Pension Freedom Fuels Increase
In UK Property Investment
Since UK pensioners were granted full control of their retirement savings in April 2015, an estimated 60,000 (70%) pensioners have taken advantage of their ability to take some or all of their accumulated pension in a lump sum, with many opting to put their cash into property instead as an alternative to annuities, shares and bonds.
According to the latest Global Real Estate Outlook report published by property investment company IP Global, property remains a far more predictable and stable longer term option compared to alternative investments in the stock market.
In the UK, property prices in London and Manchester are leading the way, with prices in Greater London increasing by 12% in the last year alone.
New properties in Manchester may appear to be valued at less than half the average of London properties, however, residential property prices are expected to continue rising to close this gap, with new projections putting Manchester’s property price growth at a staggering 26.4% by 2019.
Other analysis conducted by financial services comparison website Moneyfacts, found that since pension freedoms were introduced earlier this year, the number of buy-to-let mortgage products available to landlords has risen by 13%, from 574 in April to 664.
Moneyfacts spokeswoman, Charlotte Nelson, said “With the sector lying outside of the Mortgage Market Review that was undertaken last year, it is unsurprising that the number of buy to let mortgage deals available has risen to an all-time high. Savings rates are currently so poor, it is unsurprising that many pensioners are looking elsewhere to fund their retirement income. But the current low rates and easy-to-process buy to let mortgages will not last indefinitely. With base rate likely to rise at some point in the future, it is essential for those thinking about a buy to let mortgage to secure one now.”
The report also shows that other international cities are also attracting pensioners who want to make the most of the strong British Pound (GBP). UK investors can obtain favourable purchase prices and secure continued income in many other countries.
Property prices are continuing to increase in cities like Berlin, which saw a 10% rise in property values, and a 13% increase in the central areas of Tokyo. Growing rental demand in cities like Brisbane means that investors can pocket a yield of around 5.4% per year.
Thanks to pension freedoms, there has been a sharp rise in demand for suitable rental properties from pensioners as they look for a more secure return on their savings and property is traditionally among the safest investment vehicles available
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