More and more pensions are being invested in residential property, so what’s the attraction?
- Firstly, with the UK life expectancy being at an all-time high (and rising annually) the issue of pension pots running out prematurely has become increasingly frequent amongst those in retirement. Consequently, the search for alternative investments, including residential property, to supplement income during retirement has risen.
- Furthermore, since the budgetary changes of March 2014, an increasing number of investors have been seeking alternative forms of investment to fund their retirement. Consequently, as a result of its high level of security, property investment has provided many retirees with a secure source of regular income as well as removing the risk of funds running out during retirement.
- Thirdly, residential property has, time and time again, proven to be an asset that out-performs others year-on-year. More than this, property continues to grow in value over time and as such, makes the perfect long-term investment. Furthermore, an asset like residential property will provide a stronger, more secure income over the course of retirement, making it an appealing long term investment option.
- Another key attraction of residential property as a long term investment, is that the income gained from the house is linked to wage growth and can therefore offer investors a safer hedge to their liabilities than commercial property which is more closely linked to the slower growing retail price growth (RPI).
- Increasingly the popularity of residential property as an investment even further, is the fact that prices are driven by the owner-occupier market and do not correlate to demand from residential property investors. Consequently, this results in there being more bargains to be had with residential investments as they are generally sold at a discount to vacant possession value.
- Finally, reduced affordability in the UK property market has resulted in increasing numbers of pensioners purchasing properties specifically to rent to their offspring in order to get them on the property ladder and thus generating greater value for money in the purchase of a property.
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Pension by Simon Cunningham – Licensed by CC