Is It Better to Invest in Property or a Pension?

Reasons
to invest in a buy-to-let

• Landlords
  can enjoy a monthly income plus capital growth.
• The
  property market has been buoyant over the past decade, with prices jumping
  73% between 2013 and 2023. (Source: ONS)
• Demand
  for rental properties is high – a trend that looks set to continue.
  Average UK yields are 5.6% (Source: Zoopla).
• Investors
  who enjoy DIY, have a trade or an eye for design can add significant value
  to a property.
• If you
  know the local market, you may be able to invest in an up-and-coming area
  before prices surge.
• You can
  sell your buy-to-let whenever you want, whatever your age. Although the
  transaction will take time to complete.

Considerations

• Being a
  landlord comes with obligations and legal responsibilities. Many investors
  get a letting agent (the cost of which is tax deductible) to handle the
  day-to-day management of their BTL.
• Property
  prices can fluctuate, and there may be times when your buy-to-let is
  untenanted. However, you can get insurance to cover the loss of rental
  income.
• As a
  landlord, you’re responsible for covering repairs and maintenance.
• You may
  have to pay capital gains tax should you sell up.

Reasons
to Invest in a Pension

• You may
  be able to claim some tax relief on pension payments.
• Depending
  on the type of pension, your employer may make contributions.
• If your
  pension is a SIPP (self-invested personal pension), you’ll have
  flexibility over where you invest.
• You can
  take small sums from your pension when necessary (age permitting). You
  don’t have to cash it out all at once.

Considerations

• Commonly
  you must be 55 to access your pension. (This jumps to 57 in 2028).
• Most
  pension funds invest in stocks and shares, these can rise and fall.
• Some
  workplace pensions offer little choice as to the nature of the
  investments.
• Your
  pension provider will charge you fees.

The
hybrid option

To
diversify their investment portfolio, some people invest in a BTL and a
pension. While not everyone can afford to do this, if you’re in a position to
do so this is an option to consider.

Disclaimer

With
all major investment decisions, it’s always best to consult a financial adviser
for recommendations tailored to your situation.

Contact
us today to learn more about investing in the local property market.