The Delph Property Group is expanding the portfolio of First Property Investment (FPI), its unique buy-to-let investment product. FPI, which is aimed at investors seeking medium to long term capital growth, is to start offering new properties within the M25 ring as well as in central London. The company also plans to include properties in the M4/ M5 corridor later in the year.

As the buy-to-let boom continues, the FPI product offers all the advantages of capital growth plus an income of two percent of the purchase price. Financial planning is therefore easier than for traditional buy-to-let landlords as there are no unpredictable voids or maintenance costs. When an investor buys a property from FPI, the company leases it back from the purchaser and in return offers a 25 percent reduction on the open market price and a two percent annual income. It also manages the property for the period of the lease and pays all outgoings. To provide flexibility and liquidity, there is an option to buy out the remainder of the FPI lease at any time after three years.

A significant number of investors are buy-to-let landlords who prefer property to equities or gilts but want to avoid the costs and problems of traditional buy-to-let. FPI investors also include high earners, who view it as a pension alternative or a way to pay for their children's education, and ex pats for whom it is a convenient and accessible route to investment in residential property.

Investors can borrow up to 90 percent of the purchase price through a variety of high street lenders such as the Woolwich and the Royal Bank of Scotland. Depending on the level of the mortgage compared to the purchase price it may be possible to roll up or defer interest payments, making the investment virtually self-funding.

For those who are already buy-to-let landlords, investment in FPI can reduce overall tax on other rental income as the interest on any loan taken out to acquire it can be set against tax. Total tax will be based on the combined incomes of the properties owned, (that is rental income from the other property plus the annual two percent of purchase price from the FPI property), minus mortgage interest. For a higher rate tax payer the saving will be at 40 percent of the difference between mortgage interest and rental income.

David Green, Head of Operations at FPI, said: "We have been delighted with the initial response to FPI and its success in one of the most volatile economic periods of the last 50 years. In response to demand we are broadening the scope of the portfolio to take in popular areas for residential property investment both inside and outside London. At this stage in the development of FPI - not quite yet one year on from launch - we are listening to what the market wants.

"Since launch in March 2001 we have been able to fine tune the finance offered by high street lenders who have welcomed FPI as a more controlled way to invest in buy-to-let. Income is fixed and the investor is protected from the pitfalls that confront the inexperienced landlord. Another big advantage is the 25 percent reduction of purchase price we offer. This is particularly attractive in a down turn, making FPI an attractive alternative to equities and gilts."