Tel: 01283 701569

Experienced Independent Financial Advisers

Buy-to-let

19 Dec 2017

Boom to be sustained by pension freedoms

In the previous five years, buy-to-let has seen the impact of huge property price increases. THERE HAVE BEEN legislative changes, new tax treatment and deep economic uncertainty across the country.

New research reveals that it’s the over-50s who will help keep the buy-to-let market buoyant, with one in ten people (13%) aged 50 or over[1] likely to invest in property after they retire. This could create 1.3 million landlords[2] who consider property a safe bet when the time comes to access their pension wealth.

Boosting income in retirement

Key reasons for considering buy-to-let include the prospect of capital growth, as well as providing a regular income (50%) or to boost income in retirement (44%). A third of the over-50s (36%) think property is a safer place for their money than investing in stocks and shares. A similar number of people (35%) also think it provides better returns than leaving the money in their pension or putting it in the bank.

Some over-50s (22%) have already experienced success at being a landlord, while 18% said they were interested in residential property and would enjoy the process of rental management.

Withdrawing significant cash sums

There are a number of things to consider before embarking on a career as a landlord. First and foremost, a pension is designed to provide an income in retirement, which is usually done either through drawdown or an annuity. People will need to think long and hard before withdrawing significant sums of cash from their pension, as any withdrawal over the first 25% is subject to Income Tax.

If your main priority is to generate an income, then the rental yield from the property may not provide the income you expect. Don’t forget you will also have to manage the property, or pay someone to do this on your behalf.

Diversified investment portfolio

With most people’s main asset being their home, the old adage of having all of your eggs in one basket has never been truer when it comes to pensions and property. A diversified investment portfolio is more likely to deliver the retirement outcome you planned.

Ultimately, the choice of whether or not to invest in a buy-to-let property or portfolio depends on your goals. It’s worth remembering that there is a consensus that the private rented sector will grow, in whatever form, very significantly. A recent survey from Knight Frank suggests that as many as one in four Britons will be renting by 2021. If you think strategically, buy-to-let could therefore still represent an appropriate investment opportunity.

Source data:
[1] Research was conducted by Censuswide between 28/06/2017 and 29/06/2017. Online interviews were conducted among 1,005 people aged 50 and over, yet to retire, who have some form of private pension savings.
[2] Retirement Advantage calculation using ONS population data of over-50s.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Footnote: Our belief is that all finacial advice should be tailored to your particular needs and situation. The content of the articles featured in here are for your general information and use only; they are not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. Please get in touch to meet with us for a full consultation.

Get in touch for more details

Please fill the form below to contact us

    Your Name (required)

    Company Name

    Your Email (required)

    Areas of concern

    Individual servicesCorporate servicesMiscellaneous

    Subject

    Your Message

    We take your Privacy Seriously. Personal information submitted to us with this form will be treated in accordance with the Data Protection Act 2018 and General Data Protection Regulations ‘GDPR’. By submitting this enquiry form you expressly consent to be contacted without prior notice or arrangement by using the contact details you have provided on the form. For further information on how we treat your personal information, please view our Privacy Policy

    I have read and agree to the privacy policy. Please retain my details to contact me.Please do not add me to the mailing list.