Transfer your Pension into Clapham Property!

We are about to embark on a busy year of investing in Clapham, Brixton and perhaps slightly further afield. Hopefully you have your finance ready and are waiting for the right deal to land in your inbox. But did you know that you could also invest your pension into property? This has the added bonus of many tax benefits.

Together with my esteemed co-host Trevor Cutmore I will be delighted to present the Clapham Property Meet on Tuesday, 31st January at the Bread & Roses, 68 Clapham Manor Street, SW4 6DZ. This month's guest speaker is Mike Holt, active investor for over a decade. Having negotiated over 350 purchases, and continuing to do so, he now specialises in unlocking pensions and allowing investors to access previously locked away funds. Pensions allow access to commercial property but a whole lot more. Mike will run through the options of this very tax-efficient way of investing.

Whether you are an experienced property investor, just starting out, or perhaps have cash sitting on the side lines, I am here to help members to network effectively and find win-win solutions by helping individuals to pursue fresh property investment opportunities. 

Do join us if you are interested in property investments, be it local or further afield.  

Registration and early networking is between 6-7pm with a top quality speaker as well as the latest on current issues from your hosts between 7-8:30pm. Drinks and further socialising/networking to follow the main event.

Please book your tickets here: https://www.meetup.com/Clapham-property-meet/events/235084445/

I look forward to seeing you there. Do get in touch via email me: jeroen@claphampropertyblog.com if you have any questions beforehand. Hope to help you soon to boost your Clapham property investment returns!

Your Pension and the Clapham Property Market

Pension rules are changing this April. It certainly ruffled some feathers and caused a flurry of enquiries to my inbox with people asking questions about it. This week, I want to look a little deeper into the subject of your pension and the Clapham property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year)

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.. and now the good news!

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation. The sort of rates (also known as yields in the property investing game) being achieved in Clapham are in the order of 2% to 4.3%. 

The other aspect of property investment is how the fact property values have risen consistently over the last 50 years. According to the Office of National Statistics, the life expectancy of a 65 year old male in Clapham is 18 years and 2 months. If we roll the clock back 18 years 2 months to January 1997, property values in Clapham have risen by 474.05% to today .. you wouldn’t have had that with your pension! But this is the biggest win, even by taking a hit in income tax now, by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).

So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (ie low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce a high returns (ie high yields) but low capital growth (ie how much the value of the property goes up).

So if you want to hear more drop me a line and make investing a worthwhile task.

Jeroen Hoppe
Director
XanderMatthew