The Property Ombudsman

Should you replace your pension with a buy to let property?

For many years, it has been common for the UK population to completely rely on a pension as their only source of income for retirement. Now that people are living longer, the average age for retirement is creeping higher and pensions & annuities are not offering a substantial income for today’s lifestyle. So, what are the alternatives?

The number of individuals actively choosing to save into a pension are decreasing, with only around a third of people in the UK admitting to having one at all. Even those who do save can’t always afford to do so until later on in life, meaning they can end up with less of a lump sum than they anticipated once they reach retirement age. Along with this and the fact that annuities offer a poor return, property is a much more desirable option.

What can buy to let property offer?

Buy to let has been hailed as the best performing asset class for the past 18 years, and returns are known to be far greater than any cash that is just sitting in the bank. Annuities offer a poor deal and were previously purchased to secure a regular income throughout retirement. Thankfully, new laws introduced earlier this year gave flexibility to those over the age of 55 and handed them the power to decide what to do with their pension pot - even those who had already committed to purchasing an annuity. Since the changes took place in April, they’ve already been branded a success as more than £1 billion has been withdrawn from UK saving accounts to date.

In comparison to traditional investment options such as stocks and shares, property still remains relatively low risk. Reports released earlier in the year showed that buy to let delivered returns of up to 1,400% over the last 18 years, which is far superior than any rate offered by banks or shares. Anyone in the UK would struggle to find a way to gain such a high income rate from any other form of investment, which is why more people than ever are turning to buy to let.

Plus, it’s never too late. Those of us who may fear we have left it too late in life to save for a decent retirement fund, remember that property has no time limit. As long as you can save up enough for a 25% deposit then you can still get a sizeable monthly income with yields as high as 10% in some areas across the UK.

Would a property purchase be more hassle in my retirement?

For first time investors, it’s best to carry out extensive research about buy to let in order to be aware of the market and how best to meet your objectives. Chances are, after we’ve finished working life, we don’t want time to be taken up by organising viewings, carrying out reference checks, and dealing with maintenance queries. Hands-off investors have very little dealings with the day-to-day management of their property, as a lettings agent can handle all of this for them. Everything from viewings, paperwork and repairs won’t need landlord input at all, making this the perfect way to generate an income during retirement. Hands-off investors are able to make a profit without having to give up any of their extra time, making it the ideal way to earn a solid income in a sound investment.

Location is key with buy to let property. For those looking for yields and capital growth, northern cities are offering the best returns. Areas such as Manchester and Liverpool have been named as some of the best regions for buy to let yields in the UK. Many investors often look for property near to where they live but this isn’t always where they’ll find the best returns. It’s important to consider buy to let as a business and not to make decisions based on personal preferences.  

Where can I get more information?

Speaking to property investment specialists is a great place to start for those who are new to buy to let. Consultants will be able to speak to you about the overall process and go into great detail about how to reach your financial goals, whatever your budget may be. Specialist companies, like Sequre, often come across investors who are planning to invest for retirement income so can share their expertise and help find the perfect property to suit what you’re looking for.

Whether you’re looking to purchase one property or 100, Sequre source properties at a heavily discounted rate, meaning you can always get the best deal on your purchase. We are experts in our industry and our years of experience has allowed us to find only the best properties in the right locations, to provide the ideal hands-off investment. If you’ve been considering a buy to let investment for retirement, or are thinking of cashing in your pension to fund a property purchase, call us today on 0800 011 2277. 

For more information on investing in buy to let property, call our team today on 0800 011 2277

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