Since April this year anyone over 55 and with a big enough contribution pot has the option of taking up to a quarter of their State pension as a one-off tax-free lump sum. While investing in property has its attractions, getting the right advice is the key to avoiding pitfalls and potential disasters.
According to West Country real estate consultants, Vickery Holman, property is seen as less volatile and reasonably safe compared to of other assets such as equities. Chosen wisely, it will provide a regular rental income plus descent medium- to long-term capital growth.
“As with any marketplace there are hurdles and pitfalls to be avoided,” cautions the Robert Beale, head of valuation services at the firm’s Truro office. “It is vital, therefore, to gain the right advice at the right time.
“Anyone considering investing part of their pension in property must consider all the ‘what if’ scenarios, rather than optimistically assuming that rents quoted by the selling agent will always be received and only increase over time.”
Holding costs are often forgotten in the excitement of a purchase, but can quickly lead to the new owner incurring significant unbudgeted expenses by having to pay for business rates and insurance when the property becomes vacant, Beale warns.
And any anticipated or required capital growth must be professionally appraised taking into consideration not just the individual property, but its position within the local and regional market.
Other questions only a professional agent can provide are whether the building is structurally sound and fit for purpose and if it’s going to comply with any future changes to regulations and legislation that could have an impact on its use and value.
In its latest newsletter Vickery Holman — which has offices in Exeter, Plymouth and Truro — outlines a range of asset management issues that could affect pensioner-investor clients. For further information contact Robert Beale on 01872 245609.
Posted by Cliff Goodwin
Photo by Bigstock
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