Warning to Newbie Silver Landlords As Buy To Let Set To Rocket

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Property website TheHouseShop.com predict that the new pension reforms will see a big increase in ‘Silver
Landlords’, 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 ‘Buy to Let’ buyers who have a GBP200,000 pot,
could cash it in and have £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 ‘Buy To Let’?

The
definition of buy-to-let is a form of residential investment where you buy a
property – normally with the aid of a specialist buy-to-let mortgage – 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
Britain’s 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: “Three in
four of Britain’s 2million landlords regard their property as their pension and
it’s 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.”

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, agents’ and developers’ 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.

 â€œJust
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?”

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.

“Many customers were asking about
cash lump sums,” confirmed Prudential.

Similarly, Aviva said: “Customer
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.”

Download Government pension advice for the new pension arrangements can be found at here

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