With the launch of the pension freedoms in April this year people with good sized pension funds now have a wealth of new opportunities for investment. For some the ability to cash in their pension and withdraw a lump sum allows them to consider investing in property such as buy-to-let. The booming rental market makes this option very attractive and almost fool- proof, but is it? Advantages of property Retirees looking to secure an income from their investments have to face facts. Savings, investment and annuity rates leave a lot to be desired right now with no prospect of improving in the near future. It is little wonder people are turning to bricks and mortar to secure a better income in retirement as a good buy-to-let property can be very lucrative. Buy-to-let investments have been rising year on year for a long time now as investors see this as a long term stable return on capital invested. Rents continue to increase annually and the demand for quality rental property increases nearly every month as young couples struggle to get on the property ladder. With rents on average over the country standing at £803 per month and the potential for a good capital gain on the property purchased this does on the face of it seem a very attractive route to take. Disadvantages As a pension fund holder you will need to consider many things before cashing in your pension, you must without doubt get professional advice to see if this meets your needs and is best advice for you. If your decision is to cash in the fund and go into the buy-to-let market there are a few things to consider. Any income from the rented property will attract expenses and taxes. These will eat into any income generated and have an impact on the overall annual profit. It is also worth bearing in mind the location of your new buy-to-let property as not all areas are as lucrative as others. Need help with a mortgage? Please call one of our fully qualified advisers for any assistance you require and we will be happy to help.
