House warning
THROUGH my post comes a photograph of post-industrial Britain — a disused warehouse reflected in an empty water- way. All it lacks is a dog floating upside down. This dismal scene is to the eye of faith (or financial promotion) an invest- ment opportunity — it lets you take a tax advantage of the Business Expansion Scheme, which now extends to rented housing. Promoters of other schemes send me mailing shots with artists' impressions of dinky new houses on sunny days. When BES housing schemes first came on offer, I said that some would be good investments but none was money for old rope. As it proved, the Chancellor had brought in his tax change within months of the top of the house market. The burst housing bubble in London docklands serves to show that warehouses plus water do not always add up to profit. If these schemes tempt you, judge them by two tests. The first is the classic test, location. A property in the wrong place has a defect which can never be cured. (Docklands can show you that, too.) How do you know that your tenants will be good payers? The second test is the quality of income. Don't judge the schemes by their use of the tax advantages. A dud will still be a dud.
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