Today the government announced that they would introduce legislation to prevent investors from selling their investment holdings unless they had a good enough reason to ……..

Can you imagine that! How ridiculous would that be? Who would want to be an investor with that kind of legislation?

Probably not many, BUT that is what is exactly what is about to happen to private residential landlords. Legislation is to be introduced to prevent landlords from serving an eviction notice on tenants! That means a tenant can stay as long or as short as they like, and the landlord cannot do anything about it.

This is NOT good news for landlords.

Without getting into the politics or the rights or wrongs of the changes, that are going to take place and the implications, my thoughts turned to how best to prepare for retirement. I have spent a great deal of time over the years thinking about this question and have even been a buy to let investors myself in the past. So, I have personal experience of both conventional investing and property investing.

The most common answer to the question of planning for retirement still seems to be “invest in property, it’s the only way”.

BUT is it? I really don’t think so and here’s why, I still think, and even more so after today, believe that conventional investing into a pension continues to be the best way to save for retirement, and here’s why.

Property Investing Pension Investing
Money invested into a
property is paid out of
post-tax income and there is no tax relief on the
amount you invest, there
is no uplift from the tax
Money invested into a pension plan
receives tax relief from HMRC.
Additionally, for each personal
contribution into a pension you receive
tax relief at your highest marginal rate of
Growth in the value of a buy to let property when sold is subject to Capital Gains Tax. The current
rates are 18% and 28% of
the gain over the
Growth within a pension fund is not
subject to Capital Gains Tax. All of the
growth is for your benefit and is not taxed by HMRC.
Income received from buy to let property is subject
to income tax after
deduction of allowance
expenses at your highest marginal rate of tax.
As income is not paid out by your pension until you decide to take your benefits,
there is no income tax due on your pension as the fund builds up.
When you die the value
of all of your properties
will form part of your
estate for Inheritance Tax
If you die before the age of 75, the
the residue of your pension fund can
pass to whomever you nominate
entirely tax-free. If you die after
the age of 75, it can still pass to
whomever you nominate, but maybe
taxable at their marginal rate of tax.
The costs of owning a property is broadly speaking
The cost of having a pension is controlled.
Usually, when a pension is set up the
costs are clearly defined and set out at the
The cost of managing a
property can be
For example, there are
agent’s fees, maintenance
and repairs, and void
period costs to consider.
The actual cost of ownership of a pension
will be around 1 to 2% a year, depending
on whether you self-manage the investments or use the services of an adviser.
Property is an illiquid
investment and if it has to be sold for whatever
the reason, the process can be lengthy and costly.
You can sell your pension investments on
any given day. In other word’s you can get out of the investment very quickly.
Your employer will not
help you buy a buy to let
property and will not help you with the purchase
There is extra free money that can go into your pension as well. If you are employed, your employer will have to contribute to a workplace pension on your behalf.

So as you can see, in my opinion, pensions really should not be overlooked. In fact, there are many reasons to invest in a pension.

“But pensions don’t give any investment return” I hear you say.

“But are you so sure?” You see there is a lot of talk that pensions don’t make any money, but I have to disagree, and I’ll tell you why.

Any investment that is poorly managed whether it’s a buy to let property or a pension fund, will perform badly. History has shown over the medium to long term, that the stock market outperforms all other assets classes.

Another objection to pensions, I hear is that the Government keeps changing the rules. Perhaps, the rules have changed a little too much, however, landlords are now finding that they cannot escape government interference either

Given the announced changes to buy to let property investing, now really could be the time to re-consider your pension situation. If you have pensions but are not really paying any attention to them, maybe now is to look at them again.

Why? Apart from the positives about pensions, it seems to me that, the direction of travel for landlords is negative and further legislation is sure to follow.

In the words of Warren Buffett – “Be fearful when others are greedy and be greedy when others are fearful”. Property is still favoured by many, but is it really going to be the long-term answer?

Action Call

If you already have a pension that you have been ignoring, maybe it’s time to review what is going on. What’s it worth, where’s it invested, what risk are you taking, how is it performing, and many more questions?

Whilst reviewing your pensions may seem overly complex to you, an expert financial adviser specialising in this area will be able to help you understand where you are now and make sure that you are on track to get the most from your investments into pensions.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.