The Government’s new freedom on pensions (announced recently) will give over 55’s a new chance to invest in property – securing a far more attractive return during their retirement years than a pension. The Treasury insists that thousands of pensioners will benefit from a new freedom in rules, allowing savers to dip into their pension savings when they want to. Under new rules (valid from 1st April 2015) savers will be able to draw 25% of their pension, either in one chunk or a number of smaller amounts, completely tax free.
This obviously gives people looking to the future, the flexibility and choice to invest in products which offer a far better return than the standard pension. A lump sum invested in a carefully chosen property development could typically offer returns of 7-15%, and ‘Buy-Back’ options of up to 150%.
Throughout the ups and downs of the economy over the last 50 years, property has proven to be one of the most solid and lucrative forms of investment, offering a great alternative to pensions when considering saving for the future. There are (of course) always risks to consider when looking at property investments, but there are great deals to be had which offer an incredible amount of security. In particular, deals with developers who have a proven track record often boast fixed rate returns over a set number of years, attractive buy back options and funds secured against assets in prime locations. If buying into a development seems a daunting prospect, here at Red Brick Wealth we can offer our Due Diligence ‘top tips’ based on our 12 years experience working with our carefully chosen developers…
Check out the developer:
• Look at the developer’s track record with previous projects.
• Ask to visit previous completed projects where funds have been returned to investors.
• Make sure you meet the developer and ‘walk the ground’ of where the new development will be.
• Use Companies House, Linkedin and Google to do your own research into the background of the company directors.
Check out the land:
• Check with Land Registry who owns the land where the build will take place.
• Check the land has the correct planning permission.
• Check if there are any other charges on the land/property. (You want to ensure you have First Charge against the asset).
Check your contract:
• Read your contract thoroughly and make sure you seek independent, professional advice to ensure full understanding of what you are signing.
With the relaxation in pension rules, combined with the quality of property investments that are currently available, the next 10 years could be an exciting time for those brave enough to look beyond the traditional UK pension.