Upcoming pension reform set to create increase in buy to let activity
Recent figures indicate a high demand for buy to let property from those over the age of 55.
The anticipated rise is highlighted as a result of research announced earlier this week by YouGov and Old Mutual Wealth. The study demonstrated a vast increase in the number of individuals who plan to withdraw available cash from their family home to invest in buy to let property and supplement their pension fund.
The data indicated that 11% of those surveyed, planned on purchasing a buy to let property – quite an increase from the 6% of individuals who currently rely on buy to let property as an income generator at the moment.
This new wave of first time landlords over the age of 55 are expected to favour one and two bedroom apartments over other types of investment property.
The news comes ahead of the pension reform due to take place in April 2015, which will see all those approaching retirement gain access to their entire pension savings.
Comments from Sequre
Graham Davidson, Managing Director of Sequre Property Investment, comments on the upcoming pension freedoms:
“It comes as no great surprise that those approaching retirement, and even those currently in retirement are looking to take advantage of the new pension freedoms. From April, those aged 55 and over will have the opportunity to access their entire pension pot, giving them the ideal opportunity to invest in property."
“For the last 18 years we have seen buy to let outperform all other forms of investment, largely down to the fact that it’s proven to be a safe and reliable option for retirement when managed properly. The current pension system has seen thousands forced into buying annuities over the years just so they can get a guaranteed income for retirement and those who do manage to save, gain very little interest by having money sat in the bank. Investing in bricks and mortar not only gives investors the opportunity to experience a return from day one, but they also see the property gain value for years to come.”
He adds “The recent figures just go to show that those affected by the reform are maintaining a positive outlook for property investment. As research shows most of the interest is leaning towards one and two bed apartments and areas such as Manchester, Liverpool and Salford are ideal places to be looking for this kind of investment. Not only are they generating yields of 8-9%, better than most other places in the UK, but they also offer great potential for capital growth and don’t cost much to maintain.
“As long as those looking into buy to let are doing their research and are aware of rental demand and likely returns, they should be looking at a great investment for both their retirement, and their family’s future.”