Mr osborne

thirdman

Has Mr Osborne done me a favour? Thanks to the new pension rules, after next april I can now draw my pension as a lump sum, then draw the rest over the next three years to avoid to much tax on the rest. With the capital plus savings , I can invest in a rental property that will give me a better income than the paltry annuity I can purchase. whatsmore I will have the value of the property to pass on to my children, should I kick the bucket early, instead of the pension provider profiting from my early demise.

le_loup

Let us know in say twenty years time.

kidmugsy

thirdman wrote: »

... With the capital plus savings , I can invest in a rental property that will give me a better income than the paltry annuity I can purchase. whatsmore I will have the value of the property to pass on to my children, should I kick the bucket early, instead of the pension provider profiting from my early demise.

Broadly it's not the pension provider who gains by your early demise, it's the other annuity holders. You are mutually insuring yourselves against outliving your money; those who die early subsidise those who die late.

As for rental property; yup, who ever lost on property? Impossible to conceive. Never happened, here or anywhere else in the world.

somethingcorporate

What happens when your tenants stop paying your rent and it takes 6 months to get them evicted? And before they do they trash it from top to bottom.

Bad idea.

dunstonh

I can invest in a rental property that will give me a better income than the paltry annuity I can purchase.

Annuity hasnt been a requirement for a good many years now.

whatsmore I will have the value of the property to pass on to my children, should I kick the bucket early

Subject to inheritance tax that is and potentially capital gains tax. Unlike the pension which is exempt from both and can be passed to them

instead of the pension provider profiting from my early demise.

What makes you think that happens?

rpc

thirdman wrote: »

I can invest in a rental property that will give me a better income than the paltry annuity I can purchase

What happens when you have a void between tenancies? What about maintenance costs? Agency fees? Troublesome tenants that do a runner leaving you with unpaid rent and a big bill?

The annuity will pay out come what may. That sort of security is not cheap.

kangoora

rpc wrote: »

What happens when you have a void between tenancies? What about maintenance costs? Agency fees? Troublesome tenants that do a runner leaving you with unpaid rent and a big bill?

The annuity will pay out come what may. That sort of security is not cheap.

that happened to someone I knew. First they knew of it was when the bank informed them they'd broken their overdraft limit (that bit was their fault for not checking the account they'd set up to get the rental paid into and also pay off the mortgage).

It took almost 5 months to get the tenants evicted, costing a small fortune in legal fees (it was a while ago, not sure if this has changed). To add insult to injury the tenants had stripped the house, all the white goods had been sold, carpets removed, even the central heating system had been sold for scrap. It cost them around £20k to put things right and get back on track with their mortgage - and this was a long time ago.......

BTL isn't always sweetness and light, one reason I've never rented a house out even with multiple house moves. Maybe a mistake, but possibly also saved me money - you can never know until it happens.

mgdavid

kangoora wrote: »

that happened to someone I knew. First they knew of it was when the bank informed them they'd broken their overdraft limit (that bit was their fault for not checking the account they'd set up to get the rental paid into and also pay off the mortgage).

It took almost 5 months to get the tenants evicted, costing a small fortune in legal fees (it was a while ago, not sure if this has changed). To add insult to injury the tenants had stripped the house, all the white goods had been sold, carpets removed, even the central heating system had been sold for scrap. It cost them around £20k to put things right and get back on track with their mortgage - and this was a long time ago.......

BTL isn't always sweetness and light, one reason I've never rented a house out even with multiple house moves. Maybe a mistake, but possibly also saved me money - you can never know until it happens.

sounds like they went into it with their eyes shut, and failed to manage their investment on a pro-active day-to-day basis. Thinking anything is as easy as sitting back and letting the cash roll in is usually going to end in tears, whether it's BTL or stock market investments or even interest-paying bank accounts - all need to be actively managed, regularly and frequently. Yes there are risks but they can be managed and mitigated.

rpc

mgdavid wrote: »

sounds like they went into it with their eyes shut, and failed to manage their investment on a pro-active day-to-day basis.

So you retire, just to take up a job running your BTL?

Some retirement.

Now lets consider how much work is required to receive your monthly annuity payment...

DaveMcG

Mr Osborne has done you a favour by providing you with flexibility and you appear to want to throw the opportunity away. It's true that annuities aren't great at the moment, but that it is because interest rates are low and assumed life expectancies are long for many early in retirement. However, even a basic strategy of drawing from your fund (still sheltered from tax) until interest rates normalise and your assumed life expectancy shortens is worthy of consideration.

DonM

Coincidence. I wrote an article on this the other day. Apparently, according to a recent survey, 1 in 8 people eligible intend to withdraw their full pension next year. 16% of whom plan to purchase property. By all means do it but go in with your eyes wide open. It is risky.

For anyone who is interested the article is here..
https://www.liberty-wealth.com/news/the-terrible-state-of-uk-pension-savings-and-advice-1323.html