Buy to Let Mortgage Quote in UK and Mortgages Buy to Let UK Mortgage
Information and SIPPs
The
buy-to-let market looks set for a revival due to changes
in the laws governing Self Invested Personal Pensions
(or SIPPs).
Buy-to-let became a popular way of investing in the mid-1990s
when the law was changed to make sure tenants left at the
end of their tenancy. With the housing market apparently
intent on going through the roof, interest rates low and
demand for rented properties increasing, buying a property,
renting it out to cover the mortgage (and a bit more) and
seeing the value of your nest egg increase steadily seemed
a sure fire investment.
However
with interest rates rising and the housing market stagnating
(at least compared to the rapid rises of recent years) buy-to-let
hasn’t looked such a good bet in recent years.
Also,
some would-be investors, thinking that buy-to-let was a
fail safe get-rich-quick, underestimated the amount of work
involved and the research needed and got there fingers burnt.
SIPPs
SIPPs
pensions have been around for more than a decade but until
recently were seen as an investment tool for the rich investor.
Now, due to the fact that costs have come down (SIPPs
used to be much more expensive than other investments),
many more people are using them to invest their pensions.
The
main reason for their popularity is that they are more flexible
than other investment plans, for instance the governments
stakeholder pensions. Because of this they regularly outgun
the major stakeholder funds giving a significantly better
return on investment.
A-Day
But
probably the biggest reason for the buzz surrounding SIPPs
and buy-to-let is A-Day – April 6 2006.
A-Day
for pensions is the governments attempt to reorganise the
pension system once and for all.
A-Day
will incorporate a range of measures affecting every aspect
of the pension scheme. According to plans originally published
by the government under the new rules you would have been
able to invest your pension contributions in residential
property, including holiday lets either in the UK or abroad,
using SIPPs. The big advantage for the investor would have
been that, as a pension investment, you’d have been
able to claim tax relief of 23% (if you’re a normal
rate tax payer) or 40% (if you pay tax at the higher rate)
on the purchase price.
However
the government got cold feet amid fears that investors were
lining up to abuse the system.
So
if you were intending to take advantage of these investment
opportunities you should contact your investment advisor
and pension administrator to find out how these changes
have affected your investment plans.
But Buy-to-let remains an option with property prices remaining
high and the pressure on rental property, especially in
desirable urban areas, increasing.
As
always advice should be taken before any investment decisions
are made but here are some basic rules.
Don't
forget the basic rules for buy-to-let
Buy
in the right area. You need to be in an area where
there is demand for rental property without over supply.
Look out for big new developments.
Check estate agents for volume of business and prices.
Beware seasonal markets – like universities
where students leave during holidays
Is it safe? Is it near to services? Would
you be happy for your daughter to walk home at night?
Can you buy a newspaper easily?
There are agents that specialise in the buy-to-rent market
– it may be worthwhile taking their advice
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