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News & Blog

Edinburgh Property Rental Market Set For Pensions Reform Boost

Posted: 3rd September 2014

Click-Let LogoWith the UK Government’s proposed pensions reforms due to allow individuals aged 55 and above to take all their pension pot as a cash lump sum from April 2015, Edinburgh lettings agency Click-let is predicting a rise in the number of Edinburgh residents considering investment in rental property and becoming a landlord for the first time.

Click-let’s Operations Director Ross MacDonald said: “People are soon going to have more freedom to choose what they want to do with their money in retirement in order to maximise their return.  One of the options open to them will be to use some or all of their pension pot to invest in property to let.  This could well provide a better return than many other forms of investment, such as shares.  The recent resurgence in house price growth may provide additional incentive.

We would advise prospective later-life landlords to seek professional advice as early as possible when considering how to invest any funds they take out of their pension pot.  They should explore what will be the most tax efficient way for them to invest in a rental property, so that they are not burdened with large tax bills in retirement.  It is unlikely to be to buy property outright with the cash lump sum from their pension pot.  For those with larger pension pots, it may be more beneficial to invest in several properties rather than one to maximise their return.  So, for example, instead of investing £250,000 in one property that nets them £900 per month rental income, it may be better to invest £125,000 each in two properties that both yield £575 per month.

As well as the potential rewards, people should think about how to minimise the possible risks as well as the hassle that may be involved.  For example, if the property lies empty for any period of time and regular rental income is halted, the impact could be disastrous for someone in retirement if appropriate insurance has not been arranged.  A joint venture with a newly-retired friend or a younger family member might be a good way to spread the risk.”

To help anyone considering becoming a landlord for the first time Click-let is hosting a free information event on 9 September.  With property, financial and insurance experts on hand, the event is designed to give budding landlords the opportunity to ask questions, help them decide if property investment is right for them and find out how to get started.  The event will take place at 6pm on 9 September at Click-let’s offices, 123 Leith Walk, Edinburgh, EH6 8NP.  To reserve a place, please call 0131 555 1704 or email ross.macdonald@click-let.com.

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