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Landlords Could Be Taxed Out Of The Market

Landlords Could Be Taxed Out Of The Market

Conservatives Set About Raising Increased
Tax Revenue From Landlords

Before the general election the Conservatives were the only political party to not openly target landlords and property investors with manifesto rhetoric, making them the property professional’s choice for power.

Even before the budget statement was delivered by Mr Osborne, there was plenty of press coverage about the generous tax treatment enjoyed by private rental sector (PRS) landlords and buy to let property investors.

So it was of little surprise that the Chancellor chose to turn to the private rental sector in order to raise some additional revenue for the government.

Conservatives Vowed To Leave PRS Landlords AloneSpotlight predicted that this would happen after the Conservatives were elected, and this year’s summer budget could be just the tip of the iceberg.

George Osborne before the  summer 2015 budget announcement George Osborne’s post election Budget announcement, made earlier in July, contained two  important changes to buy-to-let taxation that will impact on portfolio landlords and higher rate  tax payers.

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New Warnings Over Using Property For Pensions

New Warnings Over Using Property For Pensions

Relying On Property To Fund Pension Is Not A Good Idea Warn Experts

3.5 million property owners plan to rent out, downsize or sell properties to get enough money in the bank to pay for their retirement according to a survey by an asset management specialist.

However, pension experts are warning that people could be risking poverty in retirement because of the volatile nature of the property market, especially if they were forced to sell properties as values fell.

The research, by Barings Asset Management, discovered that 16% of the UK workforce would be relying on property sales to provide them with all or some of their pension pots, an increase of 13% from 2013 and the highest reported figure since 2009.

Soaring residential property prices are the reason behind the trend. Last week the Office for National Statistics (ONS) said average UK residential property prices were up 11.7% in the year to the end of July to £272,000 (GBP).

The biggest rise was 19.1% observed in London.

The hard hitting story was first published by the Express newspaper earlier this week, with warnings from financial advisors that property investment was a dangerous game to play.

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Buy To Let Investment Beating Pension Investments

Buy To Let Investment Beating Pension Investments

Buy To Let More Popular Than Traditional Pension Saving

There has been a lot of editorial commentary in the media focusing on the surge in UK Buy To Let property investment over recent weeks.

There are numerous reports that the total value of properties owned by 2.5 Million buy-to-let investors is fast approaching the total amassed in workers’ pension schemes built up over decades of employment.

The Telegraph reckons that a total of £1.25 Trillion (GBP) has been invested in buy to let property and this figure is still increasing compared to £1.6 Trillion (GBP) that has been invested in pensions.

Changes to pension legislation announced by Chancellor George Osborne in the Spring 2014 budget, could see more money taken out of pensions and put into the UK’s Buy To Let (BTL) market.

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Buy-To-Let Opportunities For Pensioners

Buy-To-Let Opportunities For Pensioners

Buy-To-Let Mortgage Lenders Set To Offer Retiree’s Mortgages

Buy-to-let mortgage lenders are reconsidering their age restrictions following the Government’s announcement to give pensioners unlimited access to their retirement savings.

The move has prompted a specialist mortgage lender to offer pensioners under the age of 70 35-year mortgages, while retired people are being targeted with targeted  by buy-to-let adverts with senior appeal.

Managing Director of The Mortgage Works (TMW), Henry Jordan, said they have recognised that buy-to-let is a popular source of retirement income, stating “The recent budget announcements could see even more pensioners considering buy-to-let as an option for their retirement savings.”

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Budget Sparks Property Price Increase Fear

Budget Sparks Property Price Increase Fear

UK property prices set to soar by 30%
Says Office for Budget Responsibility

UK residential property prices could increase sharply over the next five years, fuelled by a rise in the number of savers choosing to invest in property rather than taking annuity.

The forecast comes from the Office for Budget Responsibility (OBR), following the changes announced in George Osborne’s latest Budget which means that people will not be forced to take an annuity when they retire and instead they can choose to invest their money as they wish.

Many people are expected to use their pension pot to invest in property, rather than in currently poorly performing pensions, driving up UK property prices in the process.

The OBR has revised its forecast for UK residential property price growth in the next five years from 27% up to 30.8%.

According to the Office for Budget Responsibility forecast, anticipated UK residential property price growth is expected to be:

  • 8.6% in 2014/2015
  • 7.4% in 2015/2016
  • 4.3% in 2016/2017
  • 3.7% in 2017/2018
  • 3.7% in 2018/2019.

The predictions are the OBR’s best guess, they are not accurate in any way shape or form and should be used as a guide only. These are not fact, just speculation.

The OBR are supposed to be an independent fiscal body, however, they estimate that by the end of their forecast period, UK property prices should be just 0.5% below their pre-crisis peak, and the property price to income ratio is estimated to reach 2.3% below its pre-crisis peak.

The OBR also expects transaction volumes will increase at a faster pace than originally forecast over the coming five years. Estimating 1.28 Million housing transactions in 2014/2015, some 6% higher than the previous OBR forecast in December 2013.

The OBR also predict that Stamp Duty receipts will rise 90% over the next four years from £9.5 Billion (GBP) in 2013-14 to £18.1 Billion (GBP) in 2018-19.

The OBR report said: “House prices have continued to accelerate since our December forecast with annual growth reaching 5.5 % in December 2013. We expect house prices to peak earlier than in our December forecast at 9.2% in the 3rd quarter of 2014, with prices rising by around 30% by 2018-19.”

Property price growth is currently being led by London where even large estate agency groups like Savills forecast property values to surge by almost a quarter over the next five years.

According to a five-year outlook recently published by Savills, a number of risks to the prime property markets, such as Eurozone default, have receded over the past two years and Inner London boroughs could see a growth of 23.1%, and property prices in other areas of the capital could also rise by 22.7%.

North - South Divide Widens Again

North – South Divide Widens Again

A new study by the Office for National Statistics (ONS) has revealed that 20% of middle aged workers are property millionaires – on paper!

In the South East of England almost 30% of people in their 40s and 50s living in private residential properties can calculate their wealth to seven figures, when including savings, investments, the value of their homes and pension pots.

However, the study also revealed a sharp divide between North and South of England as well as between generations.

It claims that five times more children are growing up in households in the bottom top wealth bracket, North East, South East, wealth category as there are in the top wealth bracket.

While almost 60% of middle aged people in the South East have built up an impressive half a million pounds in savings, pension and property wealth, in the North East, 20% of the same age group have little or no assets that they can rely on.

The ONS study shows how wealth builds up through people’s working lives but begins to fall once they retire and begin using up their accumulated assets, in many cases on elderly care.

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