan-to-value (LTV) ratios because of lost value, and discounts to net asset value (NAV) restricting equity raising make it hard for most to go on spending sprees.
Which UK REITs pay monthly dividends? ›
- ARMOUR Residential REIT. Industry: Mortgage REITs. ...
- Prospect Capital Corp. Industry: Asset Management and Custody Banks. ...
- LTC Properties Inc. Industry: Healthcare REITs. ...
- Apple Hospitality REIT. Industry: Hotel and Resort REITs. ...
- iShares J.P. Morgan USD EM Bond ETF. ...
- Realty Income. ...
- Stag Industrial. ...
- Agree Realty Corp.
National Grid is considered to be one of the safest dividend shares in the UK by many investors. And it's not difficult to see why. Operating in a legal monopoly, the firm has next to no competition, making everyone in Britain dependent on its infrastructure.
How are US REITs taxed in UK? ›
PIDs are UK REITs only. US REITs are subject to 15% withholding tax, which will be automatically applied.
Can a non UK resident invest in the UK? ›
There are no restrictions on foreign investment in the UK and non-UK resident individuals investing in the UK are generally only subject to UK tax on limited UK source income and gains. Tax, of course, is not the only consideration when investing in a foreign jurisdiction.
How do I open a REIT UK? ›
To be eligible as a REIT in the UK, the firm must hold at least 75% of its gross assets in rentals and generate at least 75% of its profits from these. The REIT must own at least three properties and no individual property can be more than 40% of the fund's total asset value.
Can foreigners invest in REITs? ›
As a general matter, absent some applicable exception, foreign investors in REITs are subject to U.S. federal income tax on dividends and on depositions of their interests in REITs. REITs are treated as domestic U.S. corporations.
