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Time for a Property Pension

Landlords may recall that a couple of years ago the Government were contemplating allowing landlords to include a buy-to-let property within their Self Invested Personal Pension (SIPP) as one of a number of changes affecting personal pension provision. These all subsequently came into force in April 6 2006 the so called “A Day”.

However, the Government shortly before the change and despite a number of hints that they were going to proceed with this bold step, decided at the last minute not to go ahead.

One of the primary concerns was that by allowing investors to include buy-to-let property in their pension that this would encourage a bout of speculative buying of residential property contributing to an already overheated residential market.

This clearly can’t be said now.

Property Hawk calls for a SIPP re-think.

Property Hawk now calls on the Government to consider a re-think on buy-to-let property being excluded from a SIPP.

Chris Horne Editor of Property Hawk the UK’s leading landlord website with over 25,000 registered users calls on the Government to look once again at the idea of allowing landlords to place buy-to-let properties into a personal pension.

“With residential property investment yields rising and house prices falling the case for investing in residential property as a long term investment ideal for a pension is stronger than ever.”

“The stimulus that would be provided by landlords and investors being encouraged back into the residential market could be just the boost that the beleaguered residential property market needs.”

Property Hawk urges the Government to re-think their personal pension policy and allow landlords to place their investment property into a personal pension. A buy-to-let property held within a SIPP would mean that rents and other income from the property would accrue tax free as well as any capital gains made on the sale. The Government is likely to limit the size of any loan secured on the buy-to-let property but given the current squeeze on lending criteria by buy-to-let mortgage lenders this would not be seen as too onerous by many landlords.


1. Historically it’s relatively low risk.

Unlike direct investment in equities, residential property as an asset class is relatively stable and has only fallen in value in real times three times since the war. Fluctuations in value tend also to be much less volatile. This means that as a pension investment it is much better suited than many other investments to the needs of retiree. Individuals with stock market based pensions risk large falls in the size of their pension pot. If this occurs just before a person is due to retire then this can have a big effect on their overall pension situation.

2. Capital and income options
A property is ideal for a pension in that it provides the option of taking a large capital sum or providing a regular income in retirement. This gives the individual retiree the flexibility to spend or invest their capital sum following the sale of their property or take a regular income in the form of rent to provide or supplement their income.

3. Long term growth profile

Despite the recent fall in house prices residential prices have shown a consistent upward trend over the long-term. This is ideal for pension investors who are concerned with long term not short term investment profiles.

4. Flexibility is a key advantage.

Traditional pension products are inflexible in the way they work. Many require the purchase of an annuity within a few years of retirement. An annuity guarantees the purchaser a regular fixed income until they die. Annuity rates fluctuate and investors can be forced into buying at a low level. A residential property would provide a regular income but the owner would have the flexibility to dispose of the property when the time was right for them.

5. Property is an ideal asset for estate planning.

For those people with children and family property provides an ideal asset to be passed onto the next generation. It can either be used as a home for them to live in or can be retained as an investment.


Using Property Hawk’s unique Investor Appraiser you can calculate what your future financial returns will be. For example using the example of buying a £200,000 property with a 75% repayment mortgage on a 5% yield your returns at the end of 25 year mortgage would be 16.8% per annum assuming that a long term growth rate of 5% in house prices (inflation at 2%, rental growth of 3%). In basic terms you would have a property that was paid for and worth £338,640 which assuming a rental of yield of 5% would rent for £16,932 per annum.



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