Buy to Let for retirement

coyrls

Thrugelmir said:

As always investors will want their cake and eat it.

What does that actully mean?  What investors? All?  If so and if it's possible to, I disagree.

princeofpounds

Frankly the biggest difference in terms of economic outcomes is the vastly different access to leverage available via the two vehicles. The financial system will allow joe bloggs to gear up 9:1 debt/equity to buy a property (ok, maybe a little less for BTL), but won't countenance it on shares or bonds (some short-term margin trading aside). 

Jaco70

cfw1994 said:

Thrugelmir said:

cfw1994 said:

coyrls said:

Thrugelmir said:

cfw1994 said:

Thrugelmir said:

Albermarle said:

You don’t spend your pot (the properties) on buying an income, in the way you do with an annuity, so therefore you should in effect leave your pension pot and income to your loved ones

Most people do not buy an annuity nowadays . They keep the pension pot invested during the retirement/withdrawal period.

Drawdown might lose it's appeal rapidly over the next few years. Fads are cyclical. 

You think?
DC pension drawdown is a fad?
Really?

Old ideas get recycled with embellishments and take on a life of their own.  Increasingly so thanks to the wonders of social media. 

I really find it hard to believe that the popularity of drawdown for retirement income has been driven by social media.

Yup.  Crazy statement!
Pensions Freedom - well, it only arrived in 2015, it's just a fad 

Equity bull markets help. Bond markets considerably less so.   
Bergen first published the 4% rule (based on US data ) on a 50/50 portfolio in 1994 as a reference point. Later refined to 60\40 as real bond yields started to fall. 
As always investors will want their cake and eat it. 

& you feel "Drawdown might lose it's appeal rapidly over the next few years. Fads are cyclical."
I guess you used the word "might", which perhaps means you don't have an opinion, & were just making statements you felt might be contentious....

OP, your plan sounds okay to me.   
As you say, 15 years is a long way off, the world will likely look very different....might even at some point sell YOUR house (no CGT), move into your finest let for 6+ months then repeat to make a bigger gain, if your offspring don't show interest in taking them on!
Agents are key to this as you move into retirement, I would say - sounds like you have a good one.  My suspicions are that many get slightly greedier over time.  We moved agents years back (a holiday place we have on the IOW - message me if anyone wants to stay, the bookings are cancelling left right & centre, funnily enough!) when they wanted to charge us to replace keys that they managed and had lost!   We again shuffled more recently from the one that made the press recently to a more local one when we realised 24% was a LOT to be taking from us.   Sometimes they lose sight of the fact that you are actually their customer!
So long as you have one who you trust and doesn't shaft you for LOTS of money to change a washer (!), I'd stick with it!

Yes you're bang on the money about agents getting greedier, which is odd because where we live every second shopfront is a letting agent. We had a rate of 9% with one agent (actually 10.8% including VAT, and we can't reclaim this as we're not VAT registered), but this gradually increased to 12% plus VAT and they weren't interested in negotiating. They blame increased levels of compliance, which may have a ring of truth to it. I work in the building game and work for a few landlords who are on a much greater and more profitable scale than me and they won't deal with agents because they refuse to hand this much over in fees. However, they tend to have retired from highly paid careers and therefore don't have regular 9 to 5 jobs to deal with. Also, if you have enough properties you can eventually compile a list of reliable sub-contractors, for the tenants to ring directly in the case of an emergency. You need a good few tenants though, to have a plumber/heating engineer/roofer/locksmith at your beck and call.

Mick70

more and more people that I know are buying holiday lets as a pensions vehicle now, rather than relying on DC pensions

steampowered

The tax treatment is vastly different. One of the reasons why pensions are extremely attractive is because you get tax relief. That's an instant 20% investment return (40% for higher rate tax payers). 

That's before considering the higher rate SDLT, capital gains tax and income tax position - all of which is heavily in favour of pensions. 

steampowered

Mick70 said:

more and more people that I know are buying holiday lets as a pensions vehicle now, rather than relying on DC pensions

Sounds like a recipe for disaster. I really hope your mates aren't relying on holiday lets to live.

Sailtheworld

There is another con to BTL which I don't think has been covered.

Unless someone is very wealthy then owning a BTL is a massive concentration of risk. One single house being relied upon to provide a comfortable retirement. Of course if you have a knack for calling house prices, the rental market and only get the best of tenants and think you're being adequately rewarded for the risk then the futures bright.

The reality is most people don't have that knack and they have no idea about risk either. I've lost count of the number of people who say 'it's doing nothing in the bank' as a reason to get into BTL. It might explain why they accept such poor returns - it's because they're equating the risk to cash.

Durban

Best scenario is to have both

Jaco70

Durban said:

Best scenario is to have both

I agree but unfortunately I've never had the spare cash to put much in a pension, particularly in the first twenty years. Also, regarding 'sailtheworld's quote about having 'money doing nothing in the bank', that wasn't the case for me either. I had to buy-to-get-rent-to-pay-the-mortgage. I started with an ex local authority flat that I inherited. It was the only way I could see to build any sort of pension. I have no work related pension, just a small personal one that I pay into, but it is small. If its worth 200k when I retire I'll be surprised, and it may well not be much more than 100k, depending on the next 15 years or so in work.

steampowered

There are a lot of people in your position. The key thing is to make your money work as hard as possible from now until retirement, and to have honest expectations as to what you can realistically achieve between now and retirement.

Personally I would go for a pension over property for the following reasons:
- Tax relief on contributions.
- Good investment returns - pensions typically hold stocks & shares investments diversified across lots of different companies, the major stock markets have historically generated 6-8% per year.
- No capital gains tax or stamp duty issues.
- There is no need to buy an annuity anymore - you can instead go into drawdown.