Investing is a choice many people make at some stage in their life, in the hope of bringing wealth and financial security to their lives. Whilst there are many investment alternatives, property investment is usually seen as one of the safest and most profitable sectors.
Industry experts predict a solid future for buy to let and say that the days of rocketing short-term capital growth are gone. Long-term investors are set to benefit from this and those looking for steady growth are returning to the buy to let market.
Property is an excellent long-term investment, with the potential for a good income and good growth. Capital growth in property in the past 25 years has exceeded just about any other type of investment, particularly in the South East of the United Kingdom.
However, fluctuations in the market and inevitable delays in selling property make it an unsuitable choice for anyone needing short-term returns.
As work patterns change and people become more mobile, demand for rented property and short-term lets is high. In the last few years this gap in the market has been filled increasingly, not by big landlords, but by individuals buying one or more properties as an investment and letting them out to cover the cost of the loan. Many people invest in buy to let property as a pension. The rent can be used to supplement their retirement income, or the property can be sold and the proceeds used as a nest egg.
Some lenders now offer tailor-made packages for just this market. You can now get a buy to let mortgage at interest rates to suit almost any circumstances. These include fixed rate mortgages, discount mortgages and tracker mortgage deals – and are often highly flexible. The difference between a buy to let mortgage and a standard home loan is that most lenders won’t just take your salary into account when assessing eligibility. Potential rental income from the property is often also included in their assessment.
From April 6th 2015, over-55s have the ability to withdraw the whole of their pension and invest in what they wish in retirement. But should retirees and pension holders continue to trust their pension pot, or should they now start to rely on bricks and mortar?
Savers have always had the freedom to withdraw up to 25% of their pension in a tax-free lump sum but, now they can withdraw the whole amount in a number of smaller lumps with 25% still being tax-free. This will largely benefit savers with a relatively substantial pension pot.
Growth in house prices and rewarding buy-to-let yields, as well as the recent stamp duty changes, is making this a tempting option for many. Low pension rates and excessive charges continue to undermine the chances of getting an income from pensions.
When looking long term, property prices have always gone up. Even through economic recession, when house prices fall, they have historically always returned to their original price and risen, often drastically, even more. When the market takes a dive it has always been short-term but this in turn increases rental tenant demand increasing rental income.