Make your 'lazy money' work harder to beat inflation, urges Yorkshire property investor

People with savings, inheritance or equity in their house need to make their 'lazy' money work harder as inflation continues to destroy their hard-earned cash, a Yorkshire property investor has urged.

Paul Smith, founder of property investment firm Redmayne Smith, warned that the worst thing people with savings could do was leave it sitting in a bank account.

He added: "People with money have seen it destroyed by inflation, people with equity have seen the cost of living destroy their ability to live without putting their lazy money to work and I can't really see much changing this year.”

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Doncaster-based Redmayne Smith, owned by a group of four property investors, specialises in helping people find property investment opportunities in regional cities, including Manchester, Birmingham and Liverpool.

Paul Smith, founder of property investment firm Redmayne Smith.Paul Smith, founder of property investment firm Redmayne Smith.
Paul Smith, founder of property investment firm Redmayne Smith.

In Yorkshire, it has successfully sold out apartment schemes in York and Bradford. It is currently looking at developments in Mexborough and Sheffield.

The company works with a broad range of investors, from wealthy individuals to those on a modest income.

"A significant group of our investors are trying to do something for either pension or legacy purposes,” said Mr Smith.

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He added: “A huge proportion of UK society are in the position where they almost can’t afford to retire. They could be earning quite good money but when they look at what their pensions will give them, they need something else for the future.”

Mr Smith, who has been a property investor for 41 years, left home with £170 in his pocket at the age of 17.

He bought his first house in London for £9,000 in 1982 and, despite friends and family warning that he would become bankrupt, he sold it two years later for £33,000.

"Over my career as a property investor, property has typically doubled in value every seven to 10 years,” he said. “That flat that I purchased in London is now worth more than £400,000.

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"Property is a long-term game but if you carry on doing it for long enough, it tends to create wealth.”

Redmayne Smith uses the ONS (Office for National Statistics) House Price Index to work out the best cities to invest in new build houses and apartments.

"If you look at the last four months of available data, prices in London went up by two-and-a-bit per cent. In Birmingham, they went up by nearly nine per cent and in Manchester and Liverpool between seven and eight per cent,” Mr Smith said.

He added: "We only accept between five and 10 per cent of the developments we’re offered and we demonstrate our faith in a project by deploying our own funds to invest in it ourselves.”

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Mr Smith continued: "The combination of relatively low interest and relatively high inflation is causing people to want to deploy their capital.

”If you leave your savings in a bank account, the real interest rate – the interest rate you’re paid minus inflation – is probably minus six or seven per cent.

"If you’re sitting there with money, the worst thing you can do is not invest it.”