Property website TheHouseShop.com predict that the new pension reforms will see a big increase in âSilver Landlordsâ, but warn that many will not be prepared for the responsibility that it brings.
April 2015 saw UK pension savers over the age of 55 given new freedom over their pension pots . The option of taking a number of smaller lump sums, instead of one single big lump sum, is now available in each case, and 25% of the sum will be tax-free.
Handy cash for a deposit
Potential âBuy to Letâ buyers who have a GBP200,000 pot, could cash it in and have Â£50,000 tax-free, but the remaining GBP150,000 would be liable for tax. With property prices in the UK on a steady upward trend, investing in property quickly becomes an irresistible and sensible option.
So what is âBuy To Letâ?
The definition of buy-to-let is a form of residential investment where you buy a property â normally with the aid of a specialist buy-to-let mortgage â and then rent it out. As well as generating an income from the rent, potential investors hope the capital value of the property will rise over time.
Buy To Let Growth
The saying as safe as houses seems to ring true with the growing band of landlords that are benefiting from Britainâs property boom. About one in five homes in Britain are owned by private landlords, and this is expected to rise to one in three by 2032, Government figures suggest. (reported in The Telegraph )
TheHouseShop.com Director, Nick Marr, said: âThree in four of Britainâs 2million landlords regard their property as their pension and itâs a safe bet to predict that we will see a rise in buy to let properties by budding silver landlords releasing the cash from their pension pots.â
Marr says that despite the prospect of owning a buy to let property, all is not golden.
Warning to Buy To Let Investors
Buying an investment property is different than an ordinary residential property purchase - research is key.
Property portals such as Rightmove, Zoopla and OnTheMarket make good places to start. There are some specialist buy to let investment websites that carry smaller stock. Portals such as TheHouseShop carry a mix of both private house sales, agentsâ and developersâ homes, and give you access to listings not found on the major portals. See Listings
Although it seems that turning your cash into bricks and mortar is the sensible thing to do, it may not be the right choice for everyone says Nick Marr.
âJust like any other investment, newbie landlords need to ask themselves some serious question before committing themselves. Is retirement really the best time to enter into something that could lead to additional stress? Are you happy to tie up your capital for a number of years? Have you the time to manage the property?â
Pension confusion reigns
Despite the long run up to the new pension rules, it seems that those eligible are very confused about the implications of the new rules.
Prudential said, on Tuesday, that its call volumes were double the level it would normally expect after a Bank Holiday weekend.
âMany customers were asking about cash lump sums,â confirmed Prudential.
Similarly, Aviva said: âCustomer call volume levels have increased today. Retirement-related calls into our contact centres are a mix of routine information-gathering as well as some requests for part or full cash.â
Download Government pension advice for the new pension arrangements can be found at here