In the 2014 budget the chancellor announced changes regarding pension flexibility and the Finance Bill 2014. Individuals reaching retirement age can now benefit from greater access to their pension funds the first of the fundamental reforms announced. From April 2015, regulations will change further how UK pensions work, with restrictions on access to pension pots will be removed, which will enable retirees to use their pension funds more easily to use as they wish, such as investing in buy to let or other types of investment property.
These amendments to the UK pension regulations affect anyone saving into a personal or workplace pension scheme, where payouts are based on the performance of the fund rather than final salary. Bricks and mortar for many years has been an alternative form of savings for many and is the largest asset class in the UK, encouraged by the availability of buy to let mortgages for the last 18 years. Residential property has also reportedly been the best performing asset over the last 30 years and unsurprisingly the concept and types of investment property available to the property investor has evolved.
We also have an aging population in the UK and with some with under-performing pension schemes or no pension scheme in place at all many choose the traditional bricks and mortar as an alternative. The concept of buy to let is now normally a longer term type of investment rather than a “quick flip” The prime aim is to achieve an income or yield that covers the cost of the property and provides a good return on investment. Capital appreciation is also an objective over the term of the investment but this is harder to predict, and may be offset if the property investment does not produce sufficient income to cover the costs and the investor has to utilise more of their capital to support it.
For those looking at property investment and buy to let as an alternative to a pension, the focus naturally gravitated towards income and yields and there are now a number of different types of property assets that can offer this. There is the traditional residential buy to let properties, student accommodation and also now commercial units available in smaller more affordable units that previously available. There are also residential schemes that offer the options of leasebacks at agreed rental levels that can also be attractive to those looking at a regular income.
Whether looking at buy to let student properties or other forms of property investment any potential investor should carry out research and look at all alternatives in the market. For those looking at receiving a regular income from their property investment then research on demand generators, supply, management and market conditions is important to confirm a strong and sustained demand for the property asset. Investment Property Consultants have considerable experience and success in assisting and guiding property investors when buying an investment property and have access to variety of different developments and properties.