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Why invest in property?

There are many reasons to invest in property including secure yields and a higher ROI than typical saving methods such as ISA’s and shares.  And with reports this week that the buy to let market could outperform pension annuities, the evidence for property investment is mounting.

The Property Reporter suggested that investors are increasingly opting to gain greater control over their retirement income by reinvesting some of their pension savings in buy-to-let properties.

“This has been possible since 2011, when the annuity rules were made more flexible, enabling savers aged 55 or over to withdraw 25% from their pension pot tax free.  The rules mean that someone with pension savings of £200,000 can take out £50,000 to use as a deposit to invest in property worth £200,000, enough to buy a two bedroom flat delivering a monthly rent of £1,200.  That would cover the £1,035 monthly repayments on a 15 year mortgage at 3%, and represents an attractive gross yield of 7%-8%.  Another plus point is that the interest on the mortgage is deductible against the tax on the rental income.

Because the investment is for income, rather than capital growth, it’s worth noting some difference between what renters and home buyers look for in a property:

– Good access to transport and facilities is paramount

– Evenly sized bedrooms for sharers, and ideally an additional bathroom to ease the morning rush

– While buyers tend to favour outdoor space, bear in mind that renters are unlikely to maintain a garden properly

– Buy-to-let owners may also want to consider certain types of property that might be overlooked by other buyers such as flats above commercial premises

Investors also need not worry that a buy-to-let property will disrupt their plans for a peaceful retirement.  Landlords can outsource most aspects of managing a buy-to-let property, from a basic rent collection service, to a managed service that will even include organising tradesmen to make emergency repairs.   Specialist insurance products offer further peace of mind, providing cover in the event that tenants do not comply with the terms of the rental agreement.”

If you are looking to invest in property, come to Mistoria Group who offer investors a comprehensive turnkey property solution from property sourcing right up to taxation.

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